Don't Mess With Taxes

Photo by David Guerrero

It's early in the 2025 filing season, but millions of taxpayers have already received their tax refunds. Most of these early filers also instructed the Internal Revenue Service to directly deposit their tax cash.

Not only is direct deposit faster — in most cases, the IRS says refunds sent straight to financial accounts get there in 21 days or less — it’s a safer delivery method. You don’t have to worry about the U.S. Postal Service losing or misdelivering your Treasury check. Even better, it takes tax refund mailbox thieves out of the equation.

Some taxpayers, however, aren't eligible for this faster refund option. They don't have any financial account into which the IRS can electronically deposit their refunds.

Millions of under- and unbanked: In 2023, around 5.6 million households didn't have a checking or savings account at a bank or credit union. That represents or 4.2 percent of U.S. households, according to the latest Federal Deposit Insurance Company (FDIC) national survey.

However, there is a bit of good news. The number of these so-called unbanked individuals actually dropped a tad. The unbanked rate from the prior 2021 survey was 4.5 percent.

The FDIC also notes that between 2011, when the unbanked rate was at its highest level since the survey began in 2009, and 2023, the unbanked rate fell by almost half.

Similarly, unbanked rates among Black, Hispanic, and American Indian or Alaska Native households fell by about half. Still, unbanked rates among these households remained several times higher than the unbanked rate among White households.

Another thing that hasn't changed is the main reason for not having a bank account. The FDIC found that, as in previous years and among all unbanked households, the most-cited reason was, “Don’t have enough money to meet minimum balance requirements.”

And another nearly 19 million households, or 14.2 percent of U.S. households in 2023, were what is known as underbanked, according to the FDIC survey. These individuals have a checking or savings account, but tend to turn to alternative financial services.

The financial transaction alternatives include pawn shops, payday lenders, and private sector check cashing operations, which carry their own, often exorbitant, associated costs.

Options for unbanked: Still, there are some options if you want a bank account for, if nothing else, getting quicker access to your tax refund.

The FDIC's Get Banked program offers an online guide to opening an account at one of its insured banks.

The FDIC suggests you review this checklist before using its online search tool BankFind Suite. You also can check out the lists of banks that offer accounts that can be opened online from:

• Bank On
• American Bankers Association
• Independent Community Bankers of America

If you prefer a credit union, the National Credit Union Administration website has its own credit union locator tool. You can search for a credit union by address or name, then pick one (or more) from the results to view more information.

The info will include the credit union's charter number. Plug that into the Credit Union Locator's companion Research a Credit Union online tool for more specifics on that branch.

If you're a military veteran, check out the Veterans Benefits Banking Program (VBBP). This partnership between the U.S. Department of Veterans Affairs (VA) Veterans Benefits Administration (VBA) and Association of Military Banks of America (AMBA) helps veterans and their families find account options at participating banks and credit unions.

Mobile banking options: If you're all in on mobile, some financial apps and prepaid debit cards allow for direct deposit of tax refunds.

In order for the IRS to be able to deposit your refund, the apps must have routing and account numbers associated with them that can be entered on a tax return. Check with the mobile app provider or financial institution to confirm which numbers to use.

Whichever account route you choose, set it up before your file. That way, your account will be ready to accept your direct tax refund deposit.

You also might find these items of interest:

• RALs are still around, but be sure they're worth the cost
• 2025 early tax filings down from last year, but refund amounts up
• Another reason to e-file: Theft of snail-mailed tax refund checks is increasing

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