Are you getting a refund this year?  What are you going to do with it?  My refund will be paying for some repairs to my house.  (I got hit really badly by one of those storms in 2012. Ouch!)

 

Were you thinking about saving?  Or maybe funding your IRA?  Or are you like me and you’re spending it on something special?  (Okay, I’d rather be saving up to go to Hawaii or something but I’ve got a special savings account set up to pay for my house repairs.)

 

Here’s my problem—if I get a large refund and it goes straight to my checking account, I will spend it or least a good portion of it, before it makes its way to my savings account.  But if the money is in my savings account—it doesn’t come out unless it absolutely has to.  (I’m lousy at putting the money in, but once it’s in there, I’m a gatekeeper!)  The best thing to keep me and my husband from fighting is to pick where the money should go before we have it in our hands.  We can do that with the IRS 8888 form.   http://www.irs.gov/pub/irs-pdf/f8888.pdf

 

The Form 8888 lets you split your refund.  You can use the regular 1040 form to have your refund direct deposited to your bank account, but with the 8888 form, you can have part of your refund go to your checking and part of it go to your savings.    You can make deposits in up to three different accounts!

 

This gives you options.  You could fund your IRA, your spouse’s IRA and then put some money in your savings too.  If you’re really good.

 

You can even use the split refund to buy US Savings bonds for you, your kids, or your grandchildren.  Here’s some more information about that:  http://robergtaxsolutions.com/2011/01/tax-time-savings-bonds/

 

You could (although I confess I’ve never had anyone do this in my office) have your refund split between three bank accounts, buy two savings bonds, and have the IRS issue you a check for whatever’s left over.  The point is, you’ve got options.

 

Here’s some FAQ’s about splitting your refund:

 

What happens to my split refund if I figured my tax wrong?

 

If you are getting more money—the amount goes into the first account listed on form 8888.

 

If you are to get less money, the IRS takes it out of the last account listed in part 1.

 

Can I use form 8888 if I file an injured spouse return?

 

No.

 

What happens if I have an offset for student loans or child support?

 

Personally, I would skip the 8888 if that‘s a possibility for you.  But there’s a whole routing order for how those are handled and it’s in the instructions on the form.

 

Fraud alert:  Do not use the form 8888 to put money into your tax preparer’s bank account.  It’s against the law.  If you need to pay for your tax preparation with your refund it should be routed through a bank that does that.  If you’re not splitting your refund and your preparer hands you a Form 8888—take your paperwork and go someplace else.