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February 23, 2009

Form 8888

Your Guide

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Definition

Form 8888, Direct Deposit of Refund, allows taxpayers to split their tax refunds in any proportion, and deposit the amounts into two or three different accounts with U.S. financial institutions such as a mutual fund company, brokerage firm, or credit union.

The account can be a checking, savings, or other account such as a traditional IRA, Roth IRA, SEP IRA ( as a regular IRA contribution- not as a SEP contribution), HSA,  Archer MSA, or ESA. The account cannot be a SIMPLE IRA.

The individual must notify the trustee/custodian (financial institution ) of the IRA, of the year to which the deposit is to be applied (unless the trustee will not accept carryback contributions). If the individual does not notify the financial institution, the financial institution   can assume the deposit is for the year during which they receive the deposit.

Individuals who designate their refunds as carryback contributions  must follow-up with the financial institution   to ensure that the deposit was actually made to the account by the tax filing due date. If the deposit is not made by that date, it is not a carryback contribution , and the individual  must file an amended return and reduce any IRA deduction and any retirement savings contributions credit that was claimed for the contribution

The deposit to each account must be at least one dollar.

An individual cannot request a deposit of a refund to an account that is not in his/her name, such as his/her tax preparer’s own account

Note: an individual cannot have his/her refund deposited into more than one account if he/she files Form 8379, Injured Spouse Allocation.

Referring Cite

Form 8888

Additional Helpful Information

  • Form 8888 can be filed electronically.
  • Authorized IRS e-file Providers must not charge a separate fee for Form 8888
  • Financial institutions must not charge separate fees for Direct Deposit of tax refunds
  • If you want your refund deposited into one account, you should use the special direct deposit lines on Forms 1040, 1040A, etc. If you want your refund deposited to two or three accounts, use Form 8888
  • You  cannot split you refund between a direct deposit and paper check. You can either opt for the safety, security and speed of direct deposit to one, two, or three different accounts or request a refund via a paper check, but you cannot combine the two.
  • You can split your tax refund whether you file electronically or on paper. However, IRS recommends using e-file to avoid simple mistakes that could change the amount of the refund, and therefore the amount available for deposit.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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