Oh no! I gave the IRS the wrong deposit info! What now?

What could be more upsetting than to realize your eagerly awaited tax refund might be directly deposited into someone else’s account? Or be floating around in the digital ether never to be seen again? 

Well, take some comfort in knowing you aren’t the first to have this happen. And that the IRS (even though it claims no responsibility for your error) does have remedies in place that can stave off a fiasco. As do many banks on the receiving end of these direct deposit gaffs.  

Which is not to say your problem is solved. You may still fall victim to misplaced funds. But at least you have a shot at averting a worst-case scenario with things that you, the IRS or your bank can do to help get that money where it rightfully belongs: in your account. 

We cover all of that here. So if you’re in this situation and just came across us, keep reading. You may find the solution you’re seeking. 

Or maybe it hasn’t happened to you, but you’re curious to know what to do if it does. Not a bad idea. 

What happens to my refund in this situation? 

Depending on the type of error you made, or its detection by the IRS, different things might occur. Here are some of the scenarios and solutions you may experience: 

• If you entered an incorrect account or routing number and the IRS’s validation check of your return catches the error, they’ll send you a paper check instead to your last reported address. It may take longer to get your refund, but you should be okay. 

• If the incorrect number slips through the validation check, the financial institution that receives the deposit might reject and return it to the IRS, who will then send a paper check. 

• If you mistakenly entered the account number of another person, and the financial institution accepted the deposit, you should contact the bank directly to recover your funds. If two weeks pass with no results, you can file Form 3911, Taxpayer Statement Regarding Refund to initiate a trace. Unfortunately, the banks are allowed 90 days from the initial date of the trace to respond, though it may take up to 120 days to resolve. 

• If the funds aren’t found or the bank refuses to return them to you, it then becomes a civil case between you, the bank and/or the owner of the account where the funds were deposited. 

Okay, but how do I prove the bank received the deposit? 

To determine if your refund was incorrectly sent to and deposited by the financial institution, you can use the Where’s My Refund tool.  

If it shows the IRS has marked your refund as deposited, you can use this as evidence in your claim against the bank. 

What if I make the same mistake on my state return? 

As you can imagine, every state has its own set of rules and resolutions for issues like this.  

If you put the wrong deposit information on your tax return, google the web address of your state taxing authority, where you may find the information you need, or how to contact their helpline to report the error. 

To avoid this mess in the first place… 

Obviously, check and double check you’ve entered the correct bank routing number and account number on your return.  

Also, in the event the IRS needs to send you a paper check, be sure your return displays your most current mailing address.  

The bottom line

All is not necessarily lost if you put the wrong direct deposit information on your tax return. Tracking down your refund may test your patience and take some time, but in most instances your funds will ultimately be returned. 

If you have any questions about this article, or any other tax or accounting needs to discuss, we’re always happy to help. Just click the button below to set up a free consultation: