Manilla Mini: Understanding Tax Refunds

Manilla.com

Know Your Options, Save Your Money

Most people think the easiest part of filing their taxes is waiting for their return, but there are still some things to be mindful of during this period to get the most out of your refund. Taxpayers have different options available for receiving their individual income tax refund, like direct deposit, paper check, or debit card.

  • If you choose to receive your refund by direct deposit, you can request to split it up into three separate accounts such as checking, savings, or retirement accounts.  But make sure that the accounts are in your own name, your spouse’s name or both if it’s a joint account to prevent your refund from being returned. Direct deposit is an option of choice for many taxpayers because it’s the fastest way to access your refund once it has been processed.
  • With the number of underbanked consumers continually increasing in the US, major tax preparers are now offering prepaid debit cards as an option to receive your refund. There are a few things to keep in mind when choosing a debit card. First make sure it’s a reloadable card. Second, watch out for fees. The biggest downside to receiving your income tax on a prepaid card is the countless fees that could possibly come with the card. Make sure you choose a card that has no enrollment fee, low or no monthly maintenance fee, and low ATM withdrawal fees.
  • The traditional method of receiving tax refunds is by paper check, and it’s still preferred by many taxpayers. The downside to the paper check method is the risk of your check getting lost in the mail or stolen. If you still choose to receive your refund by check, make sure you use an option that issues the check on nationally recognized check stock. By doing this, you can walk into any major bank nationwide and cash your check for under $7 or for free in some states.

Knowing all your options allows you to have an intelligent conversation with your tax professional and make sure you are keeping most of your hard-earned money in your pocket.

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