The IRS Will Split Your Tax Refund for You
If you are getting a tax refund, you probably have big plans for it. Ideally, you will use this for good : for example, to pay off a debt or, finally, to create a contingency fund. Whichever you choose, keep in mind: The IRS will allow you to split your reimbursement across multiple accounts.
The Washington Post explains how it works :
Complete Form 8888 and the IRS will transfer your money directly to three accounts of your choice. This means you don’t have to dump that $ 2,860 (2016 average return according to the IRS) into your checking account, where it can be spent at the mall. Instead, you can channel some or all of it directly into a retirement account, college savings, health savings account, or brokerage account, to name a few options.
If your account has a routing number and direct transfers are allowed, you should have no problem listing them on Form 8888 , which you can get here . (If you are using tax reporting software, the program should offer this form as an option.) However, you can only list accounts that belong to you or your spouse. So it’s out of luck if you want to send someone a refund for whatever reason.
Finally, it’s worth reminding you once again that high tax refunds are not as cool as you might think . It simply means that you are overpaying taxes throughout the year. It is generally best to exercise caution because you could be fined if you don’t pay enough. However, if your refund is huge, you can change the W4 deduction amount.
Until then, TurboTax has a helpful guide on how to fill out the 8888 form .
Another thing to keep in mind is that if your tax refund is delayed for any reason, the IRS may not split your refund as planned. In that case, they’ll just put it all in the first account, so keep that in mind when you enter your first account on the form.