Nowadays almost everybody files their Federal Tax Returns electronically.  The IRS has encouraged e-filing for many years now.  It’s a win-win because the IRS can process electronic returns very rapidly and the filer is happy to avoid the delay and uncertainty of snail mail.  Similarly, most people who are due a refund elect to have that refund directly deposited into their bank account rather than having a paper check mailed to them.

Beginning in January 2015, there will be new direct deposit limits that the tax refund folks should keep in mind.  The IRS is limiting the number of electronic / direct deposit refunds that can be deposited into a single account.  The magic number is three.  The reason the IRS is limiting directly deposited refunds to three per account is to hopefully curtain fraudulent refunds which tend to come flooding into a thief’s account one after another.

Two refunds deposited into the same account is probably fairly common: I am imagining a married couple who file separately but share a bank account.  A little odd maybe, but not suspicious either.  Three refunds deposited into the same account is somewhat less common, I am sure.  But some families with adult children may fall into this category.  The IRS has drawn the line at three because it is hard to imagine a scenario where there would be too many more than three people who would chose to receive separate refunds in the same bank account.

The IRS says that the fourth refund in a scenario such as this would be sent as a paper check, and those wishing to avoid this result would need to use a different account.