Many taxpayers still stick to the traditional way of filing their tax returns, which is through paper.
For those who may not be aware, this method of filing is highly prone to cause delays in receiving refunds.
Direct deposit allows you to receive refunds faster with lesser prone to cause delays.
Below are reasons why you should file through this means which will have a 99% chance of not causing a delay.
Direct Deposit Allow You to Receive your Tax Refund Weeks Earlier
Typically, you can add a bank account when you file your taxes so that you can receive your refund by direct deposit, CNET reported.
“The best and fastest way to get your tax refund is to have it electronically deposited for free into your financial account,” the IRS stated. If you’d like to split your tax refund deposit between three accounts, you can do so.
Direct deposit combined with electronic filing may also result in a faster refund than printing and mailing paper tax returns.
For this reason, the IRS recommends that you set up direct deposit with electronic filing for your refund to avoid any delays.
Last year, electronic tax filers with direct deposit received their refunds in 21 days on average (this stat does not include those who had issues with their return).
Likewise, taxpayers should keep in mind that the IRS prefers that they e-file their returns rather than filing paper ones.
Your return can be delayed even further if you file the old-school way, as the IRS and its recipients experienced last year.
You will also have a better chance of getting your tax return faster if you file closer to tax season’s beginning rather than closer to the deadline.
Your Child Tax Credit Will Be Processed Faster as Well
Most of the child tax credit payments went to people with direct deposit with the IRS much earlier than they went to people who received paper checks.
If you want the remainder of your child tax credit money as soon as possible, you’ll need to set up direct deposit information as soon as possible.
As part of this process, you will need to input your bank account information when you file your 2021 tax return.
Direct deposit will help you receive your stimulus check faster, or a plus-up payment, if you still need it.
Fact: Disbursing Refund Via Direct Deposit is Cheaper Than By Paper Check
Taxpayers spend more than $1 on each paper refund check, but it costs just a dime to make a direct deposit, according to the IRS.
In 2020, over 125.3 million refund checks were issued, with over 23 million distributed by mail, as per the Bankrate report.
As a result, taxpayers will lose approximately $23.3 million in 2020 because of paper check refunds and approximately $10.2 million from direct deposit refunds.
Work On Resolving Errors Now
It is possible that you didn’t receive your money if you didn’t update your banking details on the IRS child tax credit portal.
You can change those details in the portal or when you file your taxes online in order to prevent problems in the future.
Also, now is the time to split your tax refund between several accounts if that’s what you’d like.
You can add up to three bank accounts to set up direct deposits for taxes, which can be helpful if you plan to use one like a savings account.
How to Make Sure Your Bank Information is Up to Date When You File Your Tax Return
When you file taxes, select Direct Deposit for your refund method within the tax software.
Enter your bank information next — even if you’re not receiving a refund, your bank account information is still needed.
If you don’t remember your account and routing number, you can find it by signing into your bank’s website, calling your branch, or finding it on a check.
Alternatively, if you don’t file your own taxes, you can give this information to your tax preparer.
Those who are nonfilers, meaning they don’t file taxes often, but who want to claim the Recovery Rebate Credit and receive a stimulus check, should complete Form 1040 or Form 1040-SR (PDF).
In addition, the IRS recommends that you only have your refund deposited directly into a US bank account or an account associated with a US bank.
This account should be set up in your name, your spouse’s name, or both if it’s a joint account.