Direct Deposit vs. Direct Debit
1

In the filing steps, you can make a selection to transfer information automatically from your Federal return to your state return. Note that information will only transfer IF you choose to check a box and so indicate you wish it to be transferred.

Federal Direct Deposit

The "Federal Direct Deposit" information is stored (once entered in the program for a year where there is a Federal refund on the return), on Form 8888 Allocation of Refund (including Savings Bond Purchases). This information is then imported from year to year (if you choose to import the information from your prior year TaxAct return into the current year return) so it is there when you again have a Federal refund.

Federal Direct Debit

The "Federal Direct Debit" information is stored (once entered in the program for a year where there is a Federal amount of tax owed on the return), on the Electronic Filing Worksheet (a product of the TaxAct program and not an actual IRS form since the IRS does not provide a separate form for the Direct Debit information as they do the Direct Deposit information). This information is imported from year to year (if you choose to import the information from your prior year TaxAct return into the current year return) so it is there when you again have a Federal tax due amount.

These two pieces of information are never compared against each other in any situation because the banking information someone may use for a deposit may not be the same they would use for a withdrawal.

As banking information for both a DIRECT DEPOSIT and a DIRECT DEBIT may be stored in your Federal return (if you have had a Federal refund and a Federal amount of tax owed in any prior year using the TaxAct program), what is transferred to the State banking fields (per your direction in the filing steps), will be based on whether the State return reflects a refund or an amount due. It IS NOT based on what you just entered a few screens earlier in the Federal filing section for your Federal refund or amount due. HOWEVER, the screen that follows your selecting to have the banking information transferred will always prompt you to review for accuracy what was transferred. This is done to provide you a chance to correct any typographical errors that may have happened when entering that bank information originally.

How this works:

If your current year Federal return reflects an amount due, you will be prompted for that banking information first in the electronic filing steps. This information IS NOT transferred from the prior year return, but must be entered by the taxpayer. However, when you reach the State section of the filing steps (in this scenario your State return reflects a refund amount), you may be prompted to check a box if you wish to use the same DIRECT DEPOSIT account information as on your federal return. If this box is selected, the DIRECT DEPOSIT information stored in your Federal return will be transferred. This may not be the same as the banking information you just entered in the Federal section because you actually just entered DIRECT DEBIT banking information (i.e. stored on the Electronic Filing Worksheet) whereas the DIRECT DEPOSIT information is stored on Federal Form 8888 and may be from a prior year when your Federal return reflected a refund. The following screen however will prompt you to review the transferred information for accuracy.

So, in summary, the box you check to transfer banking information from your Federal return to your State return will result in the program pulling either the DIRECT DEPOSIT information (from Form 8888) OR the DIRECT DEBIT information (from the Electronic Filing Worksheet) based SOLELY on whether the State return is currently reflecting a refund or an amount due - NOT based on what was entered in the Federal section of the filing steps.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.