Do your clients split their refund into multiple deposits>

[kcjenkins]

Taxpayers are able to split their tax refunds between two to three different checking or savings accounts using Form 8888, Allocation of Refund (Including Savings Bond Purchases). However, TIGTA found that more than 65,300 bank accounts had multiple direct deposits, accounting for more than 949,000 refunds for approximately $1.6 billion.

TIGTA identified more than 4,400 bank accounts listed on tax preparers’ personal tax returns that had multiple direct deposits. More than 202,000 refunds for more than $309 million were sent to these bank accounts.

TIGTA also identified more than 200 bank accounts listed on IRS employees’ tax returns that had multiple direct deposits. More than 10,600 refunds for more than $14 million were sent to these bank accounts.

http://www.accountingtoday.com/news/Splitting-Tax-Refunds-Fraud-64668-1.html#Login

[JohnH]

I've never understood the logic behind splitting refunds between different bank accounts anyhow. If I don't have the financial acumen to have my refund sent to a single account and then transfer whatever amount I want to move into my savings account, etc, how is this going to help? Does the IRS have some magical ability to make me a better money manager by offering this option? Somebody help me out here in figuring out this wisdom of this split-refund nonsense.

I've always thought the split-refund option is a silly waste of resources, and of course it opens up the opprtunity of another avenue for abuse, either through simple misunderstanding or ignorance. They needed a study to figure this out?

[Catherine]

I can understand why some folks do this, JohnH.

Many banks charge annoying fees to transfer money. If I needed money to to go two places and I can get one transaction split at the source and thereby escape a fee, I'd go for it.

I certainly hope that those IRS employees who illicitly re-directed refunds to their own accounts were summarily fired, and that tax preparers guilty of same had their licenses yanked permanently. Then all should be prosecuted for theft.

[taxxcpa]

I read something that said that the splitting gimmick was used to enable fraud.

[Lion EA]

I have a couple of clients who fund their IRAs with their refunds, part of their refund going to that brokerage account and part going into their checking or savings account. I've had couples that are divorcing but decided to file MFJ that send their refunds to their separate bank accounts. I'm not fond of this form, as I have to read up on it everytime someone wants to use it due to the ordering rules if a refund is less (or even more) than expected. But it is the client's choice to use if it meets his needs.

[Jack from Ohio]

If my bank charged me to transfer funds between accounts in the same bank, I change banks. Problem solved. All the other "reasons" for the ability to deposit to multiple accounts are simply ways to shift the responsibility of what happens to the money to someone else.

I balance my checkbook. I learned to do that in 6th grade.

[Edward]

I have many spouses that have their own checking accounts and they like their refunds split 50/50 so this method comes in handy for them. No problem and I haven't heard anything about any fees they had to pay for using this method.

[Jack from Ohio]

I have many spouses that have their own checking accounts and they like their refunds split 50/50 so this method comes in handy for them. No problem and I haven't heard anything about any fees they had to pay for using this method.

Handy for them = you doing the work of dividing the deposits instead of them doing it. Do you charge additional for the extra work involved?

We/I only use the form if specifically asked.

[Lion EA]

I charge by the form, so yes it does cost them to use this method. But, it's usually cheaper then the fee their banks charge them to wire funds to their IRA at the last minute. And, it's always less stress than trusting a soon-to-be-ex to write a check. I don't push it on them, but if they ask me if it's possible, I explain it to them and let them choose what they want to do.

[JohnH]

I don't even mention the form to anybody. I think one or two have asked over the years and I just offered to give them the blank and let them fill it in & mail it themselves. Nobody ever took me up on that. I'm just not interested in getting involved in their personal bookkeeping. Guess I'm not very understanding about people's need to grow up & take some responsibilty for their finances.

I appreciate what others have said, but I still don't like it and am not going to do anything to encourage people to use it. The small benefit derived by a few isn't worth the larger issue of the potential for abuse or error. Too bad the iRS had to waste man-hours and some of our taxpayer funds figuring that out - I'd have gladly told them for free.

[Lion EA]

I think the treasury came up with the form as a way to sell savings bonds. Another social issue pushed into our laps!

[Pacun]

I have many spouses that have their own checking accounts and they like their refunds split 50/50 so this method comes in handy for them.

Poligamy is another big issue.

[JohnH]

Good catch Pacun. :)