Get your tax refund faster with IRS direct deposit

Last year, the average time to receive a tax refund by direct deposit was 21 days.

Sarah Tew/CNET

This story is part Taxes 2022CNET’s coverage of the best tax software and everything you need to file quickly, accurately and on time.

When you file your tax return for 2021, you’ll also want to set up direct deposit with the IRS if you can. Taxpayers considering file a tax extension should do the same.

Why? Setting up direct deposit with the IRS will help you get your much faster tax refund. You will also receive any other money owed to you, such as child tax credit money, directly into your account as soon as possible.

Most people use direct deposit as a payment method to receive tax refunds, child tax credits, and stimulus checks. Some groups, such as Social Security recipients, are even required by the US Treasury use direct deposit. The IRS is urging taxpayers to add their bank details when filing and to file electronically.

Here’s why you should set up direct deposit with the IRS and how to do it. For more details, here’s what you need to know about file your 2021 tax return with the IRS. Also, here why you should tell the IRS and USPS if you recently moved.

Your tax refund could come back sooner by using direct deposit

When you file your taxes, you usually have the option of adding a bank account to receive your refund by direct deposit. “The best and fastest way to get your tax refund is to have it electronically deposited into your financial account for free,” the taxman says. You can deposit your money in up to three different accounts if you want to split your tax refund.

You can also expect a faster refund if you combine direct deposit with e-filing, rather than printing and mailing paper tax returns. In fact, the IRS recommends setting up direct deposit to avoid any delay with your refund. Last year the average recovery time for tax refunds for those who filed electronically with direct deposit was 21 days, not including those who had issues with their tax returns.

You should also be aware that the IRS asks taxpayers to avoid filing paper returns, if possible, and instead e-file. Filing your return the old fashioned way could lead to another processing delay, like the one the IRS experienced last year. Filing your tax return closer to the start of tax season rather than closer to the deadline will also allow you to get your tax return faster – along with any unpaid child tax credits.

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Get your money faster with direct deposit.

Sarah Tew/CNET

Your child tax credit money will also arrive faster

Overall, people who had set up direct deposit with the IRS received all of their child tax credit payments much sooner than those who received paper checks. This means you’ll want to set up your direct deposit information as soon as possible if you want the rest of your child tax credit money to go faster. To do this, you will need to enter your banking information when you file your 2021 taxes This year.

And if you’re still waiting for the third stimulus check to arrive, or if you’re waiting for what’s called a bumped payment, you’ll receive it faster if you’ve set up direct deposit.

It’s cheaper to send your refund by direct deposit, rather than by paper check

Each paper rebate check issued costs US taxpayers more than $1, but it only costs a penny for each direct deposit made, according to the tax authorities. In 2020, 125.3 million refunds were issued, including more than 23 million sent by mail, according to Bankrate.

This means that in 2020, it costs taxpayers about $23.3 million to send paper check refunds and about $10.2 million for direct deposit.

Errors to correct

If you never updated your bank details on the IRS Child Tax Credit portal, you may not have received your money or it may have come as a paper check. . To avoid this in the future, you can adjust these direct deposit details in the portal or when you file your taxes online.

Also, if you want your tax refund split across multiple accounts, now is the time to do it. When you set up direct deposit for your taxes, you can add up to three different bank accounts, which can be beneficial if you’re using one as a savings account.

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Direct deposit is cheaper than receiving a check.

Sarah Tew/CNET

How to set up direct deposit when you file your 2021 tax return

When filing income tax, select Direct deposit as a refund method in your tax software, then enter your bank account and routing numbers. You can still add your bank details even if you don’t get a refund. You can find your account and routing number on your bank’s website when you log in, call your bank branch, or locate the numbers on a check. You can also provide this information to your tax preparer if you do not file your own returns.

If you are a non-filer, i.e. someone who is not generally required to file a tax returnbut you are claiming the recovery rebate credit to get a missing stimulus check, you will need to file Form 1040 (PDF) or Form 1040-SR (PDF).

The IRS says your refund should only be deposited directly into a US bank or account affiliated with a US bank, and must be in your name, your spouse’s name, or both if it is of a joint account.

What if I don’t have a bank account?

If you don’t have a bank account and still want to set up direct deposit with the IRS, you have options. The first, and most obvious, is to open a new bank account.

the FDIC GetBanked The page includes a bank locator service and information to help you review and choose a bank. If you prefer a member-owned non-profit banking option, consider a credit union. Visit CNET best checking account and best savings account features for additional bank account information.

If you don’t want to open a bank account, you can also receive your tax refund by direct deposit with a prepaid debit card. All cards that accept direct deposit will have account and routing numbers that you can enter on your tax return.

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