Your bank returned your refund — here's what happens next
When the IRS sends your tax refund to your bank account and the bank rejects it, the money goes back to the IRS, not to you. The IRS then has to reissue the refund, which adds weeks or months to when you receive it. The most common reasons a bank returns a refund are a closed account, an account number that doesn't match IRS records, or a routing number error on your tax return.
The good news is that your refund is not lost — it will eventually reach you. But you need to take action to tell the IRS where to send it next time, or the same rejection will happen again.
Key Takeaways
- A returned refund goes back to the IRS automatically; you do not lose the money, but you must wait for it to be reissued.
- The IRS will mail you a notice explaining why the bank rejected the refund, usually within two to four weeks of the rejection.
- You can check the status of a returned refund using the IRS "Where's My Refund?" tool on IRS.gov by entering your Social Security number, filing status, and refund amount.
- To prevent this from happening again, verify your bank account number and routing number before you file, and update your information with the IRS if your account has changed.
Why banks return tax refunds
A bank rejects a refund deposit when the account information on your tax return does not match what the bank has on file. This can happen for several reasons. The most common is that you closed the account after filing but before the IRS processed the refund. If you filed in February and closed the account in March, the IRS may not process your return until April or May — by which time the account no longer exists.
A second reason is a typo in your account number or routing number when you entered it on your return. Even one digit wrong will cause the bank to reject the deposit. A third reason is that the account was frozen or flagged by the bank for fraud or compliance reasons, and the bank refused the incoming deposit. Less commonly, the account holder's name on the bank records does not match the name on the tax return — for instance, if you changed your name but did not update your bank account.
You cannot prevent all of these, but you can prevent most of them by double-checking your account and routing numbers before you file, and by keeping the account open until you receive your refund.
How to find out your refund was returned
The IRS does not call or email you to say your refund was rejected. Instead, you will receive a paper notice in the mail, usually within two to four weeks of the bank's rejection. The notice will explain why the bank returned the refund and what to do next. Read it carefully, because the next steps depend on the reason for the return.
If you do not want to wait for the notice, you can check the status yourself using the IRS "Where's My Refund?" tool on IRS.gov. Enter your Social Security number, filing status (single, married filing jointly, etc.), and the exact refund amount from your return. The tool will tell you if your refund was rejected and, in some cases, why. You can check this tool once a day.
What the IRS does after a bank returns your refund
Once the bank sends the refund back, the IRS credits the money back to its account and marks your return as having a delivery problem. The IRS then waits for you to provide corrected banking information or to request an alternative delivery method. During this time, your refund is held by the IRS — it is not earning interest, and the IRS is not charging you for the delay.
The IRS will not automatically resend the refund to a different account or method. You have to tell them where to send it. If you do not respond to the notice within a certain time frame (usually several months), the IRS may eventually issue you a check by mail instead, but this can take much longer than if you act quickly.
How to provide corrected bank information
The notice you receive from the IRS will include instructions for updating your information. In most cases, you have two options: mail back a signed form, or update your information online through the IRS website.
If you are mailing a response, the notice will tell you which form to use and where to send it. Read the notice carefully to make sure you use the right form — different situations require different forms. Include a copy of the notice itself, your Social Security number, and your corrected account and routing numbers. Sign and date the form, and mail it to the address on the notice.
If you prefer to update online, visit IRS.gov and look for the option to update your banking information for a returned refund. You will need your Social Security number, filing status, and the refund amount. The online method is usually faster than mailing, and you will receive confirmation when ready.
How long it takes to receive your refund after correction
Once you submit corrected information, the IRS typically reissues your refund within two to four weeks. The refund will then go to your bank using the new account information you provided. The bank will process it like any other incoming deposit, which usually takes one to three business days to appear in your account.
In total, from the time the bank first rejected your refund to the time you receive it in the corrected account, you should expect four to eight weeks. This is longer than a normal refund, which is why it is important to verify your banking information before you file.
Alternatives if you cannot use direct deposit
If you do not have a bank account, or if you want to avoid the risk of another rejection, you can ask the IRS to send your refund by check instead. When you respond to the IRS notice, you can request a check rather than direct deposit. The IRS will mail the check to the address on file with your return.
A check refund takes longer than direct deposit — usually four to six weeks from the time you request it — but it avoids the problem of a bank rejecting the deposit. Once you receive the check, you can deposit it yourself at your bank, a check-cashing service, or a retail store that cashes checks. You control the timing and the account it goes into.
How to prevent this from happening again
Before you file your next return, verify your bank account number and routing number. Your account number is usually on the bottom right of your checks, and your routing number is on the bottom left. You can also call your bank or log into your online banking to confirm both numbers.
Enter these numbers carefully on your return — one digit wrong will cause a rejection. If you change banks or close an account, do not file your return until you have opened a new account and verified the new numbers. If you are unsure about your numbers, it is safer to request a check refund instead of direct deposit.
If you filed your return and then realized you made a mistake with your account information, contact your bank or the IRS as soon as possible. The sooner you correct it, the sooner the IRS can reissue your refund.
Frequently Asked Questions
Will I lose my refund if the bank returns it?
No. The money goes back to the IRS, not to a third party. You will receive your refund once you provide corrected information or request an alternative method like a check. The delay is frustrating, but the refund itself is safe.
Can I call the IRS to speed up the reissue?
You can call the IRS, but they cannot speed up the reissue process. The fastest way to get your refund is to respond to the notice you receive in the mail as soon as possible with corrected banking information or a request for a check. Submitting your response online is usually faster than mailing it.
What if I never received the notice from the IRS?
Check the "Where's My Refund?" tool on IRS.gov to see if your refund was returned. If it was, you can submit corrected information online without waiting for the notice. If you cannot find your information online, call the IRS at 1-800-829-1040 to request a copy of the notice or to update your information by phone.
Can I deposit the returned refund check myself if the IRS sends one?
Yes. If the IRS mails you a check because the bank rejected the direct deposit, you can deposit it into any bank account you choose — not necessarily the one you originally provided. You can deposit it at your bank, a credit union, or a check-cashing service. You have up to three years to cash the check.
What if my account information was correct but the bank still rejected it?
Contact your bank and ask why they rejected the IRS deposit. They may tell you the account was frozen, flagged for fraud, or closed without your knowledge. Once you resolve the issue with the bank, submit corrected information to the IRS — either the same account number (if it is now open) or a different account. The IRS will reissue the refund to whichever account you specify.