Direct Deposit of Refund

[S T]

Does anyone know if a direct deposit for a married joint return can be directed into a business account??

Somehow I think not, and if the bank is doing their due diligence, will bounce it.

Sandy

[FEDUKE404]

Just think flubber!

My guess is it will bounce like a very large rubber ball.

BTW: What general area of NC??

FE

[S T]

Thanks

That is what I advised the client, so waiting for a personal account.

FE, we relocated from So Calif to Clayton, NC

Sandy

[thomtax]

Question

I guess that my question to you is since you are providing a routing number and account number, how does anyone know what name the account is in? I'm not saying that it is correct procedure, but do not think they can know.

As far as the bank is concerned, how many of them actually pay any attention. I have seen them process checks with no signature, etc. I had a friend that ran the operations section of a bank and he said that it would scare you if you knew how banks really operated behind the scenes.

[JCH]

It can be done. I noticed this the other day with one of my clients. She had her 1040 refund direct deposited into her S-corp checking account. IRS doesn't care, they're just looking for a routing and account number.

[fliszt]

Sandy,

a couple years ago I had a direct deposit bounce because it was not a "joint" account. How do they know? I don't know. So I suppose if your client MFJ and the business account has both signatures on it, it'll go thru. Otherwise . . . .?
Larry

[S T]

Business Account

Business Account, is a partnership account, with the other partner (not spouse) on the account.

This taxpayer is also going through a divorce, so I am thinking either a paper check or a direct deposit into the Joint account.

Sandy

[fliszt]

I agree

with your decision. (not that it matters)
Larry

[Burke]

Does anyone know if a direct deposit for a married joint return can be directed into a business account??

Somehow I think not, and if the bank is doing their due diligence, will bounce it.

Sandy

Trust me, it can be done and has been. And it wasn't even a related party. All they go by is the RTN and Acct #. If its wrong, and there is such an account by that number it will go right into it.

[Gretel]

I agree, the IRS doesn't care. They are not the ones who accept or decline checks. The problem and/or solutions lies with the bank involved. More and more banks (their employees) don't care either, often not even with checks and required signatures.

[Jesse]

a couple years ago I had a direct deposit bounce because it was not a "joint" account. How do they know? I don't know. So I suppose if your client MFJ and the business account has both signatures on it, it'll go thru. Otherwise . . . .?
Larry

I just talked w/ one bank employee and he said the bank really doesn't have a way of checking all of these deposits if numbers on return are correct. This particular bank has a 0 as a first # and 00 as the last 2 ##'s for most of the savings accounts, therefore, if these are not in place it "nonposts" and have to be set up for redeposit manually. This is where they need to check account #'s w/ names and if both names are not on the account they refuse the deposit or if it is a child's return that is set up to go into Mom or Dad's account it is also sent back if childs name is not on the account.

But I thought from long ago when the direct deposit first came about BOTH names had to be on the account as far as the IRS is concerned and this is what I always did and still do tell my clients, however other preparers in our area say it is up to the discretion of the bank.

[ChEAr$]

Still though

It can be done. I noticed this the other day with one of my clients. She had her 1040 refund direct deposited into her S-corp checking account. IRS doesn't care, they're just looking for a routing and account number.

that's improper. A corporation is a separate person under the law, and direct deposits may
only go into accounts of taxpayer, spouse, or joint on a joint return.

[ChEAr$]

It's not the IRS

I agree, the IRS doesn't care. They are not the ones who accept or decline checks. The problem and/or solutions lies with the bank involved. More and more banks (their employees) don't care either, often not even with checks and required signatures.

in the first place; it's department of treasury that issues checks.

However.... no one up there has the means to ensure that deposits are only made into
authorized accounts.

[JCH]

that's improper. A corporation is a separate person under the law, and direct deposits may
only go into accounts of taxpayer, spouse, or joint on a joint return.

No kidding, but I'll let you explain that to my client. If you reread the original question she asked if it could be done -- yes, it can be done.

[S T]

I have already advised

Due to the circumstances of a pending separation and divorce, and the fact that the business account is in the name of the husband and partner, I have advised the client that it SHOULD NOT be done, and that it might be possible the bank will not make the deposit.

So I suggested that he supply a joint checking account with the soon to be ex spouse or in lieu of that receive a paper check.

Thanks everyone for your thoughts!

Sandy