The Pros and Cons of Different Tax Refund Disbursement Options

Regarding receiving a tax refund, the IRS offers several disbursement options, each with advantages and drawbacks. The method you choose can affect how quickly you receive your refund, the security of the transaction, and overall convenience. Let’s compare the primary techniques for receiving a tax refund: direct deposit, paper checks, and loading onto a prepaid card.

Direct Deposit

Pros:

• Speed: Direct deposit is the fastest way to receive your tax refund. The IRS states that nine out of ten direct deposit refunds are issued within 21 days of the e-filed return being accepted.
• Security: Direct deposit reduces the risk of a refund check being lost, stolen, or delivered to the wrong address. The money goes directly into your bank account.
• Convenience: Once set up, the process is automatic. You don’t need to visit a bank to deposit your refund check.
• Environmentally Friendly: Opting for direct deposit is more environmentally friendly than receiving a paper check.

Cons:

• Bank Account Required: You need a bank account, which might be a barrier for some taxpayers.
• Accuracy of Bank Details: Entering incorrect bank account information can delay your refund significantly or send it to the wrong account.

Paper Checks