Practically everyone dreads tax season, but if there is one thing that can get people all excited about taxes, it is the idea of receiving a tax refund. Even if the money is already actually yours from the start (it’s not like you are earning additional income when you get your money returned to you), having that cash on hand is still a welcome thought.
How do you receive your tax refund? Check or direct deposit?
There really are no strict rules as to which method you should choose. You ought to know, however, that the IRS prefers to use the direct deposit method simply because this costs less and also is faster than sending out checks.
On your part, it also would be better to opt for direct deposit. How so? The reasons are practically the same.
- Transactions are faster via direct deposit. Transactions are practically instantaneous and the IRS sends out tax refunds via this method before they send out paper checks.
- The chances of you actually getting the money are higher. That’s because there is no check that might get lost in the mail. We all know just how efficient the postal service can be at times!
- The direct deposit option is FREE. You do not have to pay extra to have your tax refund sent directly to your savings account or checking account.
However, there is a drawback to direct deposits. It is something that can be avoided, though. If you choose to use the direct deposit, you have to be extra careful with inputting your bank account details. Every letter and number must be correct, otherwise you risk losing your tax refund. There have been horror stories wherein it took tax payers years to get their tax refund back because of a slight error. In some cases, they never got the money back. This is where checks have an advantage – it is easier to retrieve the money if someone cashes the check.
Bottom line: you have everything to gain by choosing the direct deposit method. It won’t kill you to make sure that your bank information is 100% correct anyway.
Another reason for direct deposit — theft prevention. This is one of the big reasons Social Security went to direct deposit years ago. Thieves would rifle through mailboxes of the elderly and steal checks. Now those were easier to steal because they came at the same time every month. But things do get stolen out of mail boxes — or they never get there in the first place. Lost in the mail isn’t just a delay tactic to avoid payments. It does happen.