What is a Split Refund?
Many people look forward to their tax refunds for a number of reasons. Maybe they have some bills to take care of. Perhaps they’re looking to boost their retirement plan with a bit of extra money. In many cases, they’re looking to do both.
Traditionally speaking, the taxpayer would have to wait until the refund came in the mail before they’d be able to deposit the money into a retirement plan, savings account, or other financial account. Although the process isn’t incredibly time consuming, for many it would be more convenient if they could split up their refund at the IRS level and send it in parts to different financial accounts.
For them, the IRS created the split refund option. That’s exactly what a split refund does for you. It allows you to split your refund into up to 3 parts. Those 3 parts can be deposited in three different types of accounts:
- Bank accounts (checking and savings)
- Individual retirement arrangement
- Health savings
- Treasury Direct Online account
- Savings Bonds
- Other forms of financial accounts
You can split your refund by filling out Form 8888 (Direct Deposit of Refund to More Than One Account) on the IRS website. If you’re filing electronically, look for the form in the options provided to you by your tax agency.
For accounts, all you need is a routing number, account number, how much you want put in, and an indication of what account it should be put in, i.e. checking or savings. For savings bonds, all you need is an amount, the name of the recipient, and/or a co-owner for the bond.
You can split your refund on an original return that was filed as any of the following:
- Form 1040
That’s all it takes. Split refunds are useful for directing your money without extra effort after taxes are filled. In many cases, it’s nice to just get it all out of the way in one fell swoop, and the IRS has made that possible.