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In an effort to avoid pandemic-related disruptions, the Internal Revenue Service (IRS) is encouraging taxpayers to e-file their tax returns and opt into direct deposit to ensure accuracy and quick turnaround times for refunds. Filing season opened on Feb. 12, 2021, and individuals have until Apr. 15, 2021, to file their 2020 returns, as well as pay any owed tax.
Individuals who opt into direct deposit not only benefit from quicker tax refunds, but also safer ones. Since refunds are deposited electronically, the risk of having a paper check stolen or lost is virtually eliminated. Given the amount of COVID-19-related identity-theft scams circulating this past year, it is better to air on the side of caution when it comes to submitting any sensitive information, such as a tax return. Individuals who file paper returns instead of e-filing may also opt into direct deposit, but it will take more time to process the return.
When selecting a refund method while filing a return, individuals can simply follow the instructions to choose direct deposit. Users will then be directed to securely enter their bank account and routing number. Further, taxpayers can even split their refund into multiple financial accounts, including savings, checking, education, health and certain retirement accounts. Individuals also have the option to purchase up to $5,000 in Series I U.S. Savings Bonds using their refund.
While taxpayers can split their refund into several accounts, the IRS warns against depositing refund proceeds into accounts owned by others. Individuals are recommended to only deposit their refunds into U.S. bank accounts belonging to themselves, their spouse or both.
Individuals who do not have a bank account may visit the Federal Deposit Insurance Corporation (FDIC)’s website for assistance in finding a bank that can create an account online. Veterans have access to the Veterans Benefits Banking Program, which allows them to access financial services at participating banks.
To accommodate the difficulties of the ongoing COVID-19 pandemic, several notable tax credits and opportunities were created. Notably:
If you are in need of assistance preparing your tax return or are not sure if you qualify for any of the new COVID-19-related tax credits, contact Doeren Mayhew’s dedicated CPAs and tax advisors today.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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