Direct Deposit Refunds and Refund Offsets

By | April 15, 2024

Direct Deposit Refunds and Refund Offsets

Your tax return may show you’re due a refund from the IRS. You can generally get your refund faster by filing electronically and requesting direct deposit. See our TAS Tax Tip: Tax return filing is as easy as 1-2-3 for more information, including direct deposit options if you don’t have a bank account.

After you file your federal income tax return and request direct deposit, you can check on status of the refund using the Where’s My Refund tool on IRS.gov or the IRS2Go mobile app. Your refund status may be available as soon as 24 hours after the IRS receives your electronically filed tax return. You can also check your refund status and other tax information using your online account. You can even check on the status of your amended return online.

When accessing your online account, you will need to verify your identity through an online security process. If you are signing in for the first time, see our TAS Tax Tip: Verifying your identity to access certain IRS systems for a list of information you will need to provide and how to complete the security process.

Reasons Why You May Not Receive a Direct Deposit Refund

There are several reasons you may not receive a direct deposit tax refund.

The IRS can only deposit refunds electronically into accounts in your name, your spouse’s name, or a joint account.
A financial institution may reject a direct deposit.
The IRS can’t deposit more than three electronic refunds into a single financial account.

In these situations, the IRS will mail a paper check.

Refund Offsets

If you owe a federal tax debt from a prior tax year, a debt to another federal agency, or certain debts under state law, the IRS may keep (offset) some or all your tax refund to pay your debt. In fact, in many situations the IRS is legally required to forward your refund to pay the debt. For information about what to do if your refund is offset, refer to Get Help – Refund Offsets.

If you filed a joint tax return, your refund was offset to a debt owed by your spouse or ex-spouse, and feel like you are not responsible for their debt, you may be eligible to claim your portion of the joint refund by filing an injured spouse claim or innocent spouse claim.

For more information, including steps to take if your refund has been offset, see:

TAS Roadmap: Refund from Another Year Applied to Debt.
TAS Tax Tip: Feel like you are not responsible for a debt owed by your spouse or ex-spouse?

Preventing Refund Offsets in Economic Hardship Situations

Taxpayers experiencing financial hardship may request an Offset Bypass Refund (OBR). An OBR allows for an overpayment that would otherwise be applied to a prior federal tax liability to instead be refunded. If you have a federal tax liability, do not owe money to another federal or state agency, and are experiencing a significant economic hardship, the IRS may forego the refund offset and issue the refund under OBR procedures. The IRS can only forego amounts that would have been offset to a federal tax debt.

Timing is critical. An OBR is generally only possible before the IRS applies a refund to another tax liability. Once the refund has been offset, it’s too late to request an OBR. Also, an OBR may only be issued to relieve a specific hardship, for example to prevent utility disconnection or eviction. You must establish the amount of the hardship because the IRS will only bypass enough of the offset to alleviate the hardship.

There is no specific form used to request an OBR. If you are experiencing a financial hardship and want to request an OBR, contact the IRS at 800-829-1040 or the Taxpayer Advocate Service (TAS) before you file your tax return with the IRS. Note: You must file your tax return with the IRS. A return is not considered filed until the IRS (not TAS) receives it.

You can contact the agency with which you have a debt to determine if the debt was submitted for refund offset by calling the Bureau of the Fiscal Service at 800-304-3107 (or TTY/TDD 800-877-8339), Monday through Friday 7:30 a.m. to 5 p.m. CST. Be sure to make this call before your refund is offset so you can decide whether or not to request an OBR while you still have time.