Why Is It Useful To Have Your Bank Account And Routing Numbers When Using Tax Preparation Software?

Using tax preparation software to file your taxes can be a more efficient and organized way to manage your tax responsibilities. 

When using such software, having your bank account and routing numbers is useful for:

• Direct Deposit for Refunds: If you are entitled to a tax refund, entering your bank account and routing numbers allows you to receive your refund directly into your bank account. This method is usually faster than receiving a paper check in the mail. Direct deposit is also more secure as there’s less risk of a check being lost or stolen.
• Payment of Taxes Owed: If you owe money to the IRS or your state tax agency, many tax preparation software solutions allow you to make direct electronic payments. To do this, you’d need your bank account and routing numbers to draft the payment directly from your account. This can be more convenient than mailing a check, and you can typically receive a confirmation that your payment has been received.
• Electronic Filing Verification: Some tax agencies require bank account or routing numbers as a method of verifying your identity when electronically filing your tax return. This is an additional measure to ensure the security and integrity of electronic tax filing.
• Automatic Savings or Investment: Some advanced tax preparation software might offer options to automatically allocate portions of your refund to savings or investment accounts. Having your bank account and routing numbers ready can facilitate this process.
• Avoid Errors: Manual processes, such as writing checks or transcribing bank details, are prone to errors. By using your bank account and routing numbers directly within tax preparation software, you minimize the chances of making a mistake.
• Record Keeping: Using electronic methods for both payment and receipt of funds makes it easier to maintain accurate and timely financial records. You’ll have a clear digital trail of all transactions related to your taxes.