Updating your bank information with the IRS can feel like navigating a maze, but it's crucial for ensuring your tax refunds, stimulus payments, or other IRS-related funds land safely in the right account. Whether you've recently changed banks, closed an old account, or simply made a mistake when filing, this guide will walk you through the process step-by-step. Let's get started, shall we?
How to Update Bank Information with the IRS: Your Comprehensive Guide
Step 1: Understand the Landscape - When Can You Actually Make Changes?
Before we dive into the "how-to," it's absolutely vital to understand when you can (and cannot) change your bank information with the IRS. This is where many people run into trouble!
- Before Filing Your Tax Return: This is the ideal scenario. If you haven't yet filed your federal tax return, you have full control. When you're using tax software or filling out a paper form, you'll simply enter your new and correct bank account and routing numbers in the direct deposit section.
- If Your Return Has Been Rejected: Good news! If your e-filed return is rejected by the IRS (perhaps due to an error in your bank details), you can correct the information within your tax software before re-submitting it. This is your second-best opportunity.
- After Your Return Has Been Accepted (and Before Processing): This is where it gets tricky. Generally, once the IRS accepts your e-filed tax return, you cannot change your direct deposit information. The system is largely automated, and once it's "posted," it's locked in.
- What if I catch an error right after acceptance? If you realize an error immediately after your return is accepted, and the refund hasn't yet been processed or sent, you might be able to call the IRS (1-800-829-1040) to request a stop on the direct deposit. However, this is a long shot and not guaranteed. The faster you act, the slim chance you might have.
- After Your Refund Has Been Issued/Posted: If your refund has already been sent to an incorrect or closed account, the IRS generally cannot reroute it.
- What happens then? If the bank account is invalid or closed, the bank will typically reject the deposit and send the funds back to the IRS. Once the IRS receives the returned funds, they will then mail you a paper check to the address on your tax return. This will, however, significantly delay your refund.
- What if the incorrect account is valid and belongs to someone else? This is the worst-case scenario. If you accidentally provide a valid account number that belongs to another individual, and the bank accepts the deposit, the IRS will not be able to recover those funds for you. You will need to work directly with the financial institution and, potentially, the individual who received the funds, which may involve legal action.
Step 2: Gather Your Information - The Essentials You'll Need
Before you proceed, ensure you have the following accurate information readily available:
- Your New Bank Account Information:
- Routing Number: This is a nine-digit code that identifies your bank. You can usually find it on the bottom left of your checks, or by logging into your online banking, or by contacting your bank directly. Do not use the routing number from a deposit slip, as it can sometimes be different.
- Account Number: This is your specific account number at the bank. It can be up to 17 characters long and may include both numbers and letters. Include hyphens but omit spaces or special symbols.
- Account Type: Is it a checking account or a savings account? Make sure to select the correct one.
- Your Tax Return Information:
- The tax year for which you need to update information.
- Your Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
- Your filing status (Single, Married Filing Jointly, Head of Household, etc.).
- Your Adjusted Gross Income (AGI) from your most recently filed tax return. This is often needed for identity verification.
Step 3: The "How-To" - Depending on Your Situation
The method for updating your bank information depends heavily on when you are trying to make the change.
Sub-Step 3.1: Updating BEFORE Filing Your Tax Return
This is the easiest and most recommended method.
-
Using Tax Software (e.g., TurboTax, H&R Block, FreeTaxUSA):
- Navigate to the "Refund" or "Direct Deposit" section within your chosen tax software.
- Carefully enter the new routing number and account number for your desired bank account.
- Select whether it's a checking or savings account.
- Double-check, triple-check, and quadruple-check these numbers against your bank's official records (e.g., a blank check or your online banking portal). A single digit error can cause major headaches.
- Complete the rest of your tax return and then e-file it as usual.
-
Filing a Paper Tax Return:
- On your Form 1040 (or relevant tax form), locate the "Direct Deposit" lines.
- Clearly and legibly write in your new bank's routing number and your account number.
- Mark the appropriate box for "Checking" or "Savings."
- Mail your return to the IRS.
Sub-Step 3.2: Updating After Your Return is REJECTED (e-file only)
If your e-filed return was rejected, you have a chance to fix the banking information.
- Access Your Tax Software: Log back into the tax software you used to prepare and file your return.
- Locate the Rejection Notice: Your software should clearly indicate that your return was rejected and often provide a reason.
- Go to the "File" or "Direct Deposit" Section: Find the area where you initially entered your bank information.
- Correct the Details: Carefully input the correct routing and account numbers.
- Re-transmit Your Return: Follow the software's instructions to re-file your tax return electronically.
Sub-Step 3.3: What to Do If Your Refund Was Sent to an Incorrect/Closed Account (After Acceptance)
As established, you generally cannot change your direct deposit information once the IRS has accepted your return and is processing the refund. However, there are specific actions to take depending on what happened:
-
If the Account is Closed or Invalid:
- Wait it out: The bank will typically reject the deposit and return the funds to the IRS. This process can take several weeks.
- IRS will issue a paper check: Once the IRS receives the returned funds, they will automatically issue a paper check and mail it to the address they have on file for you.
- Check "Where's My Refund?": You can monitor the status of your refund on the IRS's "Where's My Refund?" tool (irs.gov/refunds). It may update to show a paper check being mailed.
- Update your address if needed: If you've moved since filing your return, file Form 8822, Change of Address, with the IRS immediately to ensure the paper check goes to the correct location.
