What happens if my US refund goes to old bank?
If your US tax refund goes to a closed or old bank account, the bank will reject the direct deposit. The IRS will then typically issue a paper check and mail it to your last known address on file, which can cause delays.
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Understanding Refund Direct Deposit Issues
When the Internal Revenue Service (IRS) attempts to direct deposit your tax refund into a bank account that is closed or no longer active, the financial institution is legally obligated to reject the payment. This rejection signals to the IRS that the electronic transfer failed. Subsequently, the IRS will automatically initiate the process of issuing a paper check for your refund.
This conversion from direct deposit to paper check can significantly extend the time it takes to receive your money. While direct deposits typically process within 21 days, a paper check can take several additional weeks to be printed and mailed. It is crucial to ensure your banking information on file with the IRS is always current to avoid these types of delays and ensure a smooth refund process.
Potential Scenarios and Exceptions
The primary exception is if the 'old' bank account is still open, even if rarely used. In such cases, the direct deposit might clear successfully. If it was a joint account and one owner is still active, the bank might accept the deposit. However, for genuinely closed accounts, rejection by the bank and subsequent paper check issuance by the IRS is the standard procedure. It's rare for funds to be held indefinitely by a closed account's bank; they typically return the funds to the sender.
Steps to Resolve a Delayed Refund
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Utilize the IRS 'Where's My Refund?' tool online to check the status of your refund and see if a paper check has been issued. You will need your Social Security number, filing status, and exact refund amount.
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Contact your bank to confirm the direct deposit rejection and inquire if they have returned the funds to the IRS. Obtain any reference numbers for your records.
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Ensure your current mailing address is updated with the IRS to receive the eventual paper check. You can do this through your online IRS account or by filing Form 8822, Change of Address.
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Be patient and anticipate a delay. Once the direct deposit is rejected, the IRS will automatically mail a paper check to your address on record. There's usually no further action required on your part to initiate the paper check.
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Monitor your mail carefully for the arrival of your paper refund check. If an excessive amount of time passes and the 'Where's My Refund?' tool shows no update, you may need to contact the IRS directly.
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