Ever think about what happens if your tax refund is deposited into the wrong account? Read more to know what to do if this happens to you.

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Rebecca Lake • February 20, 2020


Filing taxes can be a chore, yet getting a refund can be a sweet reward for your efforts. 

In 2019, the average taxpayer received a refund of $2,869, which is a nice amount of cash to stash in savings, use to pay down debt or fund another financial goal. 

The IRS encourages taxpayers to have their refunds deposited directly into their bank accounts. But, what happens if your refund goes astray? For example, it’s possible to have a tax refund deposited into the wrong account. 

If this happens to you, it’s important to know what to do next. Read on to learn more.

In This Article

What Can Cause a Tax Refund to Go to the Wrong Bank Account?

Surprisingly, there are several reasons why your tax refund might get routed to the wrong bank account.

Incorrect information

“Taxpayers commonly do not receive their refunds because they accidentally recorded the wrong bank account or bank routing number on their tax return,” says Logan Allec, a CPA, personal finance expert and owner of personal finance blog Money Done Right.

So for example, transposing a single digit in your bank account number or routing number could send your refund straight into someone else’s account. This same mistake can happen if you’re paying someone to do your taxes and your tax preparer incorrectly entered your bank account information, says Robert Allman, an IRS Enrolled Agent and president and owner at Professional Public Accountants, LLC.

Identity Theft

In other instances, a tax refund deposited into the wrong account can be the result of something more serious. For example, a common method of tax identity theft involves getting the jump on taxpayers and filing a fraudulent return using their social security number or tax identification number. The IRS accepts the return in good faith and issues a refund – only it goes to the fraudster’s bank account, not yours.

In most cases, a bank account will reject a direct deposit that doesn’t match the name on the account. In that case, the money could be sent back to the IRS and you’d likely be issued a refund in the form of a paper check.

But watch out as “occasionally, banks will inadvertently accept refund checks even if the name on the account does not match the name on the tax return,” says Allman.

When this happens, the ball is in your court to negotiate the return of those funds.

The IRS Refund Status Tracker Tool can help you monitor your refund’s progress. If you see that your refund has been marked as deposited but the money isn’t showing up in your bank account, you’ll need to do a little sleuthing to find out where the money went. From there, you should contact the financial institution that accepted the refund, says Allec.

But, you might be thinking, why not call the IRS about a refund? There’s a simple explanation for that.

The IRS assumes no responsibility for refunds that are misdirected to another person’s bank account as a result of taxpayer or tax preparer error. In other words, if you contact the IRS about refunds that were incorrectly deposited because of your mistake (or your tax preparer’s), they’ll most likely tell you that you’re on your own when it comes to fixing it.

So, if you have to call a financial institution, be prepared to make your case for having the refund amount returned to you. Explain what happened and the error that led to the direct deposit being incorrectly reported. You may also need to provide documentation, such as a copy of your tax return.

If you haven’t had any luck after two weeks, you can file Form 3911, Taxpayer Statement Regarding Refund. Submitting this form allows the IRS to reach out to the banking institution on your behalf to find out where the money went and attempt to recover it. This can take up to 90 days and you should know, says Allman, that the IRS can’t force the money to be turned over to you.

If you’re still not getting anywhere, there is one more step you can take. You can sue the person who owns the account that your refund was deposited into. That has its own costs, in terms of hiring an attorney and the time spent pursuing a civil claim. So you’ll need to decide how important recovering the refund is at that point.

If you want to avoid the nightmare of having a tax refund deposited into a wrong account, there’s a simple solution.

Both Allec and Allman say that vigilance and double-checking your bank account information is the best way to defend yourself against direct deposit issues. This means you should also check the work of a tax preparer if you’ve gone this route.

And if you double-check your tax return and there’s still an error, you may be able to correct it.

“If you realize your bank (account) information is incorrect after filing the return but before the refund has been processed, the IRS can update the payment method and issue you a refund check instead,” Allec says.

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Getting a paper check can mean waiting six to eight weeks to receive your money, compared to the 3-week wait for direct deposit. But it can be well worth the wait if it means your refund lands in your hands and not someone else’s.