Reposting this since it’s tax time again. Another good use of this is for meeting bank account bonuses direct deposit requirement, government payments always qualify.
Every year different financial institutions offer you bonuses for depositing your tax refunds into their accounts. Some tax software will also offer you a 5-10% bonus if you use your refund to purchase gift cards instead of receiving it as cash.
I’ve always thought that you’d only be able to get one of these bonuses, but it’s actually possible to split your tax refund into multiple accounts. I was made aware of this by reader, Jackalope. Splitting your refund into multiple accounts is pretty easy, all you need to do is fill out and file form 8888. The IRS even reminded taxpayers about this feature recently.
You are still somewhat limited though, you cannot split your tax refund into more than three accounts. If anybody knows of a work around to split it into more than three accounts, let us know in the comments.
If you know of any companies offering bonuses, please let me know in the comments section below or contact me directly.
A necessary word of caution – ” Another good use of this is for meeting bank account bonuses direct deposit requirement, government payments always qualify.”
It doesn’t *always* qualify. I applied for the BoA $300 checking offer which does specify “regular monthly income” in the terms, and was unsuccessful. Had I checked the comments I would have found DPs indicating this, but this article made me overconfident.
No hard feelings toward Will, just warning others.
Can I have my refunds DD to my checking account and my husbands into my Savings acct from a different bank? Can I have his portion of his refund direct dep to his account? Or it should be sent thru mail as a check?
If it’s a joint return, I imagine you can split part into your account and part to your husband’s at a separate bank.
Per Chuck’s comments, if is a joint return, and both your names are on the return, you should be able to do what you want. I successfully did this last year. However, the IRS says the following are reasons the direct deposit could be rejected:
“You are asking to have a joint refund
deposited to an individual account, and
your financial institution(s) won’t allow this.
The IRS isn’t responsible if a financial
institution rejects a direct deposit.
• The name on your account doesn’t match
the name on the refund, and your financial
institution(s) won’t allow a refund to be
deposited unless the name on the refund
matches the name on the account.”
So, it won’t be due to the IRS, but your financial institution,if it is rejected. You should check with your financial institution(s) if you think this will be a problem before filing. For more info, read the instructions on Form 8888, here:
https://www.irs.gov/pub/irs-pdf/f8888.pdf
Does anyone know if “Credit Karma tax” does form 8888?
I am planning to use “Credit Karma” for my tax return this year.
While at it, you can also use Form 8888 to buy I bonds. If you are in a high state / local tax area (CA, NYC, etc.), they are highly competitive with any deposit accounts. The rate is tied to inflation, and adjusted every 6 months. Two caveats that you can’t redeem them for 12 months, and before 5 years there is 3 months’ of yield EWP. The current yield is 2.76%, and not taxable by state / local govt, so if you have a 10% state / local tax, it is equal to 3.07%. Even if the next rate drops to 0% (it’s possible, currently the inflation is -0.03% since September..), it will have a 1 year effective yield of 1.53%, still better than any 1Y CD out there.
Every year one is limited to buy $10k of I bonds per SSN (you + spouse + kids..) through TreasuryDirect, and another $5k through Form 8888 refunds (married filing jointly is also $5k).
Thank you, I saw the offer to buy bonds but had no idea whether it made sense or not. This is really helpful info.
If you are getting a state tax refund also, you can direct the state refund into a different account than the Federal. I’m sure it varies by state if splitting is allowed, but at the minimum you could split up to 4 total accounts (3 Federal, 1 state).
Good info – Thanks!!
Is it still possible to overpay taxes for 2016? Asides from decreasing allowances (for next year) how would that be done using a CC as previously mentioned?
You can still send estimated taxes for Q4 for a few days, and you can file Form 4868 to pay your taxes before April 15, but sending the actual return later (up to Oct 15). You can pay any amount of extra tax with Form 4868 (and pay that with a CC), you will get it returned when you actually do your 1040.
Thanks for the HT!
In case this helps anyone this year(by giving them ideas), here is what I am doing to maximize this.
1. Converted an IRA to a Roth and am overpaying estimated taxes by 1-15-2017 to ensure a big refund. The IRS will only have my overpayment for about 3 or so Months (see #4 below)
2. Waited to get Chase Sapphire Reserve ($4,000 spend) and just got it on Jan 6th.
3. Going to open at least two checking accounts in the next month or two that allow for funding a high value with a credit card (this will help with the $4,000 CSR spend ) and require a Direct Deposit to trigger a good value bonus.
4. File Taxes in late Feb / Early March and use this direct deposit feature to trigger the bonus for the checking accounts.
In past tax years this has worked perfectly for me. Justincase – I applied one of my split refunds to Chase and it worked fine as refund & bonus in 4/2016. Other banks too. Years ago my personal finance advice regarding taxes was to try for a 0/0 owned/refund. Today I’m thrilled about a large refund due to a 2016 renewable energy credit which I will turn into a bigger bonus from banks.
This is the gold I come here for. Amazing tip.
FYI, my situation is one where this is very useful. I can change my DD at work of course, but my wife doesn’t have W2 income and I don’t think my DD from work would count if I tried to put it into accounts in her name. So I’ve only been getting her bonuses that don’t require DD. But if this counts as DD I can get her 3 bonuses that do require DD in one go. Thinking of overpaying my taxes with her CSR to meet min spend and to increase the amount of my refund, then getting her Santander, PNC $5K+ $300 bonus, and one more come refund time.
Why not just open a joint account for the bonus? Or do you open both a joint and individual account to trigger multiple bonus?
Have you tried depositing from work into her account? Most of the time all I enter are routing number and account number. Does your work specify that the account has to be in your name?
I suppose I could try opening a solo account for me, getting bonus, then getting a joint account with wife, then doing DD into that for second bonus. I wonder if that would prevent the second bonus from paying out, though, since I would already be in the system as a previous account owner. Not sure if anyone has DP on that with any banks.
I think it’s possible I could change work DD to my wife’s accounts, but in general I’ve heard DP of this being rejected (in general, not at my company specifically). I would ask directly of course but my company works with a local accounting place that I don’t really trust to know what their own system will do, and there’s a fee for bouncing a DD. My be worth it to try at some point.
Worked for me for chase.
Not sure if it’s true, but the HSBC rep told us when my wife opened her account with them that DD from my employer would be treated as an incoming wire with a $15 fee. I’ve never had a problem with this at other banks, and I didn’t actually test it at HSBC.