With the convenience and security of direct deposit available at most financial institutions, more taxpayers are requesting payment of their tax refunds by direct deposit.
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With the convenience and security of direct deposit available at most financial institutions, more taxpayers are requesting payment of their tax refunds by direct deposit rather than paper checks.
And now, if you file IRS Form 8888 with your federal tax return, the Internal Revenue Service will direct deposit your refund into multiple accounts and even give you the option of purchasing U.S. savings bonds.
A benefit of filing Form 8888 is that it eliminates the delay of having to transfer your tax refund to different accounts yourself. Moreover, you can receive your refund in various types of accounts—not just checking and savings. Among other types of investment or brokerage accounts, your expanded direct deposit options include:
A TreasuryDirect account allows you to purchase many federal government securities in paperless format, but you’ll need to access the website (www.treasurydirect.gov) and open an account before requesting this deposit option on Form 8888.
You can even have the IRS send you a paper check for a portion of the refund in addition to any direct deposits you request.
You can purchase up to $5,000 of series I U.S. savings bonds as an additional option to receiving all or part of your refund in the form of an electronic deposit or paper check.
Part I of Form 8888 allows you to allocate the tax refund across three different accounts.
If you are purchasing bonds, you must fill out Part II and indicate the total amount of your refund you’re applying toward the bond purchase. Below this line are additional lines that allow you to purchase up to two bonds, which can be in anyone’s name.
If you want a portion of your refund by paper check, you’ll need to fill out Part III with the amount.
To ensure that all amounts listed throughout Form 8888 add up to the total tax overpayment reported on your return, all filers must fill out Part IV.
You shouldn’t file Form 8888 if you’re:
You can indicate these choices of deposit directly on your tax return. Form 8888 should be used for the direct deposit of your refund into two or more accounts, including the purchase of U.S. savings bonds.
You should also be aware that your deposits may be rejected by your financial institution if:
One more tip: if the processing of your return is delayed by the IRS, your refund may not be split; all of it will be deposited into the first account listed on Form 8888. Be sure that the first account listed on Form 8888 is the account that you want the entire refund to be deposited in if this should happen.
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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
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A Form 1040 return with limited credits is one that's filed using IRS Form 1040 only (with the exception of the specific covered situations described below). Roughly 37% of taxpayers are eligible.
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