13314: Banking Refund Disbursement Options

In Drake Tax, you can deliver a refund to a taxpayer from these sources using software options:

• From a banking partner of Drake Tax, for a Federal refund, or for both a Federal and state refund.
• From the IRS, for a Federal refund.
• From a state department of revenue (DOR), for a state refund.

Drake Software banking partner options

Drake partners with several banks to offer bank products. Drake banking partners include:

• EPS Financial
• Tax Products Group
• Refund Advantage
• Refundo
• Republic

Bank products must be selected in data entry and all forms signed by the taxpayer(s) before the return is transmitted. You cannot stop or retrieve a return that has been transmitted. Bank products cannot be used on amended returns.

Available bank product refund options include these disbursement methods, summarized in the chart below:

• Paper check printed in the tax preparer’s office (or on the bank's website, in some cases)
• Direct deposit into the taxpayer’s bank account. Refunds from a bank product can be deposited into a single checking or saving account only. There is no option to deposit the bank product into multiple accounts at this time.
• A pre-paid debit card that is funded when the IRS or a state deposits the refund

Note:

• Only one type of bank product can be used on a federal or state return. For example, neither federal nor state refund can be split between a bank product direct deposit and a bank product check.
• A refund cannot be split between an IRS or state disbursement and a bank product. For example, neither federal nor state refund can be split between an IRS or DOR check and a bank product check.
• When a federal bank product is on a return, either a state disbursement option or a bank product option can be used for a state refund.
• State bank products are not available in states without a state income tax.
• Generally, you cannot paper-file a return with a bank product; see "Search EF Database, Common Acks, and Rejection Codes" in Related Links for details. You cannot elect to paper-file a return with bank product information included unless the return is first rejected through the e-file database and it cannot be corrected.  

Federal and state disbursement options

Available IRS or state DOR disbursement options include:

• Paper check mailed directly to the taxpayer’s mailing address
• Direct deposit in the taxpayer’s checking or savings bank account(s)
  • The IRS permits
    • direct deposit into up to three bank accounts
    • use of all or part of a federal refund to purchase savings bonds for one or two beneficiaries (with Form 8888)
  • Some states allow direct deposit for residents or part year residents only:
    • Alabama (resident only)
    • District of Columbia (resident/part-year resident only)
  • Most states allow direct deposit into only one account. Only a few allow direct deposit into multiple accounts. States with a multi-account option include:
    • California
    • Maryland
    • Ohio
  • Hawaii does not allow direct deposit for first-time filers.
• Pre-paid debit card. Some states offer this refund option. These states include:
  • Alabama
  • Connecticut
  • District of Columbia
  • Georgia
  • South Carolina
  • Virginia