Rules on Cashing Income Tax Checks at Banks

Knowing the rules means less time at the teller window.

Knowing the rules means less time at the teller window.

Knowing the rules about cashing income tax checks can save you from a major headache at the bank. Most banks won't let you cash these or any other checks without an affiliation. Because of the potential for fraud, funds from tax checks might not be made available right away.

Account Ownership

Due to the rise of income tax refund fraud, banks are not required to cash income tax return checks if the payee does not have an account. According to a 2013 advisory published by the Financial Crimes Enforcement Network, financial institutions play an important role in discovering income tax refund fraud and must take special precautions. Every bank has their own policies, but most require you to have an account before cashing your refund check.

Funds Availability

Although the government issues tax refund checks, most banks now place a hold on them to prevent fraud. Under Regulation CC, checks from the Department of the Treasury must be available for withdrawal within one business day. If your account balance covers the amount of the check, you can deposit the check against it and cash it immediately. In many cases, if the bank teller knows you personally, or at least recognizes you as a regular customer, the bank won't hold the funds if your account is in good standing.


Banks limit the amount of cash given to each account holder every day to ensure they don't run out before their next shipment. If you need to cash a tax return for a substantial amount, call the bank ahead of time to give them notice and find out when you can come in to complete the transaction. It might be easier to get a large sum of cash in the middle of the week when people typically aren't cashing their paychecks.

Endorsements and Verification

Properly endorsing income tax refund checks is really important. If the check is made payable to you and your spouse, both of you need to sign it. Having a joint account makes cashing the check easier, but if you don't have one, you'll need to bring your spouse to the bank with you; you both must have your drivers' licenses or other government-issued identification. This helps the teller to verify your identities and determine that both of you agree to the cashing of the check.


About the Author

Cynthia Nigro's areas of expertise include accounting, business administration and personal finance. She has spent more than seven years in the banking industry, and she holds an MBA in accounting from the University of Phoenix. Nigro began her writing career ghostwriting web content for a wide range of businesses.

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