Effective January 2015, the IRS will be limiting the number of electronically deposited refunds into a single financial account or a pre-paid debit card to three, in an effort to control fraud and identity theft. All subsequent refunds will be converted to a paper check format and mailed to the taxpayer automatically. Taxpayer’s will be notified of exceeded direct deposit limits for the account, and a paper refund will be mailed to the taxpayer in about 4 weeks.
While many taxpayers will not be affected by this change, it should be noted that multiple taxpayers who use the same bank account to receive their refunds (such as families with children) may be affected by this new development. Those who could be potentially affected should make other deposit arrangements, such as setting up and using multiple bank accounts or receiving paper check refunds.
Direct deposit is still the fastest and safest way to receive your tax refund, and the IRS still encourages direct deposit as the best way to receive your refund. The purpose of the limitation is to help prevent refund fraud and protect taxpayers from unscrupulous tax preparers.
For more information on this new refund limitation, please click here.