What Happens When Your Bank Rejects Your Tax Refund

Your refund goes back to the IRS, and you have to claim it again

When a bank sends back a direct deposit refund, the money returns to the IRS within one to three business days. The IRS then holds it and marks your account as having a failed deposit. You do not automatically receive the money—you have to take a step to get it, either by requesting a check or correcting the deposit information and having the IRS try again.

The rejection usually happens because the account number or routing number on your tax return was wrong, the account was closed before the deposit arrived, or the account holder's name did not match the IRS records. Sometimes a bank will reject a deposit if the account has been flagged for fraud or if the account is overdrawn past a certain threshold. The reason matters because it determines what you do next.

Key Takeaways

A rejected refund goes back to the IRS within one to three business days, and the IRS will not send it out again without action from you.
The IRS will mail you a check if you do nothing, but this takes four to six weeks from the rejection date.
You can request a new direct deposit attempt by calling the IRS or correcting your information through your online account, but only if the original problem is fixed.
If the account information on your return was wrong, you will need the correct routing number and account number before you contact the IRS.
A rejected refund does not affect your tax filing or your refund amount—only how and when you receive it.

How the IRS handles a returned deposit

The moment your bank rejects the deposit, it sends a message back through the ACH network (the system that moves money between banks). The IRS receives this rejection notice and stops trying to deposit the money. At that point, your refund is in limbo—it exists in the IRS system, but it is not moving anywhere.

The IRS has two default actions: it can mail you a paper check, or it can hold the money while you request a new deposit attempt. If you do nothing, the IRS will mail a check. This process takes about four to six weeks from the date of rejection, because the IRS has to process the rejection, print the check, and route it through the postal service. You will receive a notice in the mail explaining that your direct deposit failed and that a check is on the way.

The check will arrive at the address the IRS has on file for you. If you have moved since filing your return, the check may go to your old address. If that happens, you can file a change of address with the post office, or you can contact the IRS to update your mailing address and request that they reissue the check.

What caused the rejection—and how to know

The IRS does not always tell you why the bank rejected the deposit, but the most common reasons are straightforward. A wrong account number or routing number is the most frequent cause. If you typed the numbers incorrectly on your return, or if you copied them from the wrong place on a check or bank statement, the deposit will fail. The second most common reason is that the account was closed before the refund arrived. If you closed an account after filing but before the refund was processed, the bank will reject it.

A third reason is a name mismatch. If the name on the account does not match the name on your tax return exactly—including middle initials, suffixes, or spelling—some banks will reject the deposit. A fourth reason is fraud flags or account holds. If your bank flagged the account for suspicious activity, or if the account is overdrawn, the bank may reject incoming deposits as a protective measure.

You can check your IRS account online through IRS.gov to see the status of your refund. The "Where's My Refund?" tool will show you whether the deposit was rejected and, sometimes, why. If the reason is not clear from the tool, you can call the IRS at 1-800-829-1040 and speak to a representative who can see the rejection code and explain what happened.

Requesting a new direct deposit instead of waiting for a check

If you want the money faster than a check would arrive, you can ask the IRS to try the direct deposit again—but only if you have fixed the original problem. If the account number was wrong, you need the correct account number and routing number. If the account was closed, you need an open account in your name. If there was a name mismatch, you need to verify that the account name matches your tax return exactly.

Once you have corrected the problem, you can contact the IRS through your online account at IRS.gov or by calling 1-800-829-1040. You will need to provide the correct banking information. The IRS will then attempt the deposit again, usually within five to seven business days. If this second attempt succeeds, the money will arrive in your account within one to two business days after that.

If you are not sure whether the problem is fixed, ask your bank directly. Call the number on the back of your card or log into your online banking and confirm that the account is open, active, and in your name. If you recently changed banks, make sure you are providing the routing number and account number for the new bank, not the old one.

The timeline from rejection to receiving your money

The speed of getting your refund depends on which path you take. If you do nothing and wait for a check, expect four to six weeks from the date the bank rejected the deposit. If you request a new direct deposit attempt and the account information is correct, expect five to seven days for the IRS to process your request, plus one to two days for the deposit to clear. That is roughly one to two weeks total, which is faster than a check but slower than a successful first attempt.

The IRS processes refund requests in batches, so the exact timing can vary. If you request a new deposit on a Friday, the IRS may not process it until the following Monday or Tuesday. If you call the IRS, ask the representative when they expect the next batch to process and when you should see the money in your account.

What to do if the second deposit attempt also fails

If the IRS tries the direct deposit again and it fails a second time, the same thing happens: the money goes back to the IRS, and you have to take another step. At this point, the IRS will usually mail you a check instead of attempting a third deposit. This is a safety measure to prevent the money from bouncing indefinitely.

If a second deposit fails, call the IRS when ready and ask why. There may be a problem with the account itself—the bank may be rejecting all incoming ACH deposits, or there may be a fraud hold on the account. Your bank can tell you whether they are blocking deposits. If they are, you will need to contact them to lift the hold before the IRS can try again. If the bank is not blocking deposits, the IRS can investigate further and may be able to identify the specific reason for the rejection.

Preventing this from happening on next year's refund

Once you receive this year's refund—whether by check or by the second deposit attempt—verify the account information you used. If the account number or routing number was wrong, write down the correct numbers and save them. When you file next year, double-check every digit before you submit the return. A single wrong number will cause the same rejection.

If the account was closed, make sure you file next year's return with an account that will still be open when the refund arrives. Tax refunds are typically processed between January and May, so if you are planning to close an account, do it after you have received your refund.

If there was a name mismatch, confirm that the name on the account matches your legal name exactly as it appears on your tax return. If you have a suffix like Jr. or III, or a middle initial, make sure it is on the account. If you recently changed your name, update it with your bank before filing.

Frequently Asked Questions

How long does it take for a rejected refund to go back to the IRS?

One to three business days. The bank sends a rejection notice through the ACH network, and the IRS receives it within that window. Once the IRS has the rejection notice, it stops trying to deposit the money and begins the process of either mailing a check or waiting for you to request a new deposit attempt.

Can I get my refund faster if I request a new direct deposit instead of waiting for a check?

Yes, if the original problem is fixed. A new deposit attempt takes five to seven days for the IRS to process, plus one to two days for the money to clear—roughly one to two weeks total. A check takes four to six weeks. But the new deposit will only work if the account information is now correct and the account is open and active.

What if I do not know why the bank rejected my refund?

Check the "Where's My Refund?" tool on IRS.gov, which sometimes shows the rejection reason. If it does not, call the IRS at 1-800-829-1040 and ask a representative to look up the rejection code. You can also call your bank and ask whether they rejected a deposit from the IRS and why.

Will a rejected refund affect my tax filing or my refund amount?

No. The rejection only affects how and when you receive the money. Your refund amount stays the same, and the rejection does not change anything on your tax record. You will still receive the full amount you are owed.

What should I do if the second deposit attempt also fails?

Call the IRS when ready and ask why. The problem may be with the account itself—your bank may be blocking ACH deposits, or there may be a fraud hold. Contact your bank to find out. If the bank is blocking deposits, ask them to lift the hold. If the second attempt fails, the IRS will mail you a check instead of trying a third time.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.