Screen Bank - Deposit, Electronic Funds Withdrawal (1040)

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MFA required for electronic filing

Effective May 3rd, the 2017 version of UltraTax CS requires multi-factor authentication (MFA) to transmit e-files from CS Connect. Find out more.

Overview

Use this screen to enter bank account information for up to three bank accounts, refund allocation information, and U.S. Series I Savings Bond purchase information for up to three different individuals. The following information will proforma to the following year:

IRS Security Summit guidelines require that all proforma'd bank information be confirmed with the client every year. To print a Bank Account Verification Worksheet, mark the Print Bank Account Verification checkbox under Setup > 1040 Individual > Other Return Options on the Other tab.

See also

Direct Deposit/Electronic Funds Withdrawal Information

Use this section to enter the primary account information. The primary account is used for all electronic funds withdrawals. The primary account can also be used in the refund allocation. Complete bank information is necessary and includes the routing transit number, name of financial institution, depositor account number and the type of account.

The application considers an account valid if it contains complete bank information. Complete bank information includes all of the following:

Only the primary account may be used for electronic funds withdrawal. You cannot allocate withdrawals from multiple accounts.

Notes

  • The application also uses the primary account information from this section to generate the e-file "Electronic Funds Withdrawal" with balance due returns. See Screen ELF instructions for more information on e-file "Electronic Funds Withdrawal." To generate the e-file payment, the Electronic funds withdrawal for balance due returns: Requested payment date field in Screen ELF must have a date entered. The e-file payment is only generated when the Electronic funds withdrawal for balance due returns: Requested payment date field in Screen ELF has an entry.
  • If you have selected Direct deposit from the Disbursement Method field in Screen RAL, the application uses the account information entered in the Primary Account fields for the client's bank account information on the applicable bank product. The application generates a diagnostic if you have not completed these fields and requested Direct deposit in Screen RAL.
  • For all state returns other than California, Maryland, Ohio, and nonresident District of Columbia, only the primary account information applies. Only California, Maryland, Ohio, and nonresident District of Columbia support multiple accounts for direct deposit.
  • Beginning with tax year 2009, a request to use a refund (or part of a refund) to buy up to $5,000 in U.S. Series I Savings Bonds can be made. The amount requested for savings bonds must be a multiple of $50 but cannot exceed $5,000. The bonds will be issued in the name of the taxpayer, and in the names of both taxpayer and spouse when married filing jointly.
  • Beginning in January 2015, the IRS will enforce a limit for each financial account or prepaid debit card of three direct deposits. For the fourth (and subsequent) requested deposits of a tax refund into the same account a paper check will be issued. The IRS has enacted this limit to help prevent fraud and also to prevent tax return preparers from collecting payment by directing all or a portion of a taxpayer's refund into the tax return preparer's own account.

A custom paragraph may be selected to include instructions on how to revoke an electronic funds withdrawal payment in the transmittal letter. To select this custom paragraph on a client basis, select custom paragraph Electronic funds withdraw (TL) from one of the Paragraph Description fieldviews in Screen Letter. To select this custom paragraph to print for all clients when applicable, choose Setup > 1040 Individual, click either the Letters & Emails or Filing Instructions button in the Federal tab, click the Custom Paragraphs tab, and mark the Electronic funds withdraw (TL) checkbox. For additional information, see Custom paragraphs FAQs.

Beginning in January 2017, IRS Security Summit requirements specify that bank information must be verified annually by the taxpayer. This field is required when any bank information is entered on this screen. Bank information will not transfer to the return until this field has been completed.

  • If eSignature is used to complete the Bank Account Verification, 1 is automatically entered after the successful eSignature has been retrieved. You can not manually enter a 1 in this field.
  • Enter 2 if a Bank Account Verification worksheet is printed, and then signed by the taxpayer. To print the Bank Account Verification worksheet, see Printing the Bank Account Verification Worksheet (1040).
  • If the taxpayer verifies the bank information while completing a Web Organizer, 3 is retrieved in this field with the completed Web Organizer. This value must be accepted by the preparer during the review of the retrieved Web Organizer data.
  • Enter 4 for any other method used to verify banking information. This could include a 3rd party eSignature solution, a custom verification document, or any other solution generated outside of the application that is used to verify bank information by the taxpayer.
  • If this screen contains bank information that is not required (such as a zero balance return or a payment due return that is not using electronic funds withdrawal), enter 5 to clear the diagnostics and retain the bank information to proforma for next year.