-
If the Account is Valid but Incorrect (Belongs to Someone Else):
- Contact the bank first: Your immediate priority should be to contact the financial institution where the funds were incorrectly deposited. Explain the situation and see if they can assist in recovering the funds. They may have procedures for this.
- File Form 3911, Taxpayer Statement Regarding Refund: If the bank cannot or will not help, or if two weeks have passed without resolution, you can file Form 3911 to initiate a trace with the IRS. This form authorizes the IRS to contact the bank on your behalf.
- Be prepared for delays: The IRS states that banks are allowed up to 90 days to respond to a trace request, and a full resolution could take up to 120 days.
- Civil matter: If the bank refuses to return the funds and they are no longer available, the IRS cannot compel them to do so. This situation may unfortunately become a civil matter between you and the financial institution, and potentially the person who received the funds.
Step 4: Special Circumstances - Other IRS Payments and Business Accounts
While the focus is often on tax refunds, you might need to update bank information for other IRS interactions.
Sub-Step 4.1: Estimated Tax Payments or Other Payments to the IRS
If you make payments to the IRS (e.g., estimated taxes, payments for taxes due), you can often set up or update your bank information through:
- IRS Direct Pay: This is a free, secure online service that allows you to pay your taxes directly from your checking or savings account. You don't need to register. You can schedule payments up to 365 days in advance and change or cancel them within 2 days of the scheduled payment date.
- Electronic Federal Tax Payment System (EFTPS): This is a free service for individuals and businesses to make federal tax payments electronically. It requires prior enrollment and allows for greater control and tracking of payments. If you're enrolled in EFTPS, you can update your bank information within your EFTPS account.
Sub-Step 4.2: Updating Bank Information for Businesses (Corporate Tax Refunds)
For businesses, direct deposit of corporate tax refunds (Form 1120 or 1120S) is typically requested by attaching Form 8050, Direct Deposit of Corporate Tax Refund, to the tax return. If you need to update this information for an upcoming refund, you would do so on the Form 8050 submitted with your return.
For businesses making payments, EFTPS is the primary method for updating bank details and scheduling payments.
Step 5: Prevention is Key - Best Practices for Future Filings
To avoid the hassle of updating bank information with the IRS, especially after filing, follow these best practices:
- Verify, Verify, Verify: Before submitting your tax return, always verify your routing and account numbers directly with your bank. Compare them against a voided check or your online banking portal.
- Don't Rush: Take your time when entering financial information into your tax software or on paper forms.
- Keep Records: Retain copies of your filed tax returns and any confirmation numbers for direct deposits or payments.
- Monitor Your Refund: Use the "Where's My Refund?" tool regularly once you've filed to track your refund's status.
- Update Address Promptly: If you move, inform the IRS by filing Form 8822, Change of Address, so any paper checks or correspondence reach you.
10 Related FAQ Questions
Here are 10 frequently asked questions, with quick answers, to help you further understand updating bank information with the IRS:
How to Check if the IRS Has My Correct Bank Account Information?
You cannot directly "check" your bank information on file with the IRS outside of your tax return. The IRS uses the banking details you provide each time you file for refunds. For payments you make, you'll see the bank info you've set up in IRS Direct Pay or EFTPS.
How to Change Direct Deposit for a Past Tax Refund That Haven't Received?
If your past tax refund was already issued to an incorrect or closed account, you generally cannot change the direct deposit. The bank will usually return the funds to the IRS, and the IRS will then mail a paper check to your address on file.
How to Stop a Direct Deposit from the IRS if I Entered Incorrect Information?
If your e-filed return has been accepted but the refund hasn't yet been issued, you might be able to call the IRS (1-800-829-1040) to try and stop the direct deposit. However, this is a very limited option and often not successful if processing has already begun.
How to Get My Refund if My Bank Account Was Closed After the IRS Sent the Direct Deposit?
If your bank account was closed after the IRS sent the direct deposit, the bank will typically reject the deposit and return the funds to the IRS. The IRS will then mail a paper check to the mailing address on your tax return.
How to Recover a Tax Refund Sent to Someone Else's Account?
If your refund was mistakenly sent to a valid account belonging to someone else, first contact the financial institution. If they cannot help, file Form 3911, Taxpayer Statement Regarding Refund, with the IRS to initiate a trace. Be aware this can be a complex issue.
How to Update Bank Information for Estimated Tax Payments?
You can update your bank information for estimated tax payments through IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS). For Direct Pay, you simply enter the new bank details each time you schedule a payment. For EFTPS, you manage your bank accounts within your online profile.
How to Change My Bank Account for My Business Tax Refunds?
For corporate tax refunds (Forms 1120/1120S), you provide direct deposit information on Form 8050, Direct Deposit of Corporate Tax Refund, which you attach to your tax return. If you need to change it, you would do so on the Form 8050 for the new tax year.
How to Ensure My Direct Deposit is Processed Correctly?
Always double-check your bank routing number and account number against a voided check or your bank's official online portal before submitting your tax return. Confirm whether the account is checking or savings.
How to Find My Bank's Routing Number for IRS Direct Deposit?
You can find your bank's routing number on the bottom left of your checks, through your online banking platform, or by contacting your bank directly. Do not use the routing number from a deposit slip, as it can sometimes be different.
How to Know if My Bank Will Accept an IRS Direct Deposit?
Most U.S. banks and credit unions that are members of the Federal Reserve System accept direct deposits from the IRS. If you have any doubts, contact your specific financial institution to confirm they accept federal direct deposits and to get the correct routing and account numbers for that purpose.
