In previous years, taxpayers could choose to have their refund direct deposited in their checking or savings account or they could have opted for a paper check mailed to their address. Starting this year, taxpayers can opt to send their refund to three different accounts -such as a checking, savings and retirement accounts.
The idea behind split refunds is to encourage people to increase their savings or retirement account balances. In order to take advantage of the split refund option, taxpayers must use Form 888. This is a simple form that tax filers use to tell how they would like their refund split and the account numbers to which the funds should be deposited. Form 888 is then attached to your 1040 form. Tax filers who want their refund direct deposited into only one account do not need to file Form 888.
Refunds directed into savings and checking accounts usually arrive within two – five weeks. Hopefully, the short turn around time of refunds will help consumers avoid rapid refund anticipation loans. These types of loans can come with high interest rates.
For more information visit the IRS website at www.irs.gov.
Contributed by: Dr. Jo Turner, Professor, Family and Consumer Economics.
