Why is it Useful to Have Your Bank Account and Routing Numbers When Using Tax Preparation Software?

Tax preparation software is a convenient and efficient way to file your taxes online. However, to make the most of this service, you need to have your bank account and routing numbers ready. These numbers are essential for various purposes, such as receiving your tax refund, paying your tax bill, verifying your identity, and importing your financial data. In this article, we will explain why it is useful to have your bank account and routing numbers when using tax preparation software, and how to find them.

Receiving Your Tax Refund

One of the main benefits of having your bank account and routing numbers when using tax preparation software is that you can opt for direct deposit of your tax refund. Direct deposit is the fastest and safest way to get your money back from the IRS. According to the IRS, most taxpayers who choose direct deposit receive their refunds within 21 days of filing their returns, compared to six to eight weeks for those who request a paper check.

Direct deposit also reduces the risk of your refund getting lost, stolen, or delayed in the mail. Additionally, direct deposit allows you to split your refund among up to three different accounts, such as checking, savings, or retirement accounts. This can help you manage your finances and save for your goals.

To set up direct deposit, you need to provide your bank account and routing numbers to the tax preparation software. These numbers are usually found on the bottom of your checks, or on your bank statements or online banking portal. You can also contact your bank to get these numbers.

Paying Your Tax Bill

Another reason to have your bank account and routing numbers when using tax preparation software is that you can use them to pay your tax bill electronically. Electronic payment is a convenient and secure way to pay your taxes, as you can avoid writing checks, mailing envelopes, or visiting a tax office. You can also schedule your payment in advance, or choose to pay in installments if you qualify.

There are several options for electronic payment, such as:

• Electronic Funds Withdrawal (EFW): This is a free service that allows you to authorize the IRS to withdraw the funds directly from your bank account. You can use this option when you e-file your return through the tax preparation software, or when you use the IRS Free File or Fillable Forms programs.
• Direct Pay: This is a free service that allows you to pay your taxes online from your checking or savings account. You can use this option through the IRS website or the IRS2Go mobile app. You will need to provide your bank account and routing numbers, as well as your Social Security number or Individual Taxpayer Identification Number (ITIN).
• Electronic Federal Tax Payment System (EFTPS): This is a free service that allows you to pay your taxes online or by phone. You need to enroll in this service and create a PIN and password. You can use this option to pay your individual or business taxes, and you can schedule your payments up to a year in advance.

Verifying Your Identity

A third advantage of having your bank account and routing numbers when using tax preparation software is that you can use them to verify your identity with the IRS. Identity verification is a security measure that the IRS uses to prevent identity theft and fraud. When you e-file your return, the IRS may ask you to verify your identity by providing information from your previous year’s tax return, such as your adjusted gross income (AGI) or your self-select PIN.

However, if you do not have access to this information, or if the IRS cannot verify it, you may need to provide your bank account and routing numbers instead. The IRS will use these numbers to match them with your bank records and confirm your identity. This will allow you to proceed with your e-filing and avoid any delays or rejections.

Importing Your Financial Data

A fourth benefit of having your bank account and routing numbers when using tax preparation software is that you can use them to import your financial data into the software. Many tax preparation software programs can connect to your bank account using these numbers, which makes importing your income, expenses, deductions, and credits much easier. This can save you time and effort, as well as reduce the chance of errors and omissions.

By importing your financial data, you can also ensure that your tax return is accurate and complete. You can avoid missing out on any tax breaks or reporting any incorrect amounts. You can also compare your data with the information that the IRS receives from your employers, banks, and other sources, and resolve any discrepancies or issues.

Conclusion

Having your bank account and routing numbers when using tax preparation software is useful for several reasons. You can use these numbers to:

• Receive your tax refund faster and safer through direct deposit.
• Pay your tax bill easily and securely through electronic payment.
• Verify your identity with the IRS and avoid any e-filing problems.
• Import your financial data into the software and ensure accuracy and completeness.

To find your bank account and routing numbers, you can check your checks, bank statements, online banking portal, or contact your bank. You should also make sure that you use a reputable and secure tax preparation software that protects your personal and financial information. By doing so, you can enjoy a smooth and hassle-free tax filing experience.