The hidden risk that turns a 21-day refund into a 10-week nightmare
Most taxpayers choose direct deposit because it’s the fastest refund method. But there’s one critical error that can destroy your timeline:
Entering an incorrect bank routing or account number — or using a mismatched account name.
When that happens, the IRS attempts the deposit… and the bank bounces it back. Not only does this fail — it triggers a chain reaction inside the IRS system that leads to one of the most painful refund delays.
The IRS Code That Confirms the Rejection: TC 841
If your direct deposit fails, your transcript will show:
TC 841 — Refund Cancelled/Dishonored Check
This means:
- The bank rejected your refund
- The deposit never reached your account
- Your funds are being returned to the U.S. Treasury
- The IRS will now issue a paper check instead
This is not a small delay — it resets the payout process.
The 3 Common Reasons Direct Deposits Fail
1. Incorrect Routing Number
Even a single digit wrong — refund is rejected.
Example:
Correct routing: 041000124
Entered: 041000142
Result: BANK REJECTS
Routing numbers must match your financial institution EXACTLY.
2. Incorrect Account Number
If your account number is wrong — even by one digit — the bank cannot match it.
A refund cannot “land in someone else’s account.”
Banks are required to reject mismatched deposits.
3. Name Mismatch or Ownership Error
This one surprises most taxpayers.
Examples:
- Refund listed to JOHN SMITH
- Bank account belongs to JOHN & SUSAN SMITH (joint)
Or:
- Refund issued to JAMES WASHINGTON
- Bank account belongs to James Washington Jr.
Most banks use identity-matching procedures.
If the names don’t align — they reject the deposit.
And the IRS will not contact you first.
They simply change the refund method to paper.
What Happens After TC 841: The Paper Check Delay
Once the bank sends the money back:
- IRS applies TC 841 to cancel the deposit
- Refund is sent for physical check printing
- Check is mailed to the postal address on file
This typically adds:
4–8 additional weeks
And if:
- you recently moved, or
- your address is incorrect, or
- USPS forwarding isn’t active
your refund can literally disappear into mail limbo.
What To Do If Your Direct Deposit Was Rejected
Step 1: Check your IRS transcript
Look for:
- TC 841 (Refund Reversal)
- TC 846 (Refund Re-issued later as paper check)
Step 2: Verify your address
If necessary, file Form 8822 to update it.
Step 3: Call your bank
Ask:
- Was the refund rejected?
- Why? Name mismatch? Bad routing? Wrong account?
Step 4: If you have a better bank account
You cannot fix it for the current refund — that one is already locked to a paper check.
But you should update bank information for future years.
How to Avoid This Disaster Next Year
Golden rule: Copy routing and account numbers from the source
Never rely on:
- screenshots
- old checks
- memory
- online guesses
Instead, use:
- your official bank account page
- your printed check
- direct confirmation from your bank
Also avoid:
- depositing to someone else’s account
- business accounts if refund is personal
- accounts with name mismatches
- closed or dormant accounts
Special Warning for Prepaid Cards and Digital Banks
Refunds can be rejected if:
- the account is not verified
- secondary identity is required
- card is new or unused
- name on the card doesn’t match IRS return
This is common with:
- CashApp
- NetSpend
- Green Dot
- Chime
- Go2Bank
If the IRS sees that the deposit cannot be validated:
TC 841 triggers
Paper check follows
Entering the wrong bank number or using an account that doesn’t match your IRS identity is not a small clerical mistake.
It’s a refund-killing error.
Once TC 841 hits — it’s over.
Your refund will not go to your bank.
It will be sent as a paper check through the slowest possible route.
The fix is prevention — not repair.
Your refund isn’t lost.
It’s just trapped in the paper-check pipeline.
And now you know why — and how to avoid it next time.
