In a move to encourage retirement savings, the IRS has increased the options taxpayers have for depositing tax refunds. Direct deposit of refunds has been an option since 1987.
Beginning with the filing of 2006 taxes, taxpayers have had the option of depositing their entire refund into a checking, savings or retirement account by using the appropriate line on form 1040.
In addition, the IRS created a new form, Form 8888, Allocation of Refund (Including Savings Bond Purchases), that gives taxpayers the option of splitting their refund and depositing it into more than one account. Taxpayers can attach this form to their returns and indicate the amount they want deposited into each account by providing valid routing and account numbers. This is automatic if you choose to e-file.
Prior to the 2006 tax year, receiving a paper check in the mail or direct deposit into a checking or savings account were the only options offered to taxpayers.
The option to split direct deposit refunds into multiple accounts is available to all individual filers, whether they file Form 1040, Form 1040A, Form 1040EZ, or any of the other 1040 series forms.
If you would like further information regarding this topic or any other tax related issue, contact Henssler Financial at 770-429-9166 or at [email protected].