The Internal Revenue Service (IRS) recently announced a new program that will allow taxpayers who use direct deposit to divide their refunds in up to three financial accounts. The program will take effect in January 2007.
According to the IRS, more than three-quarters of the nation's taxpayers receive refunds each year. Last year, the average refund was $2,171. By using a new form, Form 8888, taxpayers will be able to choose up to three accounts—such as checking, savings and retirement accounts—for refund deposits.
The new split-refund option will be available to all individual filers, whether they file Forms 1040, 1040A/EZ, 1040NR or any of the other 1040 series forms. Taxpayers who want all their refund deposited directly into one account can still use the appropriate line on the Form 1040 series.
An IRS spokesman said the split-refund program is intended to encourage consumers to save more and to open depository accounts.
The IRS will work with its Stakeholder Partnerships, Education and Communication (SPEC) team to collaborate with IDA programs, VITA sites and nonprofit organizations. SPEC works with 60 national partners and 290 community coalitions.
Keep up with what’s new and noteworthy at the St. Louis Fed. Sign up now to have this free monthly e-newsletter emailed to you.