Refund transfers can be a great addition to your tax preparation, but the key to getting all the benefits is understanding what they do. Everyone knows how frustrating it is to wait on a tax refund check to arrive and then clear the bank before they can use it. What many people do not realize, though, is that there are other ways to get your refund distributed.
This year, instead of dealing with another agonizing wait to get your tax refund, consider a refund transfer. This guide will explain everything you need to know about what they are, how they work, and how you can benefit from them.
What is a Refund Transfer?
A refund transfer is one way taxpayers can choose to receive their tax refunds.
Here’s what you need to know about it:
Is a Refund Transfer a Good Idea?
No Upfront Costs
Get Money Faster
Different Disbursement Methods
Not Always the Best Option
How Do You Set Up Refund Transfers?
Once a taxpayer’s tax return is completed, they can elect to use the refund transfer process.
Rather than getting the money from the IRS, the taxpayer’s refund will be routed through a refund settlement bank. These banks are authorized to deduct necessary fees and then distribute the funds to the taxpayer.
The bank will take care of deducting the preparation fees from the refund, as well as any other associated fees such as refund transfer, transmitter, and service bureau fees.
Refund Transfer Hang Ups to Watch For
Incorrect Direct Deposit Information
Wrong Personal Information
You can speed up the process of getting your tax refund through the refund transfer method, but personal information that does not match what the IRS has on record can result in the IRS slowing down the whole refund action.
If you are a new wife who changed her surname, for example, you need to alert the Social Security Administration of your name change. This can ensure there will be no problems when filing your first joint tax return.