Direct Deposit into a traditonal checking account is the most popular way to receive your tax refund. According to the IRS, “8 out of 10 people use e-file and direct deposit to get their tax refund.” There are also several other ways you can choose to have your tax refund sent. Good old Tax Topic 152 will remind you of this after the IRS begins to process your tax refund and you check your status with the IRS Where’s My Refund? tool. Prepaid cards for tax refunds is a form of direct deposit that is one of the choices for taxpayers.
Direct Deposit onto prepaid cards for tax refunds
Prepaid cards for tax refunds is often an alternative for people who do not have a traditional checking account. They also offer some perks. Some of the prepaid cards offer bonuses to use their prepaid card for tax refunds. Another perk we have seen is that NetSpend tends to make your tax refund available earlier them some banks. Taxpayers report that they have had their refunds available 1-2 days earlier than others who use traditional checking accounts. But beware, there can also be some downfalls to use prepaid cards for tax refunds. Prepaid debit cards come with a cost – fees.
A good breakdown of the differences amongst some of the popular prepaid cards is provided by The Simple Dollar who compares the best prepaid debit cards for 2018 to help you.
Other Ways to Receive your Tax Refund
- TreasuryDirect®: Deposit into a TreasuryDirect® online account to buy U.S. Treasury marketable securities and savings bonds. For more information, see Using Your Tax Refund for TreasuryDirect;
- Traditional, Roth, or SEP-IRA: Directly deposit part or all of your refund into a traditional IRA, Roth IRA, or SEP-IRA, but not a SIMPLE IRA. You must have an existing IRA account before you file your return, and your routing number and account number. See the Form 1040 General (PDF) for more information. For more information on IRA contributions, see Publication 590-A.pdf, Contributions to Individual Retirement Arrangements (IRAs).
- Savings Bonds: By purchase of U.S. Series I Savings Bonds up to $5,000;
- A Health Savings Account (HSA);
- An Archer MSA;
- A Coverdell Education Savings Account (ESA); or
- Paper Check: By paper check sent to the address listed on your return.