University of Wisconsin - Extension

MADISON, Wis.—“Out of sight out of mind” is a great way to save money. This year the IRS will support your saving strategies by splitting your tax return between two or among three different accounts, with up to three different U.S. financial institutions. Many of us would like to spend our tax return; we usually have it go electronically into our checking account.

“Having a portion of your tax return sent directly into a savings account is a good strategy for saving money” says Michael Gutter, UW-Madison/Extension family financial management specialist.

By splitting your money, you can allocate some to savings and some to current issues like paying off bills, debt, or something you had wanted to pay cash for. Identifying a specific savings goal for a savings account also helps with motivation. Saving money in different locations for different goals is a great strategy for successful saving and can provide advantages. For example, different saving goals might include emergency savings, saving for college, or saving for retirement. Many of these have specific accounts you would use.

Splitting your refund is easy. Use the new IRS form 8888, Direct Deposit of Refund, to split your refund among two or three different accounts. Form 8888 is not required if you want the IRS to direct deposit your refund to a single account; in that case, you can use the direct deposit line on Form 1040.

With a split refund, you now have a convenient option for managing your money—sending some of your refund to an account for immediate use and some for future saving—teamed with the speed and safety of direct deposits. “It’s a win-win,” says Gutter.

Today is the best time to start saving. This year, use this great opportunity to maximize the use of your tax refund and start saving toward one of your financial goals. You can save money! You can build wealth.