TurboTax and H&R Block customers encounter issues with second stimulus check deposit

After US lawmakers reached an agreement for a second stimulus check, millions of Americans who were set to receive their checks via direct deposit have encountered some challenges. Those affected are Americans who filed their 2019 taxes with TurboTax and H&R Block.

In late December 2020 through January 4, the IRS started the process of sending out the second round of stimulus checks of $600 per individual. Millions of TurboTax and H&R Block customers who paid for tax preparation services through their 2019 refund have filed complaints.

According to many customers who tried to track down their deposit with the IRS Get My Payment tool, some of the second round of stimulus checks were sent by the IRS to an unfamiliar bank account which the customers do not have access to. Some of the customers said the accounts were temporary “pass-through” accounts set up by the tax preparers in previous years. Payments were made to the tax preparers’ accounts instead of the customers’ accounts.

Like every other tax preparer, Turbo Tax and H&R Block set up special bank accounts to give tax refunds in advance to their customers. The IRS had those accounts on file instead of the customers’ regular accounts.

To rectify the issue, the IRS has asked TurboTax and H&R Block to return all received funds to the IRS, and it will reissue the payments to the appropriate accounts. This means the recipients will experience some delay in receiving their payments.

“We know how important these funds are for so many Americans and that everyone is anxious to get their money,” said Ashely McMahon, a TurboTax spokesperson. “We are partnering with the IRS to help taxpayers receive their payments as quickly as possible.”

TurboTax also posted on Facebook that it is “working tirelessly on a solution with the treasury and IRS.” Promising that the error will be fixed within a few days and the second stimulus checks will be deposited to the right bank accounts.

An IRS spokesperson told CNBC on Monday that taxpayers whose Get My Payment tool shows “Payment Status #2 – Not Available” will not receive a second stimulus check. Those who fall into this category will have to claim a Recovery Rebate Credit on their 2020 tax return. The agency said in a press release that due to “the speed at which the IRS issued this second round of payments, some payments may have been sent to an account that may be closed or no longer active.”