Why is it useful to have your bank account and routing numbers when using tax preparation software?

Why is it useful to have your bank account and routing numbers when using tax preparation software?

A. To indicate where tax refunds should be sent.

B. To show how much interest you have earned over the year.

C. To use as additional forms of identification.

D. To show much money you have paid in taxes.

Answer: A. To indicate where tax refunds should be sent.

While entering data into the tax preparation software, as a rule, it is helpful to input your bank account and routing numbers mainly in terms of identification of where your tax refund should be issued if you are eligible. The method referred to as direct deposit has the following benefits over accepting a check in the mail. First of all, it provides clear advantages, such as being much quicker than the regular search. Although the paper refund cheques can easily take several weeks to arrive through post, the direct deposits can take only a few days after the IRS approves your return. For instance, should you file your taxes on the first of February and expect a refund of a thousand dollars you will have it by mid-February should you use direct deposit.

Also, direct deposit cannot be lost, stolen, or delayed as compared to paper checks that are sometimes issued to employees. It is also way easier, for example, a person does not have to leave his or her home or office to deposit a check. The tax software then employs an electronic transfer to set up this transaction, which is secured via your account and routing numbers. All the same, it is important to point out that these numbers are only usable for crediting; the IRS cannot debit from your account using this information. Some tax software also gives you an option you distribute the amount of the refund to different accounts or even buy saving bonds with the refund, this requires banking details for the software to work well.