Posted by William Charles on January 12, 2017
Tips

Published on January 12th, 2017 | by William Charles

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How To Split Your Tax Refund Into Multiple Accounts For Triggering Bank Bonuses & Other Purposes

Reposting this since it’s tax time again. Another good use of this is for meeting bank account bonuses direct deposit requirement, government payments always qualify.

Every year different financial institutions offer you bonuses for depositing your tax refunds into their accounts. Some tax software will also offer you a 5-10% bonus if you use your refund to purchase gift cards instead of receiving it as cash.

I’ve always thought that you’d only be able to get one of these bonuses, but it’s actually possible to split your tax refund into multiple accounts. I was made aware of this by reader, Jackalope. Splitting your refund into multiple accounts is pretty easy, all you need to do is fill out and file form 8888. The IRS even reminded taxpayers about this feature recently.

form 8888

You are still somewhat limited though, you cannot split your tax refund into more than three accounts. If anybody knows of a work around to split it into more than three accounts, let us know in the comments.

If you know of any companies offering bonuses, please let me know in the comments section below or contact me directly.

 



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Jackalope
Jackalope

It looks like TurboTax includes the ability to file From 8888:

https://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Forms/Guide-to-IRS-Form-8888–Direct-Deposit-of-Your-Tax-Refund-in-Multiple-Funds/INF19453.html

Also, H&R Block Tax Software launched a program similar to TurboTax and amazon which offers up to a 10% bonus when you apply your direct deposit to a number of different gift card purchases:

https://www.hrblock.com/lp/refund-bonus/terms-and-conditions.html

the Financial Hippie

H&R Block also looks to offer Form 8888 if anyone’s interested

https://www.hrblock.com/taxes/doing_my_taxes/products/popup/diy_6.html

trackback

[…] If you’re lucky enough to receive a refund this year, you can receive a $20 credit for having your refund deposited into your Serve or REDCard account. T-Mobile Money apparently has a similar offer. The Serve/REDCard appears to be a targeted offer, so check your email. You can only deposit your refund into an account with your name on it. Doctor of Credit has a series of posts on this topic, including how to split your refund among multiple accounts. […]

trackback

[…] How To Split Your Tax Refund Into Multiple Accounts (Doctor of Credit). […]

jason
jason

Can I dd my parents’ tax refund into my bank account?

DrRyan_L
DrRyan_L

I have done this without any problem before with federal. They had to submit verification for the state return to go through though.

Abey
Abey

This is a very good post
Never thought about this
Thanks you guys.

James
James

I guess most readers are self employed if they’re splitting their tax refunds. Most employers already allow this with direct deposit.

projectx
projectx

Or in my case, your HR/Payroll process is in the stoneages, where you have to manually fill out a form to have HR change your DD.

Justincase
Justincase

DP: I tried to use my federal tax refund ACH to trigger the Chase Total Checking DD bonus last year, and even after being told by the banker that it would count as a DD and the refund posted to the account, Chase did not post the bonus. Several calls to the debit card and checking account CSRs only got me waived fees for 6 or 7 months. YMMV

MJG
MJG

This is the gold I come here for. Amazing tip.

FYI, my situation is one where this is very useful. I can change my DD at work of course, but my wife doesn’t have W2 income and I don’t think my DD from work would count if I tried to put it into accounts in her name. So I’ve only been getting her bonuses that don’t require DD. But if this counts as DD I can get her 3 bonuses that do require DD in one go. Thinking of overpaying my taxes with her CSR to meet min spend and to increase the amount of my refund, then getting her Santander, PNC $5K+ $300 bonus, and one more come refund time.

James
James

Why not just open a joint account for the bonus? Or do you open both a joint and individual account to trigger multiple bonus?

Dan
Dan

Have you tried depositing from work into her account? Most of the time all I enter are routing number and account number. Does your work specify that the account has to be in your name?

MJG
MJG

I suppose I could try opening a solo account for me, getting bonus, then getting a joint account with wife, then doing DD into that for second bonus. I wonder if that would prevent the second bonus from paying out, though, since I would already be in the system as a previous account owner. Not sure if anyone has DP on that with any banks.

I think it’s possible I could change work DD to my wife’s accounts, but in general I’ve heard DP of this being rejected (in general, not at my company specifically). I would ask directly of course but my company works with a local accounting place that I don’t really trust to know what their own system will do, and there’s a fee for bouncing a DD. My be worth it to try at some point.

Glt
Glt

Worked for me for chase.

Charles
Charles

Not sure if it’s true, but the HSBC rep told us when my wife opened her account with them that DD from my employer would be treated as an incoming wire with a $15 fee. I’ve never had a problem with this at other banks, and I didn’t actually test it at HSBC.

Master Allan
Master Allan

In past tax years this has worked perfectly for me. Justincase – I applied one of my split refunds to Chase and it worked fine as refund & bonus in 4/2016. Other banks too. Years ago my personal finance advice regarding taxes was to try for a 0/0 owned/refund. Today I’m thrilled about a large refund due to a 2016 renewable energy credit which I will turn into a bigger bonus from banks.

Jackalope
Jackalope

Thanks for the HT!

In case this helps anyone this year(by giving them ideas), here is what I am doing to maximize this.

1. Converted an IRA to a Roth and am overpaying estimated taxes by 1-15-2017 to ensure a big refund. The IRS will only have my overpayment for about 3 or so Months (see #4 below)
2. Waited to get Chase Sapphire Reserve ($4,000 spend) and just got it on Jan 6th.
3. Going to open at least two checking accounts in the next month or two that allow for funding a high value with a credit card (this will help with the $4,000 CSR spend ) and require a Direct Deposit to trigger a good value bonus.
4. File Taxes in late Feb / Early March and use this direct deposit feature to trigger the bonus for the checking accounts.

lingua
lingua

Is it still possible to overpay taxes for 2016? Asides from decreasing allowances (for next year) how would that be done using a CC as previously mentioned?

Lrdx
Lrdx

You can still send estimated taxes for Q4 for a few days, and you can file Form 4868 to pay your taxes before April 15, but sending the actual return later (up to Oct 15). You can pay any amount of extra tax with Form 4868 (and pay that with a CC), you will get it returned when you actually do your 1040.

Michelle
Michelle

Good info – Thanks!!

Curmudgeon
Curmudgeon

If you are getting a state tax refund also, you can direct the state refund into a different account than the Federal. I’m sure it varies by state if splitting is allowed, but at the minimum you could split up to 4 total accounts (3 Federal, 1 state).

Lrdx
Lrdx

While at it, you can also use Form 8888 to buy I bonds. If you are in a high state / local tax area (CA, NYC, etc.), they are highly competitive with any deposit accounts. The rate is tied to inflation, and adjusted every 6 months. Two caveats that you can’t redeem them for 12 months, and before 5 years there is 3 months’ of yield EWP. The current yield is 2.76%, and not taxable by state / local govt, so if you have a 10% state / local tax, it is equal to 3.07%. Even if the next rate drops to 0% (it’s possible, currently the inflation is -0.03% since September..), it will have a 1 year effective yield of 1.53%, still better than any 1Y CD out there.

Every year one is limited to buy $10k of I bonds per SSN (you + spouse + kids..) through TreasuryDirect, and another $5k through Form 8888 refunds (married filing jointly is also $5k).

Tortoisehsell
Tortoisehsell

Thank you, I saw the offer to buy bonds but had no idea whether it made sense or not. This is really helpful info.

Mark
Mark

Does anyone know if “Credit Karma tax” does form 8888?
I am planning to use “Credit Karma” for my tax return this year.

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