The question: why is it useful to have your bank account and routing numbers when using tax preparation software? Tax season is coming and being prepared can save you time and stress. One of the easiest and most important things you can do is to have your bank account and routing numbers ready when using tax prep software. This little step can make the entire tax filing process go so much faster, faster refunds, easier tax payments and more peace of mind. In this post we will go into why having your bank info handy is so good.
Faster Refunds
Direct Deposit
When you provide your bank account and routing numbers you can opt for direct deposit of your refund. Direct deposit is the fastest way to get your refund, bypassing the wait for paper checks. According to the IRS, over 80% of taxpayers choose direct deposit because it’s easy, safe and fast.
Direct Deposit Benefits
- Speed: Direct deposit gets your refund to your bank account faster than a paper check. The IRS issues most refunds within 21 days when using this method.
- Security: Direct deposit eliminates the risk of your refund check getting lost, stolen or destroyed in the mail. It’s an electronic transfer directly to your account.
Easier Tax Payments
Pay Taxes Owed
Tax prep software can use your bank info to make direct payments of any taxes you owe. No need to mail a check or make separate online bill payments, so you’ll make timely and accurate payments.
Convenience and Accuracy
By providing your bank info you can set up automatic tax payments. Less chance of forgetting to pay and no late fees or penalties, makes it seamless and easy.
Easy Filing
Autofill Payment and Refund
Software can store your bank info and autofill the payment and refund sections. This makes filing easier and less prone to errors or delays.
Less Filing
When your bank info is pre-entered you don’t have to enter it every time you file. This way your return is accurate and complete, less chance of mistakes.
Encryption
Tax software developers use robust encryption protocols to protect your financial info. This means your bank info is safe and protected from hackers and fraud.
Safe Information
Now you can focus on other parts of filing without worrying about data breaches or identity theft. That’s priceless during tax time.
Deposit and Pay
Set up Deposit and Pay
With your bank info, software can set up direct deposit for refunds and direct pay for taxes owed. This is way better than paper methods, accuracy, timeliness and security.
Paper Methods
- Accuracy: Electronic transfers reduce the chance of errors that can happen with manual entries or check writing.
- Timeliness: Direct transactions are processed faster, payments and refunds are timely.
- Security: Electronic is less prone to theft or loss than paper checks.
Split Refund
Flexibility and Convenience
Using IRS Form 8888 you can split your refund into multiple accounts, such as checking, savings, IRA or HSA. This gives you flexibility and convenience to allocate funds where you need them most.
Strategic Financial Planning
Splitting your refund can help you manage your finances better, whether you’re saving for the future, paying off debt or investing in retirement.
Avoid Errors and Delays
Costly Errors
Using tax software with your bank info avoids costly errors and delays that can happen when you manually enter bank info or write paper checks. So your return is processed smoothly and fast.
No Delays
Direct deposit and direct pay means accurate and on time submissions to get your refund or pay your taxes.
Wrap up
Having your bank and routing numbers ready when using tax prep software is a small thing that makes a big difference. Faster refunds, easier payments, smoother filing and more security. Be ready this tax season and rest easy.
By following these guidelines and keeping your banking information at hand, you can make tax season a breeze. Happy filing!
FAQs
How fast does direct deposit get my tax refund?
The IRS issues tax refunds electronically into your bank account. In most cases you’ll get your tax refund in less than 21 days after you file your federal tax return.
Is it safe to give bank and routing numbers to tax software?
If someone gets your bank and routing numbers they can use them to withdraw or transfer money from your account. They can also create fake checks, file a fake tax return or commit other types of financial fraud.
What are the benefits of direct deposit for tax refunds?
Benefits of direct deposit:
- It’s fast. The fastest way for taxpayers to get their refund is to file electronically and choose direct deposit.
- It’s secure. Since refunds are electronically deposited, there’s no risk of a paper check being stolen or lost in the mail.
- It’s easy.
- It’s options.
Why do I need my bank and routing numbers?
Bank and routing numbers work together to identify your account and get your money to the right place. Financial institution routing numbers are also known as RTNs (Routing Transit Numbers) or ABA (American Bankers Association) routing numbers.
Also Read: Credit vs. Deduction: Which Should You Claim on Your Taxes