If you selected that you would pay your pay your TurboTax fees from your refund, then the IRS does not have your banking information. To pay your fees from your refund, your refund must go to a third-party bank which opens a temporary account in your name, deducts the fees, and then closes the account and sends the rest of your refund to your regular bank. This is because the IRS will not split the refund with TurboTax. This also means that the IRS does not have your real banking information, it only has the information for the temporary account at the third party bank.
This will also happen if you choose to have your refund paid on a debit card or if you request the refund advance, because in both of those cases, your refund must also go to a temporary account at a third-party bank and not directly to your regular bank account.
The IRS knows which banks are used for this service, and if they see that your refund was sent to one of these banks, they should mail you a check or a debit card containing your stimulus payment. If the IRS sends the stimulus payment to the third-party bank, in some cases the third-party bank will be able to re-open your temporary account and put the stimulus payment on your debit card. In other cases, the third-party bank will reject the payment and send it back to the IRS.
You also had the opportunity up through about October to go to the IRS website and inform them of your correct banking information. If you did not do this, it is not TurboTax’s fault.
I have always argued that paying your fees out of your refund is a terrible idea, not only because it cost an extra $40 service charge, but because it puts another bank that you don’t know in between you and your refund. There are many other ways of paying TurboTax’s fees without using the service. The economic stimulus payment in 2020 simply makes the refund transfer idea even worse than usual.
You should expect that your second round payment will be paid to you in the same way as the first round payment. If not, that’s on the IRS as well, TurboTax has no control over how the IRS processes payments. Any payment that you do not receive by January 15 can be claimed as part of your refund on your 2020 tax return.
