4 ways to receive your tax refund

I know you probably already saw today's tax tip there in the upper right corner of the ol' blog (or at the complete Daily Tax Tips page) on ways the IRS can deliver your tax refund.

But since most folks who file early do so because they're getting a refund, I thought it worth repeating here.

The fastest way to get your refund is to e-file and have your money directly deposited.

No, I don't work for the IRS and no I'm not, as some <cough…tax protesters…cough> have "suggested," a "tool of the government." I'm reiterating the tax agency's advice about electronic filing and refund options because it's right on target.

Nowadays, however, we're well beyond just having refund money sent to one account. You now have four ways to get your money directly from the IRS.

By filing Form 8888, you can split your refund money into three different accounts, and they don't all have to be at the same bank or financial institution.

The acceptable accounts could be your checking, or your checking and your spouse's checking if y'all handle your money that way. Or you can have the money go, in whatever amounts you decide, to a checking, savings and IRA.

The permutations are limited only by the types of accounts you have. The types of accounts to which the IRS will gladly directly deposit your refund include, but are not limited to:

• Regular passbook savings or checking accounts 
  
• Brokerage accounts  
  
• IRAs  
  
• Health savings accounts (HSAs)
  
• Archer MSAs 
  
• Coverdell education savings accounts 
  
• Individual development accounts (IDAs)

The only things that the IRS demands is that:

1. The accounts be at U.S. financial institutions,
2. They accept direct deposits for the account(s) you select, and
   
3. You put at least $1 of your refund into a chosen account.

Double check your account entries: And be very careful when entering account and routing numbers.

The IRS explicitly notes that it assumes no responsibility for taxpayer error. It will, however, correct any mistakes it makes. (Yet another reason to keep a copy of your return.)

But unlike unlike paper refund checks that are easily reissued if they go missing, sorting out misdirected direct deposits is more difficult. Privacy and banking laws that in most cases are good things can work against taxpayers whose refund money has been electronically placed into someone else's account.

So verify your account and routing numbers with your bank and then double check the numbers you enter on your Form 1040 if you're having the refund go to just one account or on Form 8888 if you're splitting your refund into multiple accounts.

Savings bond option enhanced: I know. You've been double checking my math in this blog post. I said there are four ways other than a paper check to get your refund from the IRS.

Here's the remaining option. Form 8888 also lets you use your refund money to buy up to $5,000 in Series I savings bonds.

These are the inflation adjusted bonds,which pay interest based on a combination of a fixed rate (currently 0.00 percent; yeah, as a saver I hate the Fed's policy, too) that stays constant throughout the life of the savings bond, plus a semiannual inflation rate (currently 0.74 percent). The inflation factor is updated each May and November.

This year, the IRS has added a new feature to tax refund bond purchases. Instead of getting the bonds in just your name (or yours and your spouse's if you file a joint return), you can designate the bonds be issued to someone else you name as primary owner, co-owner or beneficiary.

You'll get your savings bonds after you receive any tax refund amount you had deposited to bank accounts or mailed to you as a check. Issuance of the bonds is handled by the Treasury Retail Securities Site, which takes up to three weeks to send out the bonds. You can check on the status of your bonds refund by calling 1-800-245-2804.

There's only one requirement to get your refund as savings bonds; your purchase must be in $50 increments. So if you have $375 coming back from the IRS, you can buy $350 worth of bonds.

The excess $25 refund amount will be deposited into a checking, savings or investment account you designate on Form 8888 or you can have it mailed to you as an old-fashioned refund check.

And speaking of old school taxes, you don't have to e-file to split your refund.

Yes, some folks use tax software to prepare their returns and for various reasons — for example, they have to send in verification documents like a closing statement to claim the first-time homebuyer credit or a receipt for a very generous charitable gift — but then opt to deliver their tax return documents via the U.S. Postal Service.

If that's you, that's fine. Send in your paper 1040 and 8888 forms and the IRS will take care of your multiple direct deposits.

Just remember that even though the IRS will be sending your refund electronically, it will take a bit longer to show up than if you had e-filed.

Related posts:

• New federal tax refund debit cards for taxpayers
  without bank accounts
• Direct deposit to replace U.S. checks
• The IRS' electronic future
• IRS has almost $165 million in refund money it can't deliver.
  Is some of it yours?

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