Tax Refund Direct Deposit - and more to watch for in the 2021 tax season
Getting your tax refund deposited straight into your bank account is a convenient method that a lot of people choose. What happens if you get the routing number or account number wrong? Here’s what you need to know as well as some new policies to watch for in tax year 2021.
Direct Deposit information -
If you have your refund deposited into a bank account from the IRS, and you have a different bank account from when you filed last year, then you need to make sure you put the correct routing number and account number into the system.
Having the wrong bank account information can lead to a delay in receiving your return and potential problems in the future. If the IRS attempts to deposit a refund with account information that doesn’t match the information at the bank, it will get rejected. This is to protect people from having money deposited in the wrong account. If it is rejected, the IRS will then issue a paper check, which will take longer to arrive.
Some realized this when the stimulus was sent out and part of the Child Tax Credit was distributed early. The IRS will use the same account information for any other programs they run in the future, which could complicate things if you give them the wrong account information.
At Southern Bank, you can confirm your account information within mobile and online banking or by checking your statements. Always make sure to double check that this information is correct.
If you do have personal information that needs to be changed, you can change it on the IRS’s website here.
What else to watch for –
A couple of things are different for tax year 2021. Here are a few prominent changes to look for when filing:
Child Tax Credit (CTC)
If you have children, then there are two things that could affect your refund this year.
- One major change that came in the past year is that the government began giving advanced payments of half of the CTC in July of 2021. This means that if you did not opt out of the advanced payments, you will be receiving half of the credit you are eligible for on your annual tax return. Keep in mind that this is a general statement, and that each individual situation could be different.
- The government has also increased the child tax credit to a maximum of $3,000 per child under 17 and $3,600 per child under 5. If you had a child in 2021, this could lead to a larger refund, depending on your situation. However, if you received half of your CTC in 2021, then you could see a decrease overall in the CTC you receive when filing.
Student Loan Forgiveness
If you had student loans forgiven in the past, you would have been surprised to find that it was still considered taxable income when you filed. That changed this year, which means if you had loans for postsecondary education forgiven in 2021, you will not be taxed on that amount. This is a policy change that came from the federal coronavirus relief stimulus passed in 2021. This policy is expected to continue through 2025.
Increased standard deductions
The standard deduction is a pre-determined deduction that the IRS releases each year that the average person can take instead of itemizing deductions, which requires tracking expenses keeping documentation to show expenses.
In 2021 the standard deduction took a slight bump. Here are the standard deductions for tax year 2021:
Single/Married filing separately - $12,550
Married Filing Jointly – 25,100
Head of Household - $18,800
If you want to check the status of your refund after you have filed, you can go to https://www.irs.gov/refunds, and click Check My Refund Status.