IRS to End Paper Checks

The federal government is making a big change to how Americans receive their tax refunds and federal benefits. Starting September 30, 2025, paper checks will no longer be issued. Instead, all payments will be made electronically through direct deposit. This move aims to reduce fraud, cut costs, and speed up payment processes, but it also requires taxpayers to prepare in advance.

Why Is This Happening?

According to an executive order, paper checks are 16 times more likely to be lost, stolen, or tampered with compared to electronic payments. Switching to direct deposit increases security, reduces delays, and ensures payments are made faster.

What About People Without Bank Accounts?

Millions of Americans, known as the "unbanked," don’t have a traditional bank account due to lack of access or mistrust of banks. To help, the government might offer alternative options like prepaid debit cards or work with banks to create low-cost accounts. If you don’t have a bank account, it’s a good idea to open one now to avoid delays in receiving your payments.

Key Changes to Expect

1. Bank Accounts Are Required

To receive tax refunds or benefits, you'll need a U.S.-based bank or credit union account after the transition.

2. No More Delays from Mailing Checks

Direct deposits are much faster, cutting down on waiting times.

3. Less Risk of Fraud

Electronic payments eliminate issues like stolen or lost checks.

Concerns for Certain Groups

• Americans Living Abroad

Expats might face issues as the IRS typically requires a U.S.-based bank account for refunds. They may need to set up special accounts or wait for alternative solutions.

• Special Cases

Executors, trustees, and taxpayers managing estates might run into challenges, as some forms don’t currently allow direct deposit details. Experts are urging the government to provide exceptions or clear guidelines for these situations.

Social Security Benefits

Less than 1% of Social Security payments are still sent via paper check. If you’re one of them, switch to direct deposit or sign up for a prepaid Direct Express® card through the Social Security Administration.

What Should You Do?

To prepare for this change:

• Open a U.S.-based bank account if you don’t already have one.
• Update your direct deposit details with the IRS and other agencies if needed.
• Stay informed about updates or guidance from the government before the deadline.

By planning ahead, you can ensure a seamless transition to the new all-electronic payment system. If you have questions or need help navigating these changes, feel free to contact us.