Why Is the IRS Sending Me a Check Instead of Direct Deposit?

Receiving a check from the IRS instead of an expected direct deposit can confuse taxpayers. This change in payment method can occur for several reasons, each influencing how and when refunds are received.

Incorrect Bank Information

One common reason for receiving a check instead of a direct deposit is providing incorrect bank information on the tax return. Errors in account or routing numbers, or closing a bank account without notifying the IRS, can result in failed transactions. In such cases, the IRS issues a paper check. Taxpayers should ensure their bank details are accurate before submitting returns to avoid delays. Using IRS Form 8888 to specify direct deposit details requires careful attention, as mistakes can disrupt the refund process. If banking information changes after filing, taxpayers must update the IRS since banking details do not automatically carry over from prior years.

IRS Review or Error Correction

The IRS may send a check if a tax return is under review or requires corrections. These reviews verify deductions, credits, or income declarations for accuracy and compliance. Discrepancies, such as mismatches between reported information and third-party data like employer records, can lead to delays. Taxpayers may receive notices, such as the CP05, requesting additional documentation to resolve the issue. Until the review is complete, refunds are withheld to prevent errors, potentially extending processing times.

Offsets Applied to Other Debts

Offsets applied to outstanding debts can also result in receiving a check instead of a direct deposit. Under the Treasury Offset Program, federal and state agencies can collect overdue debts, such as unpaid child support, federal student loans, or state taxes, by reducing tax refunds. The IRS adjusts the refund amount and issues a paper check for any remaining balance. Taxpayers are notified of these deductions, including details about the original refund amount, the offset, and the agency responsible for the debt. Awareness of this process helps taxpayers anticipate possible offsets.

Chosen Filing Approach

The method of filing a tax return affects whether a refund is issued via direct deposit or check. Paper returns often involve longer processing times, increasing the likelihood of receiving a check. The IRS encourages electronic filing for its speed and accuracy. E-filed returns are processed faster, with fewer errors, ensuring direct deposit details are accurately captured. Taxpayers who e-file and opt for direct deposit typically receive refunds within 21 days, compared to six to eight weeks for paper filers.

Additional Identification Requests

The IRS may issue a paper check instead of a direct deposit when additional identity verification is required. This safeguard often arises when potential identity theft or fraudulent activity is detected. In such cases, the IRS may place a hold on direct deposits and issue a physical check until the rightful recipient is confirmed. Taxpayers might receive notices, such as Letter 5071C, requesting identity verification through the IRS Identity Verification Service or by contacting the agency directly. First-time filers or those making significant changes to their returns, like altering filing status or claiming new dependents, may also encounter this process. Promptly responding to IRS correspondence and ensuring accurate returns can help minimize delays.