Split Refunds: Just Another Tax Form or an Opportunity?
Beginning in tax season 2007 (for tax year 2006), all tax filers due a Federal refund will have the option to have their refund direct deposited to up to three destinations. Tax filers will use IRS Form 8888 to indicate which accounts and in what amounts they would like their refund disbursed. Any account in the taxpayer's name with an account number and routing number can receive part of a Federal tax refund.
One of the benefits of splitting your refund – is that you can select the amount and which account up to three accounts that are tied to a financial institution. You can send your money where you want it to go. You also get the convenience of directing some of your refund to your checking account for immediate needs and sending some to savings for future use. It is also safer and speedier by using direct deposit.
You will need to fill out and attach Form 8888, Direct Deposit of Refund, to your federal income tax return. Tell the IRS how much and to which of your accounts you want your refund deposited. You will need to include the routing and account numbers.
If you want your refund to go to one account, you can still do that. The refund must be greater than $1.00.
If you wish to e-file, you can split your refund.
Types of savings accounts that are eligible to receive a refund via direct deposit include:
Passbook savings, individual development accounts (IDAs), individual retirement arrangements (IRAs), health saving accounts (HSAs), Archer medical savings accounts (MSAs), and Coverdell education savings accounts
