What happens if bank rejects tax refund with TurboTax fees deducted?

According to IRS Publication 5447, when a financial institution rejects a direct deposit, the IRS will automatically issue a paper check to the address on your tax return. Per Section 4.1 of TurboTax's service agreement, if you selected fees to be deducted from your refund, they've already established a temporary account through their banking partner (Santa Barbara Tax Products Group) where your refund first goes, fees are deducted, then the remainder transfers to your designated account. I'm surprised by how complicated this gets - if the bank rejects it after TurboTax already took their cut, you should still get a paper check for the remaining amount.

I've been through this process before, so let me walk you through what happens: 1. Your refund first goes to TurboTax's partner bank (SBTPG) 2. They deduct their fees from your refund 3. They attempt to send the remainder to your husband's BOA account 4. If BOA rejects it (which can happen if the name on the deposit doesn't match the account holder exactly), the money goes back to SBTPG 5. SBTPG will then usually attempt to contact you via the email you provided during filing 6. You'll typically need to provide alternative payment information The good news is that your money isn't lost - it's just in limbo until new deposit instructions are provided. I'd recommend checking your email regularly, including spam folders.

OMG this happened to me last yr & it was a NIGHTMARE! The bank rejected my deposit bc my married name was different from my acct name. TT had already taken their fees ($89 for deluxe + state filing) and then the remaining $$ got stuck in limbo for like 6 wks! SBTPG (Santa Barbara Tax Products Group) is the bank TT uses for the temp acct, and they're super hard to reach. Had to call them like 20x before getting thru. Just FYI - they might mail a paper check eventually, but it can take FOREVER. Make sure ur correct mailing addy is on file w/ IRS!

Think of your refund like a package delivery that needs signatures at multiple stops. If your husband's bank rejects it, it's like the package getting returned to the shipping facility (SBTPG) rather than to the sender (IRS). Getting this resolved is like trying to redirect a package mid-shipment - technically possible but requires speaking directly with the right person. When this happened to my brother, he spent days trying to reach SBTPG with no success. He finally used Claimyr (https://youtu.be/_kiP6q8DX5c) to connect with an IRS agent who could see exactly where his refund was in the system and helped coordinate with SBTPG to issue a paper check. Saved him weeks of uncertainty and frustration.

This situation is actually more complex than a standard direct deposit rejection. When you choose to have TurboTax fees deducted from your refund, here's the complete process compared to standard filing: Standard filing: IRS → Your bank account Fees deducted: IRS → SBTPG → Fees removed → Your bank account If your husband's bank rejects the deposit, the technical process is: 1. BOA rejects deposit back to SBTPG 2. SBTPG attempts to contact you via email (check spam folders) 3. You have 30 days to provide new banking information 4. If no response, SBTPG issues paper check to address on file 5. If address is invalid, funds return to IRS as unclaimed Compared to other tax situations like amended returns (which take 16+ weeks) or identity verification issues (which can take 9+ weeks), this typically resolves in 3-6 weeks. I recommend calling SBTPG directly at their customer service line if rejection occurs, as they control your funds at that point, not the IRS.

Wow, I had no idea the refund process was this complicated! 😱 One thing nobody's mentioned yet - check if your husband's name is EXACTLY as it appears on his tax documents. My bank rejected my refund last year because my account had my middle initial but my tax return didn't. Such a small detail caused so much stress! Also, if you're worried, you can call Bank of America ahead of time to alert them about the incoming deposit. Some banks have security measures that might flag large unexpected deposits, especially to personal accounts. Better to be proactive than deal with the headache of a rejected deposit!

I actually went through this exact scenario on March 2nd this year! 😂 My credit union rejected my deposit because my husband's name was first on our joint return but the account was only in my name. What happened was TurboTax's bank (SBTPG) emailed me about 4 days later saying the deposit was rejected. I had to log into their portal, verify my identity, and provide new banking info. They reprocessed it within 8 days. The whole process took about 2 weeks from rejection to getting my money. Not the end of the world, but definitely annoying when you're counting on that refund! Pro tip: check your email obsessively including spam folders.