This is part of the story Taxes 2022 coverage of CNET’s best tax software and everything you need to get your refund fast, accurate, and on time.
Take out those W-2s, fire up your favorite tax software, and start filing—this year’s tax season is over and on, and the April 18 tax deadline will be here before you know it. Because a massive backlog of tax returns urges the IRS to file taxpayers electronically to claim their immediate tax refund † depositing money directly with the IRS will speed up your money even more.
It only takes a few minutes to use direct deposit for your taxes. With a direct deposit with the IRS, any money owed to you—for example, your tax refund or child tax credit payments —will go straight into your account as soon as possible.
Most people use direct deposits as a payment method to get tax refunds, child tax credit money, and incentive checks. Some groups, such as Social Security beneficiaries, are even required by the U.S. Treasury to use direct deposits.
We’ll explain why you need to make a direct deposit with the IRS and how to do it. For more details, here’s what you need to know to file your 2021 tax return with the IRS † So, here’s why you should tell the IRS and USPS if you recently moved. †
Your tax refund may come back sooner with a direct deposit
When you file your taxes, you usually have the option of adding a bank account so you can get your refund via direct deposit. “The best and fastest way to get your tax refund is to have it deposited electronically, free of charge, into your financial account,” the IRS says. If you want to split your tax refund, you can deposit your money into up to three different accounts.
You can also expect a faster refund if you combine direct deposit with electronic filing, rather than printing and mailing tax returns. The IRS recommends making a direct deposit to avoid any delays with your refund. Last year, the average time it took for those filing electronically with direct deposits to get their tax refund back, excluding those who had problems with their tax return, was 21 days.
You should also know that the IRS asks taxpayers to avoid filing paper returns if possible and instead file e-filing. Making your return the old-fashioned way can result in another processing delay like the IRS experienced last year. Filing your tax return closer to the start of tax season, rather than closer to the deadline, will allow you to file your tax return faster and get the unpaid child tax credit money too.
Your child’s tax credit money will arrive faster, too
In general, people who set up direct deposits with the IRS received all their child tax credit payments much earlier than those who received paper checks. This means that if you want the rest of your child tax credit money to be faster, you’ll want to adjust your direct deposit information as soon as possible. To do this, you need to enter your bank information when you enter it. File your 2021 taxes this year.
And if you’re still waiting for the third incentive check money to arrive, or what’s called a plus-up payment, you’ll get the money faster if you have a direct deposit setup.
It’s cheaper to send your refund via direct deposit rather than a paper check
Each issued paper refund check costs U.S. taxpayers more than $1, but only a penny for each direct deposit made, according to the IRS refunds were made in 2020, 23 million of which were sent by mail.
That means it costs taxpayers about $23.3 million to send paper check returns and about $10.2 million for direct deposits in 2020.
Errors you need to fix while filing
If you’ve never updated your banking information 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 set these direct deposit details on the portal or when you file your taxes online.
Also, if you want your tax refund spread across several accounts, now is the time to do so. When setting up direct deposits for your taxes, you can add up to three different bank accounts; this can be useful if you are using one like a savings account.
Direct deposit is cheaper than receiving a check.
How to set up a direct deposit when you file your 2021 taxes?
When filing a tax return, select Direct deposit tax software as your refund method, then type in your bank account and routing numbers – you can add your bank account information even if you don’t get a refund. You can find your account and routing number on your bank’s website when you sign in, call your bank branch, or find the numbers on the check. If you do not file your taxes, you can also provide this information to your tax preparer.
If you’re, this is the person who doesn’t usually need to file a tax return. however you are applying for a Recovery Discount Loan to receive a missing incentive check, you must file Form 1040 (PDF) or Form 1040-SR (PDF).
The IRS says your refund should only be deposited directly into a US bank or an account linked to a US bank, and it should be made in your name, your spouse’s name, or both if it’s a joint account.
What if you don’t have a bank account for direct deposit?
If you don’t have a bank account and still want to make a direct deposit with the IRS, you have options. The first and most obvious is to open a new bank account.
The FDIC’s page includes a banking locator and information to help you review and choose a bank. If you prefer a nonprofit, member-owned banking option, consider a credit union. Visit CNET ‘s best checking account and best savings account features for additional information on bank accounts.
If you don’t want to open a bank account, you can also get your tax refund by direct deposit with a prepaid debit card. All cards that accept direct deposit will have an account and routing numbers that you can enter on your tax return.
