Buzz
If you're expecting a tax refund, you likely have big plans for it. Ideally, you'll use it wisely: paying off debt or finally putting money into your emergency fund, for instance. Whatever you decide, remember: the IRS allows you to divide your refund among multiple accounts.
The Washington Post clarifies how this works:
To make this happen, simply fill out Form 8888, and the IRS will deposit your refund directly into up to three accounts of your choice. This means you don't have to put the entire refund—like the average $2,860 (according to the IRS in 2016)—into your checking account where it might be spent impulsively. Instead, you can direct part or all of it into a retirement fund, college savings, a health savings account, or even a brokerage account, just to name a few options.
As long as the account has a routing number and accepts direct deposits, you should be able to list it on Form 8888, which is available here. (Tax software should also provide this form option if you're filing online). However, note that only accounts you or your spouse own can be used. You can't send any portion of the refund to someone else, no matter the reason.
Just a reminder: a big tax refund isn’t necessarily a good thing. It usually means you’ve been overpaying on your taxes throughout the year. While it’s safer to overpay slightly to avoid penalties, if your refund is large, you might want to reconsider adjusting your W4 withholding.
In the meantime, TurboTax offers a helpful guide on how to complete Form 8888.
Keep this in mind: if there’s a delay with your tax refund, the IRS might not be able to split it as expected. In that case, they will deposit the full amount into the first account listed, so make sure you’re prepared for this when filling out the form.
