Using direct deposit helps you get a faster, more convenient tax refund, but it can also cause some issues if your bank information is incorrect. As long as you haven't filed this year's tax return yet, you can easily enter new direct deposit information during the tax preparation process. However, once you've filed, the IRS will follow its procedures for handling deposit issues, and it doesn't currently offer an online tool to change banking details for tax refunds. You may end receiving a paper check or having to work with the bank to try to attempt to recover your refund if possible.
IRS Handling of Refund Issues
The IRS expects all tax returns to have accurate and current information for direct deposit accounts. But when issues do occur, the IRS has a few ways of handling the issue that can include sending you a paper check instead or proceeding with depositing the funds despite the issue.
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You can expect to have a paper check mailed if your routing or account number fails to validate or if your bank just doesn't accept the direct deposit attempt. For example, this might happen if you give details for a closed bank account or leave off a digit in one or both of the numbers. However, if you gave wrong numbers that do exist for a real account, the IRS may have no problem depositing it, even if it's not yours. In that case, the IRS requires that you contact the bank to handle the issue.
In a case where you had your tax preparer give you an advance for your refund but had given them the wrong account details, then you have to speak with the tax preparer's bank for help.
Changing Account Details Before Filing
To avoid running into issues where you have to wait for a paper check or deal with contacting banks for help, it's best to change your direct deposit account information before you file your return. When doing so, know that you can even request to have the refund split and sent to up to three bank accounts for your convenience.
You can simply tell your tax preparer to use your new direct deposit information when you go to file your taxes. If you file your own taxes using software, your past direct deposit details usually get saved for your convenience, but you will get the option to confirm your banking details and make any update to the routing or account numbers. If you complete your own return by hand, you'll also find a place to fill in your current direct deposit information on the second page of Form 1040.
Changing Account Details After Filing
Once you've filed, you may or may not be able to change your direct deposit information. It will depend on whether the IRS accepted or rejected the return and whether they've already sent the refund.
If the IRS rejects it the first time, you have the chance to update the direct deposit info – along with fixing any other problems – before you resubmit it. But once the return gets accepted and posts, you'll need to call the IRS at 1-800-829-1040. They can potentially update the direct deposit information for you if you act quickly enough.
Handling Lost or Missing Refunds
If it's too late for you to fix the issue, the IRS will proceed according to its refund rules, meaning you may get a paper check or have to contact the bank for assistance. In the meantime, you should track your tax refund online using the IRS "Where's My Refund?" tool to see when it gets sent. If you don't receive your refund via a paper check despite the tool showing it's been sent after a few weeks, that indicates you should contact your bank and show documentation about your refund.
The IRS encourages you to complete Form 3911 to trace your tax refund if your bank doesn't provide sufficient help after two weeks of attempts. This process can take up to three months, and there's no guarantee that you'll eventually get the money if it ended up in the wrong account. If all else fails, you could proceed with getting legal help if the refund's worth the additional attorney fees.
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- IRS: Form 1040, U.S. Individual Income Tax Return
- IRS: Form 3911, Taxpayer Statement Regarding Refund
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