What Taxpayers Need to Know Before Their Refund Is Sent

Direct deposit is the fastest way to receive your federal tax refund, and most taxpayers choose it every year. But direct deposit only works smoothly if the information on your return is accurate and the IRS successfully transmits funds to the correct account. When something goes wrong, your refund can be delayed for weeks or sent back to the IRS.

Here is what taxpayers should know about direct deposit problems and how to prevent them.

Why Direct Deposit Is Normally the Best Option

Compared to paper checks, direct deposit offers:

• faster refund delivery
• no waiting for mail
• less chance of stolen checks
• fewer processing delays

For most taxpayers, direct deposit is reliable. But errors do happen, especially when banking information is incorrect or account details change between filing and refund time.

Common Direct Deposit Issues

Several things can go wrong when the IRS tries to send your refund electronically:

• incorrect account or routing number
• using someone else’s bank account
• closed accounts
• prepaid card mistakes
• refund intercepts
• bank rejection of funds
• mismatched account names
• fraud protection blocks

If your bank rejects the deposit, the IRS usually converts the payment to a check, which takes longer.

Using Someone Else’s Bank Account Can Cause Delays

Some taxpayers try to deposit refunds into a relative’s or friend’s account. While this sometimes works, it also increases the chance of:

• account rejections
• mismatched names
• funds being held
• refunds being returned to IRS

Whenever possible, the refund should go into a bank account in the taxpayer’s own name.

Refund Transfers Can Add Extra Processing Time

If you choose a refund transfer through a tax preparer or bank product, the IRS sends your refund to a financial partner first. The bank deducts tax preparation and filing fees, then routes the remaining funds to your final account or prepaid card.

This process adds an extra step and may add:

• additional processing days
• identity checks from the bank
• deposit holds
• delays on weekends or holidays

Prepaid Cards Can Be Tricky

Many prepaid cards accept tax refunds, but not all. Some reject large deposits or require identity verification before releasing funds. If identity verification fails, the card may hold the money or send it back.

Always confirm your card accepts federal refunds before entering card information into your tax return.

Banks May Hold or Reject Refunds Under Certain Conditions

Even if your account information is correct, a bank may still:

• reject the deposit,
• hold the deposit for review,
• require identity verification,
• or freeze funds temporarily.

Most banks do this as a fraud-prevention measure, especially when the refund amount is much higher than regular deposits.

If Your Direct Deposit Fails

If a bank rejects your refund, the IRS cannot fix the problem immediately. Instead, the money is:

• returned to IRS,
• converted to a paper check,
• and mailed to the address on your tax return.

This process may add several weeks.

How to Prevent Direct Deposit Problems

You can reduce the chance of delays by:

• double-checking routing numbers
• double-checking account numbers
• using your own bank account
• confirming your prepaid card allows refunds
• avoiding last-minute account changes
• filing only when your information is accurate

Taking a few minutes to verify banking information prevents many refund issues.

Direct deposit is the fastest way to receive your refund, but only when everything is entered correctly and the receiving bank accepts the funds. When mistakes happen, your refund may be delayed, held, rerouted, or converted to a paper check.

Knowing the risks ahead of time makes it easier to avoid delays and ensures your refund lands in the right account.