When you direct deposit, where does the money come from? Is it my actual IRS refund or is it a refund from a 3rd party company (Santa Barbra)?

[bauers_ctu]

If the money that you get direct deposited comes from a 3rd party company (like Turbo Tax use to do) instead of the actual IRS, then the new PATH Act (not releasing refunds until at least Feb. 15) would not effect me.

[mesquitebean · Accepted solution]

If you have a Federal refund and choose direct deposit, how the refund money is routed depends on how you chose to pay the TurboTax fees.

If you have no TurboTax product fees, or if you pay the fees upfront with credit/debit card or a prepaid debit card you can buy in a store, then the refund money goes directly from the IRS to your bank account  (or to a prepaid debit card if you are direct depositing to a card.)    In this circumstance no third-party company is involved.

On the other hand, if you do not pay your fees upfront and instead choose to pay them out of the Federal refund, then the refund goes first from the IRS to an intermediary bank where the fees are subtracted.   That intermediary bank then sends the rest of the refund to your bank (or prepaid card.)   The company that administers that process is SBTPG (Santa Barbara Tax Products Group.)     If you choose to pay your fees out of the Federal refund, there is a 39.99 service fee (44.99 for California filers), and the refund will go through SBTPG's bank first.

[bauers_ctu]

Thank you, this is what I thought but I wasn't sure and couldn't find anything on the website to confirm this. So it almost seems smarter to use your refund to pay the bill, even though it cost extra, that way you are getting your money from SBTPG and not the actual IRS since there is a chance that they might be shut down here anytime and be issuing refunds. What I was wondering is why does Turbo Tax say that the IRS doesn't start accepting refunds until Jan 29th when the IRS website says that they start accepting refunds Jan 23rd??

[xmasbaby0]

The actual source of the money in your refund is the U.S. Treasury

[mesquitebean]

The method you use to get the refund (straight from the IRS or through SBTPG) doesn't have anything to do with the PATH act.  The money still comes from the IRS/US Treasury whether it goes directly to your bank or first to SBTPG to pay any TurboTax fees.    When you pay fees out of your refund, that adds an extra link in the chain, and another place with an opportunity for something to go wrong.   If it goes smoothly, then it doesn't add much to the time, maybe a day or two.   But if there's any problem with at SBTPG, it can delay it significantly.

 It is the IRS who will not release refunds until Feb. 15 if the return has EIC (earned income tax credit) or ACTC  (additional child tax credit.)  Everyone who has EIC or ACTC is subject to the PATH act.   The PATH act started during filing season last year and mandates that the IRS not start releasing refunds until February 15, for filers who have those credits.  This is its second year.

It is the IRS who announced a few weeks ago that they would start processing returns on January 29.  The IRS does pull a few returns early for testing purposes.   You can read about the January 29 date at this link on the IRS website:

<a rel="nofollow" target="_blank" href="https://www.irs.gov/newsroom/2018-tax-filing-season-begins-jan-29-tax-returns-due-april-17-help-avai...>

[arhuber16]

Why is my refund hundreds of dollars shorter than what TurboTax would be? I feel like SBTG stole several hundreds of mine. This is insane. I will never be using TurboTax again. The email address given by TurboTax for these people was rejected. I need someone to assist me in getting back hundreds of dollars from these people.

[mesquitebean]

@arhuber16
If the IRS reduced your refund, you should get a letter from the IRS in about 3 weeks explaining why, and what your options are if you disagree with them.   I see you started a thread on your issue, so to avoid redundancy, please continue the discussion there at the link below.  You'll likely get some help in your thread today.

Or if the shorted amount is due to a state refund, it will be coming in a separate direct deposit.  A state refund does not go through SBTPG.

<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/4231125-my-ach-deposit-by-taxproducts-is-hundreds-of-dollars-less-...>

[Tymerria]

How long do this process takes?

[mdiakite3494]

hi

[Jmckinney08]

My refund was almost 1k less than what it says I was getting from my irs letter. Where would almost 1k go? I’ve checked my where’s my refund to confirm the amount that I was getting and it’s not matching what turbo tax deposited into my account. 

[Katina S]

There are many reasons your refund may have been adjusted by the IRS. See this FAQ regarding Refund offset.

@Jmckinney08

[romanboy]

Will Santa Barbara Tax Products still get my refund first if Turbo Tax already took their fees out of my State refund which came sooner. Or will the IRS send it directly to my account?

[MarilynG1]

TurboTax doesn't take their fees from your state refund, even if its's issued first.  The IRS will send your Federal refund directly to the processing bank for 'pay with my refund' options.

@romanboy 

[romanboy]

With all due respect tax expert, that is not true. Turbo Tax took the whole $267 out of my State Refund.