Direct Deposit of Refund

[Edward]

Have client who does not have a bank account but would like to deposit the refund in his sisters account. I thought I had read a post last year in which this was acceptable and that use of accounts other than the taxpayer was permitted? Can anybody provide any advice on this? Thanks

[kcjenkins]

Depends on several factors, and also varies from bank to bank. Is he a signatory on that account? If it's a joint account, probably will work fine. But some banks will not accept the deposit unless he's named on the account. So at a minimum he should verify with the bank whether they will accept it.

Another option is to consider the debit card option that was added this year. Look on the efile info where it says MoneyWise MasterCard. That might be his best option.

And some banks will allow the opening of a 'special tax account' that has no checks, is set up just to get the direct deposit, and costs only a small fee. You should check to see if any local banks do that.

[Pacun]

Have client who does not have a bank account but would like to deposit the refund in his sisters account. I thought I had read a post last year in which this was acceptable and that use of accounts other than the taxpayer was permitted? Can anybody provide any advice on this? Thanks

As long as the bank takes the direct deposit, there is no problem. If the bank refuses, the IRS issues a check next Friday automatically. The client orders you, "I want my money to be deposited to this account" and signs. As long as that account is not yours, there is not a problem. Most of the time, people bring a piece of paper with routing number and account number and I enter that information and end of the conversation. Remember that it is their refund and they can do whatever they want with it.