Don't Mess With Taxes

If you got a refund from the Internal Revenue Service, you probably filed your 1040 many weeks or months ago.

The same is true for folks in the 43 states and the District of Columbia that collect some sort of income tax (mostly on wages, but on some investment income in Tennessee and New Hampshire).

But the way that state tax offices deal with refunds is starting to look decidedly different from the federal process.

This year, refund recipients in at least five states are getting their state tax cash back in the form of a debit card.

That's right. It didn't work for the U.S. Treasury, but tax officials in New York (its tax refund MasterCard from Bank of America was blogged about here back in January), Georgia, Louisiana, Oklahoma and South Carolina are betting that they can pull off plastic tax refunds.

Like the ill-fated federal debit card tax refund program, the states' efforts are designed for folks without a bank account into which a refund could be directly deposited.

There's also a budgetary component. Delivering refunds this way means states don't have to spend time printing and mailing paper checks.

Georgia's tax refund debit card carries the Visa brand. It's issued by Bank of America.

South Carolina's tax refund debit card also is a Visa, also issued by Bank of America.

Louisiana's My Refund debit card is a Visa, but is from Chase.

Oklahoma's Way2Go tax refund debit card is a MasterCard administered by ACS and issued by Comerica Bank.

Pushing aside paper: While the states are encouraging taxpayers to get their refunds by plastic, only Oklahoma is requiring refund recipients to use plastic.

Louisiana automatically sends refund recipients a card and those who insist on a paper check must request one from the Department of Revenue before activating the card.

The other states offer the debit card as a refund option taxpayers can choose when they file their returns.

Read the fine print: As with any piece of purchasing plastic, you need to read the fine print.

Some transactions with the cards are free. Others aren't.

And while it probably won't be an issue, the cards also have expiration dates.

But these are good examples of the types of issues you need to pay attention to when you use a debit (or credit) card, regardless of whether it's a straight consumer piece of plastic or one from your state's tax office.

Other state debit cards? Did I miss any states that are issuing refunds via debit cards? Let me know and I'll add them to this post.

Do you have your refunds, state and federal, directly deposited? If your state offered a refund debit card, would you switch to that method?

You also might find these items of interest:

• Direct deposit to replace U.S. checks
• The IRS' electronic future
• 4 ways to receive your federal tax refund