Stimulus payments erroneously sent to closed or incorrect bank accounts by the IRS are being redirected, according to tax preparation companies affected by the mistake. Many taxpayers can expect to receive their economic impact payments starting Feb. 1.
Customers of tax prep companies including H&R Block, TurboTax, Jackson Hewitt, Liberty Tax, TaxAct and others were notified earlier this month that their stimulus deposits were sent to incorrect bank accounts. Though the IRS initially said taxpayers would need to wait to claim a Recovery Rebate Credit on their 2020 tax returns to receive their stimulus payment, the agency now says that it is working with the companies to "potentially get these payments to individuals as quickly as possible."
The IRS has not explained why or how the mistake happened, only saying that because it is required to issue payments by Jan. 15, "some payments may have been sent to an account that may be closed or, is no longer active, or unfamiliar."
Here's where different tax preparation companies affected by the IRS error stand now.
Direct deposits expected by this week
TurboTax and H&R Block customers initially affected by the mix up began receiving their payments in the correct accounts last week.
Additionally, a spokeswoman for Tax Slayer told CNBC Make It that "most people impacted by this specific error have received their stimulus checks by now," though "the IRS is still in the process of sending payments" for some.
Direct deposits expected Feb. 1, 2021
"Jackson Hewitt always fights for its clients and the situation of millions of taxpayers not having their second stimulus payment due to an IRS error was no exception," Jackson Hewitt said in a statement. "We considered this chain of events absolutely unacceptable."
TaxAct said it recommended other solutions to the IRS that could have gotten the payments to customers before February — including having a banking partner front the stimulus money now to be repaid by the IRS — but the agency "chose their own path that does not as quickly help the people most affected by the pandemic."
According to a TaxAct spokesman, the company returned all of the stimulus funds sent to incorrect bank accounts to the IRS, as required under the law, and is now waiting for the agency to resend the money.
"The situation that the IRS has created is unacceptable because it is hurting not just TaxAct customers, but millions of additional Americans that need stimulus funds," a spokesman told CNBC Make It.
Direct deposits expected at tax time
The IRS is still advising those who have not received their stimulus payments to file their 2020 tax return electronically and claim the Recovery Rebate Credit. That is the quickest way to get it if it is not automatically deposited.
Direct deposit status unclear
Liberty Tax customers have also been affected by the error. The company did not immediately respond to a request for comment Monday about the ongoing situation.
Paper checks and debit cards en route
The IRS is also currently mailing out millions of paper checks and approximately 8 million pre-paid debit cards to taxpayers.
Some people who received a paper check for the first round of stimulus payments may get a debit card for their second payment, and vice versa.
Check the IRS Get My Payment tool to see how you will receive your stimulus payment. If you are being sent a paper check or debit card, then the date listed on the tool is the day it was mailed. Keep in mind that the agency notes it could take three to four weeks to receive it.
Editor's note: This article has been updated with comment from TaxAct and Tax Slayer.
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