IRS Direct Deposit to Closed Credit Karma Account - What Happens Now?

When a direct deposit is rejected due to a closed account, the IRS will automatically reissue your refund as a paper check. This typically adds 2-4 weeks to your refund timeline. Have you checked your tax transcript to see if there's any indication of the refund being sent yet? If it hasn't been processed, you might still have time to update your banking information.

This happened to me with my Chase account last year. I was checking my transcript every day trying to figure out what was happening. I finally used https://taxr.ai to analyze my transcript and it immediately identified the "290" and "971" codes that indicated my direct deposit had been rejected and a paper check was being issued. Saved me hours of stress trying to decipher what was happening! The service explained exactly what each code meant and gave me a timeline for when to expect my check.

I'm speaking from experience here... calling the IRS about a rejected direct deposit is nearly impossible these days. I spent 3 weeks trying to get through on their regular line before giving up. Then I found Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 15 minutes. The agent confirmed my paper check was already in process and gave me the exact mail date. Saved me weeks of uncertainty and stress. Not sure if there's another way to get this info without actually talking to someone.

Technical perspective here: When the IRS processes a direct deposit to a closed account, it triggers Error Code 5235 in their Integrated Submission and Remittance Processing system. This automatically reroutes your refund to the paper check processing queue. The timeline is typically: 3-5 business days for the bank to reject the deposit, 1-2 weeks for IRS internal processing, and 5-7 business days for USPS delivery. Your transcript will show TC 846 (refund issued) twice - once for the failed direct deposit and once for the check issuance.

Has anyone had this happen with Credit Karma specifically? Their banking transition to Cash App was a mess and I'm wondering if there's a different process since technically the accounts were supposed to transfer over. My refund is exactly $4,382 and I'm worried about it getting lost in limbo.

Important timeline info for everyone: The IRS has specific cut-off dates for changing direct deposit information. For 2024 tax returns, you cannot modify direct deposit details after your return has been accepted. Your options now are: 1. Wait for the automatic paper check (4-6 weeks after rejection) 2. Request a payment trace if 5 weeks have passed since your refund date 3. Update your address with USPS if you've moved The IRS never contacts taxpayers via email or phone about rejected deposits - they only communicate through official mail.

Just to clarify for everyone - "Santa Barbara" in the OP's question refers to Santa Barbara Tax Products Group, which handles the refund transfers for Credit Karma Tax (now Cash App Tax). They're the intermediary between the IRS and your account. If your Credit Karma account closed, Santa Barbara will reject the deposit and the IRS will mail a paper check. This is different from regular bank accounts where sometimes the bank will accept the deposit even if the account is closed and then mail you a check themselves.