Is it true that everyone that used turbotax are still waiting for the 2nd stimulus check because it went to the wrong account

Forum|Forum|5 years ago
January 5, 2021
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TurboTax Deluxe Online

Opus 17

No, only some people who used refund transfer to pay their tax preparation fees out of their refunds.

Turbotax NEVER receives a stimulus payment. The bank that Turbotax and most other tax preparers use might have received your deposit if the IRS screwed up.

If you used refund transfer to have your fees deducted from your refund, that means your refund was sent to Turbotax's bank SBTPG, to open a temporary account in your name, receive the refund, subtract the fees, forward the rest of the money to your regular account, and close the temporary account.

That means that the IRS never had your real banking info, just the temporary closed account. The IRS had a web site open through October where you could have updated your banking information.

The IRS should not have tried to make deposits into these closed accounts, because they know which banks provide this service. During round 1, when the IRS mistakenly sent stimulus payments to SBTPG, SPTBG tried to match them to their customers and forward the money. However for round 2, SBTPG has decided to bounce all payments back to the IRS.

So if you used refund transfer to pay your fees, and if you never updated the IRS with your banking information, the IRS should recognize this fact and mail you a check or debit card. If the IRS makes a mistake and tries to do a direct deposit, it will bounce, and the IRS would normally mail a check or debit card later, but it takes longer.

The new law says the IRS can only make payments until January 15. After that, if you don't receive a deposit, check or debit card, you can claim the rebate as a credit on your tax return and it will be added to your refund.

Refund transfer is a terrible product -- not only is it overpriced, but putting a bank you don't know in between you and the IRS is always a bad idea. In 2020, it turns out to be galactically bad.

eddie16

When you say have have your fees deducted- is this the case when using TT and select

the option to pay TT fees out of the refund?

Meaning if this was done TT’s bank actually received the funds and passed along to my bank?

Why was this not an issue with the first stimulus check?

Opus 17

Correct, if you have your TurboTax fees deducted from your refund, the only way to process that is to send your refund to a TurboTax banking partner. That is because the IRS will not split your refund with TurboTax or anyone else. Nearly all the consumer tax preparation companies use the same bank, in fact. That bank opens a temporary account in your name, subtracts the TurboTax fees and their service charge, forwards the rest of the money to your regular account, and closes the temporary account.

During the first round of the stimulus, that bank agreed to work with the IRS to re-open the temporary accounts, and forward the payments to the original customers, even though that was a violation of banking security laws. For the second round of the stimulus, the bank is refusing to process any stimulus payments and is bouncing them all back to the IRS. I don’t blame them, for various reasons, and in fact since the IRS knows exactly which customers used this process, the IRS never should have attempted to make the deposit in the first place and it is the IRS’s mistake that is ultimately responsible for this problem.

If the IRS had directly mailed checks or debit cards to affected customers as they were supposed to, the customers would probably have the checks in the mail before January 15. Customers for whom the IRS tried to make improper deposits, will probably not get their checks before the 15th and can claim the credit on their tax return.