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This new development for many American taxpayers is here to stay: the new, more flexible IRS option
The United States Social Security Administration (SSA) has confirmed a very useful update for taxpayers regarding IRS refunds. This improvement allows taxpayers to receive refunds in a more flexible and beneficial way, thanks to an option that makes it easier to manage money in a more organized and secure manner.
According to the SSA and the IRS, many Americans can now split their refund into up to three different accounts through direct deposit. This option was already in effect, but SSA is reminding people so more individuals can benefit from it.
Social Security Allows This Option to Collect IRS Refunds: You'll Like It
The split can be made using Form 8888, which allows taxpayers to assign exact refund amounts to different bank or compatible financial accounts. These options include a variety of accessible accounts.
This includes checking or savings accounts at banks or credit unions, already established IRA or Roth IRA accounts, and even prepaid accounts or mobile apps. These must offer an account number and routing number for direct deposit.
Health savings accounts (HSA), education savings accounts (ESA), investment or brokerage funds, and accounts adopted into plans like Archer MSA and Coverdell ESA can be included. Individual retirement accounts are also eligible.
What This SSA Update Offers Taxpayers
Direct deposit is fast and secure. The IRS usually issues refunds in less than 21 days if taxpayers file electronically and choose this option. In addition, it avoids delays and risks of theft or loss, which are more common with paper checks.
Additionally, by splitting the refund, taxpayers can organize their finances better. One part can go toward daily expenses, another to savings or investment, and another to an IRA account for retirement.
This promotes more effective money management, without having to make transfers afterward. This SSA option is flexible: taxpayers can choose the percentage or exact amount for each account, and the accounts can be at different banks.
How to Use This Option? See How Easy SSA Makes It for You
When filing the return online, simply select the direct deposit boxes and enter the banking information for each account. If filing on paper, taxpayers must complete Form 8888, indicating the amount and the details—routing and account number—for up to three accounts.
The IRS allows at least 1 USD to be deposited in each account and doesn't require the amounts to be equal. Important: the refund must only go into accounts in the taxpayer's name, their spouse's, or both (in the case of a joint account).
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