Why you need to set up direct deposit with the IRS now — and correct errors, too

Today, Feb. 12, the IRS begins accepting and processing 2020 tax returns. Whether you submit your return now or wait until later in the tax-filing season, there’s one thing you should strongly consider: setting up direct deposit with the IRS when you file. There are benefits when it comes to receiving your tax refund and a future third stimulus check, if and when Congress approves another direct payment.

More than eight out of 10 taxpayers use direct deposit to get their tax refunds, according to Benefits.gov. In addition, the IRS and US Treasury sent out more than 100 million payments by direct deposit with the second stimulus check. Some people are even required by the US Treasury to use direct deposit to receive their money, such as Social Security beneficiaries.

We understand if you’re hesitant to share personal banking details with another entity, and there are two potential drawbacks that some may encounter — we’ll explain those below. Overall, you may find the benefits of setting up direct deposit with the IRS are compelling this year. There are also distinct benefits to filing your 2020 taxes earlier. We’ll tell you how to do it.

You can get your tax refund back weeks sooner

When you file your taxes, you usually have the option to add a bank account so you can receive your refund through direct deposit. “The best and fastest way to get your tax refund is to have it electronically deposited for free into your financial account,” the IRS says. You can have your money deposited in up to three different accounts if you’d like to split up your tax refund.

Read more: New child tax credit rules could give your family a check every month for a year

You can also expect a quicker refund if you combine direct deposit with electronic filing, rather than printing out and mailing in paper tax returns. In fact, the IRS expects nine out of 10 taxpayers will receive their refund within 21 days of when they file electronically with direct deposit, if there are no issues with their tax return.

You should also be aware that the IRS is asking taxpayers to avoid filing paper returns, if possible. Filing your return the old-school way could add to the processing delay the IRS is already experiencing as a result of a backlog of 6.9 million unprocessed paper returns from last year. Filing your tax return closer to the beginning of tax season rather than toward the deadline will also set you up to get your tax return faster — and any unpaid stimulus check money, too.

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You could also receive your next stimulus check faster

On the whole, people who had direct deposit set up with the IRS received their first and second stimulus checks much sooner than those who didn’t. Now that a proposed third stimulus check is on the table, you’ll want to get your direct deposit information set up as soon as possible. To do this, you’ll need to enter your banking information when you