Notes

  • When this field has been completed, all bank information on this screen is protected from changes because the fields are unavailable for data entry. If a change is needed later, this field must be cleared in order for the fields to become available again. In this case, the bank information must be reverified.
  • To print the Bank Account Verification Worksheet when it is not required, choose Setup > 1040 Individual and click the Tax Return button under the Collation group box. In the Return Collation dialog, select Bank Account Verification from the list and then select the Always if data option in the Print conditions group box.

Enter a valid routing transit number. To meet IRS requirements, a valid transit number must be nine numbers (no hyphens) with the first two digits within the range of 01-12 or 21-32. The application will consider an account with an invalid routing transit numbers as incomplete and fire a diagnostic.

The application considers an account valid if it contains complete bank information. Complete bank information includes all of the following:

  • Verification of all bank information by the taxpayer
  • Valid routing transit number
  • Name of the financial institution
  • Depositor account number
  • Type of account

Accounts missing this information will not be used in either refund allocations. If the primary account is missing this information, electronic funds withdrawal requests will not be processed.

Note: This field is used by datasharing to make the bank name available for sharing. Large banks have more than one routing transit number, so the name of the institution cannot be used to share the routing transit number.

Data entry in this field is required in order to consider the account information complete for 1040 processing. If this field is left blank, the account will not be used for electronic funds withdrawal (Primary account only) or used in refund allocations.

Data entry in is this field is required in order to consider the account information complete for 1040 processing. If this field is left blank, the account will not be used for electronic funds withdrawal (Primary account only) or used in refund allocations.

Select the type of account. The type of account codes are listed in the table that follows and in the fieldview.

1 Savings
2 Checking
3 IRA (Traditional, Roth, or SEP-IRA)

The application considers an account valid if it contains complete bank information. Complete bank information includes all of the following:

  • Verification of all bank information by the taxpayer
  • Valid routing transit number
  • Name of the financial institution
  • Depositor account number
  • Type of account

Accounts missing this information will not be used in either refund allocations. If the primary account is missing this information, electronic funds withdrawal requests will not be processed.

Notes

  • Type of account 3 is not available for the Primary account, as it also involves electronic funds withdrawal. Use either of the secondary accounts to direct deposit to an IRA account.
  • Custom Paragraph Direct deposit to IRA is marked by default to notify taxpayers of their obligations prior to requesting a direct deposit to an IRA account and instructions to confirm current tax year contributions, if applicable, are received in a timely manner.

Some financial institutions will deny the direct deposit of a joint tax refund into an individual account. When this occurs, a paper check will be issued, which may cause delays of up to ten weeks. This field is used for client document purposes only, and works in conjunction with Custom paragraph 65 Joint tax refunds (FI). The paragraph will print in the filing instructions when any of the fields for any of the accounts is left blank. Enter X to indicate that the account contains both the taxpayer and spouse names.

Enter X if the funds for an automatic payment withdrawal come from an account outside the United States, or if the direct deposit refund will go to an account outside the United States. This does not affect the federal return but does affect many states. Certain states do not allow direct deposit or debit for their returns when it involves an International Automated Clearing House transaction (IAT). IAT rules are maintained by the National Automated Clearing House Association.

Refund Allocation Information

Use this section to enter the refund allocation information, including accounts to receive the deposits, savings bonds purchases, and selecting the order in which the refund is allocated. The refund can be allocated using dollar amounts or percentage of refund. Refunds can be allocated to the following:

Note: When allocating to secondary banks or the purchase of bonds, data entry is required in the Secondary Bank Account(s) and Bond Registration sections.

Use the fields provided to allocate the expected refund either based on a dollar amount or percentage of total refund. Refunds may be allocated to any, all, or a combination of the following:

  • Primary account
  • Secondary accounts 1 or 2
  • Purchase of U.S. Series I Savings Bonds for taxpayer and spouse if married filing jointly
  • Purchase of U.S. Series I Savings Bonds for persons other than the taxpayer or spouse
  • Paper check

Refunds can be allocated to the different options using a mixture of dollar and percent methods. Mixing allocation methods is not allowed on a per option basis. Once data is entered in the one field, the other field will become unavailable for data entry. For example, if $100 is entered in the primary account's Dollar field, the corresponding Percent field will become shaded. To access the shaded field, remove the data in the unshaded field.

If data entered exceeds the expected refund, the application allocates based on the allocation order. Once the actual refund has been allocated, any remaining options will be ignored. For example, if the actual refund is $800 with $1,000 entered in the primary account's dollar field, and $750 is entered in the secondary account 1's dollar field, the application allocates all of the expected refund to the primary account.

