- Refund Transfers – What Are They and How Do They Work
Refund Transfers – What Are They and How Do They Work
There are a bunch of financial layers that you have to deal with when running a tax business and one of the most important aspects of your tax business operations is your refund transfers. When you get to offer refund transfers to clients, you won’t get to streamline your business’s finances, but you’ll get a valuable addition to your tax preparation business. Thanks to technology and advancements in payment methods, developers have created tax software to help taxpayers and businesses manage tax preparations. Besides familiarizing yourself with the different financial and tax lingo, you should also partner it up with professional tax preparation software. Streamlining tax preparations is the ultimate dream for taxpayers and businesses. If you can incorporate refund transfers into your system, your clients will be pleased with the service. You’ll get the most out of your tasks.
What Are Refund Transfers?
Refund transfers are also called bank products and refund settlement solutions. This process is a way your clients can choose to receive their tax refunds. The great thing about this is that your clients can get your services with no upfront cost, allowing you to easily deduct their fee from their refund.
How Do Refund Transfers Work?
1. Prepare Your Return and Confirm
Before you can prepare for refund transfers, the first thing you need to prepare for refund transfers is to ensure that your client has completed their tax return. After that, if they have determined that they should get a refund, they should start a refund transfer process. However, you should remind your client that the refund transfer process is optional and may involve some fees. But the truth is, the convenience of refund transfers really outweighs the additional charges. Fortunately, tax pro software will have refund transfers integrated into their systems, making tax preparations and refunds more straightforward.
2. The IRS Will Distribute Refund to the Bank
When you have refund transfers connected to your tax system, your clients don’t need to receive their money directly from the IRS. Instead, it will be routed through a refund settlement bank. These banks are designed to deduct necessary fees from federal and state tax refunds, which will then be distributed to the taxpayer.
3. The Bank Will Handle Manage Fees
Once the IRS transfers the refunds to the bank, the bank will then deduct preparation fees from the refund and distribute it accordingly through direct deposit. Associated costs, like service bureau fees, transmitter fees, or refund transfer fees, will also be subtracted, eliminating any hassle for your client.
4. Your Client Will Receive their Money
After the bank has received payment from the IRS and the tax preparation fee has been processed, they will then distribute the refund to your client, depending on the form they choose. Typically, they can receive a refund in the form of a check, prepaid card, or direct deposit.
How Can Refund Transfers Benefit Your Clients?
- No Upfront Costs: The great thing about refund transfers is that your client won’t have to pay a tax preparation fee upfront. This is because the bank will handle the fees, making it a seamless, hassle-free process.
- Payment Options: Your client can choose the method of how their payment will be disbursed, which is great for different clients, both with a bank account or no banking relationship.
- Receive money Quicker: The great thing about refund transfers is that it allows your clients to receive their money faster than a traditional refund disbursement.
The Bottom Line: Streamline Tax Preparations and Refund Transfers with the Right Tools
Offering efficient services to clients, such as refund transfers, can greatly improve your tax services. Partnering it up with professional tax preparation software, you’ll get to offer effective tax services that are hassle-free, quick, and easy.
How Can We Help You?
If you’re looking to improve your tax preparation process, consider getting professional tax preparation software
to help develop your workflow. Keystone Tax Solutions is an affordable tax software designed to help elevate your tax process. Our 100% cloud-based technology allows you to manage your documents, create unlimited federal and state returns, provide exceptional customer support, and more. Learn more about how we can help you today!