Valid accounts that do not contain either a dollar or percent amount will, by default, get any unallocated balance. When there is no account to default the unallocated balance to, the application defaults to the last valid account. The application does not default any unallocated balances to purchase of bonds. The application considers an account valid if it contains complete bank information. Complete bank information includes all of the following:

  • Verification of all bank information by the taxpayer
  • Valid routing transit number
  • Name of the financial institution
  • Depositor account number
  • Type of account

If purchasing bonds for the names on the return (i.e. if married filing jointly bonds will be registered in both the taxpayer and spouse names), use the Bonds for names on tax return fields. Use the Bonds other fields when bonds are being purchased for persons other than the taxpayer (and spouse if married filing jointly), or to register the bonds to either the taxpayer or spouse instead of both if married filing jointly. The application properly allocates the purchase of bonds using the maximum total purchase of $5,000 in $50 increments. The application always rounds down when adjusting for the $50 increment. Any remaining refund due to limiting the purchase will be defaulted either to the last valid bank account or paper check.

All fields allow for zero data entry. This allows the data to proforma to the following year without being used by the current year return. This also allows the primary bank to be used for the electronic withdrawal of estimates while using the secondary bank for a direct deposit of the refund.

IRS Security Summit guidelines require that all proforma'd bank information be confirmed with the client every year. For example, if the client closed an account or if the bank's routing transit number or account number changed due to merger.

Note: Data entry is required in the Secondary Bank Accounts(s) and Savings Bonds Registration Information sections to allocate refund to either of these two options.

By default, the application allocates the refund in the following order:

  • Direct deposit
  • Bond purchase
  • Paper check

Use this field to have the application allocate in a different order. If more than one allocation method is used, any method that is blank with be ignored. For example, if you select a method that lists bond purchase but no bond fields contain data, nothing will be allocated to the purchase of bonds. The refund allocation orders are listed in the table that follows and in the fieldview.

1 Direct deposit, bond purchase, paper check
2 Direct deposit, paper check, bond purchase
3 Paper check, direct deposit, bond purchase
4 Paper check, bond purchase, direct deposit
5 Bond purchase, direct deposit, paper check
6 Bond purchase, paper check, direct deposit

The application defaults to not submitting a direct deposit request (either on 1040 page 2 or on Form 8888) when a client falls into the IRS Direct Deposit Reject 44 situation. Enter an X to force the application to process the direct deposit request. An IRS Direct Deposit reject 44 situation exists when the total direct deposit request is $10,000 and total tax is zero and withholding plus excess FICA totals $10,000 or more. Forcing the direct deposit in this situation may still result in the taxpayer receiving a paper check and a possible 10 week delay in receiving the refund. For additional information, see DIR-DEP-REJ-RSN-CD #44 located in the Internal Revenue Manual, Part 21.4.1.4.8.1, Direct Deposit Reason Codes.

Note: A custom paragraph may be selected to notify the taxpayer that their direct deposit request could not be submitted due to IRS limitations, or if this field is marked, alerting the taxpayer that the direct deposit request may be rejected by the IRS and a paper check may be issued. To select this custom paragraph on a client basis, select custom paragraph IRS Direct Deposit Limit (FI) from one of the Paragraph Description fieldviews in Screen Letter. To select this custom paragraph to print for all clients when applicable, choose Setup > 1040 Individual, click either the Letters & Emails or Filing Instructions button in the Federal tab, click the Custom Paragraphs tab, and mark the IRS Direct Deposit Limit (FI) checkbox. For additional information, see Custom paragraphs FAQs.

Savings Bond Registration Information

Use the fields provided to enter the bond registration information when either purchasing bonds for persons other than the taxpayer (and spouse if married filing jointly), or to register the bonds separately for the taxpayer or spouse, if married filing jointly. Names must be entered using the following rules:

  • Enter only one name for owner, co-owner, or beneficiary.
  • Enter the person's given name. Do not use nicknames.
  • Use only letters. Do not use special symbols.
  • Use the Indicate name is for beneficiary field to indicate beneficiary status instead of co-owner status.

Notes

  • Data must be entered in the applicable Bonds other 1 or Bonds other 2 fields in the Refund Allocation Information section for bonds to be purchased with the refund.
  • By default, bond information will not proforma to the following year. Use the Proforma bond information to 2016 field to proforma the information in these fields.
  • The following custom paragraphs are selected by default regarding savings bonds purchase:
    • Refund Savings Bond (FI): Reports the total amount of bonds purchased, that the bonds will be mailed to the taxpayer, and a contact number for the Treasury Retail Securities.
    • Refund Savings Bonds Registration: When bonds are purchased for persons other than the taxpayer (and spouse if married filing jointly), this paragraph will report the bond registration information.
  • For additional information, see Custom paragraphs FAQs.

Related topics

Electronic filing guidelines for 1040 Screen Bank

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