What to do if a state and federal refund is denied direct deposit?
"It is not allowed to pay refunds to anyone other than the taxpayer. This is due to various tax return fraud schemes that were running around. Banks are required to enforce this. If the direct deposit is denied, a check will be issued. In her name, obviously. What she does with it when she gets it is her business - but I believe that tax refund checks may not be just ""endorsed"", the bank will likely want to see her when you deposit it to your account, even if it is endorsed. For the same reason." Publication 17 Your Income Tax top of page 14 If the direct deposit cannot be done, the IRS will send a check instead. When your girlfriend gets the check, she can endorse it over to you for deposit into your account.
Wire transfers normally run through either the Fedwire system or the Clearing House Interbank Payments System (CHIPS). The process generally works like this: You approach a bank or other financial institution and ask to transfer money. You give the bank a certain code, either an international bank account number or one of several other standards, which informs the bank where to send the money.  The bank sends a message through a system like Fedwire to the receiving bank, along with settlement instructions.  This is where the process can get a bit tricky. For the wire transfer to work, the banks must have reciprocal accounts with each other, or the sending bank must send the money to a bank that does have such an account with the receiver. If the sending bank sends the money to a third-party bank, the transaction is settled between them, and the money is then sent to the receiving bank from the third-party bank. This last transaction may be a wire transfer, ACH transfer, etc.  The Federal Reserve fits into this because many banks hold accounts for this purpose with the Federal Reserve. This allows them to use the Fed as the third-party bank referred to above. Interestingly enough, this is one of the significant ways in which the Fed makes a profit, because it, along with every other bank and routing agent in the process, collects a miniscule fee on this process.  You'll often find sources that state that Fedwire is only for transferring large transactions; while this is technically correct, it's important to understand that financial institutions don't settle every wire transfer or payment immediately. Although the orders are put in immediately, the financial institutions settle their transactions in bulk at the end of the business day, and even then they normally only settle the difference. So, if Chase owes Bank of America $1M, and Bank of America owes Chase $750K, they don't send these as two transactions; Chase simply credits BAC $250K.  You didn't specifically ask about ACH transfers, which as littleadv pointed out, are different from wire transfers, but since ACH transfers can often form a part of the whole process, I'll explain that process too. ACH is a payment processing system that works through the Federal Reserve system, among others. The Federal Reserve (through the Fedline and FedACH systems) is by far the largest payment processor.  The physical cash itself isn't transferred; in simple terms, the money is transferred through the ACH system between the accounts each bank maintains at the Federal Reserve.  Here is a simple example of how the process works (I'm summarizing the example from Wikipedia). Let's say that Bob has an account with Chase and wants to get his paycheck from his employer, Stack Exchange, directly deposited into this account. Assume that Stack Exchange uses Bank of America as their bank.  Bob, the receiver, fills out a direct deposit authorization form and gives it to his employer, called the originator. Once the originator has the authorization, they create an entry with an Originating Depository Financial Institution, which acts as a middleman between a payment processor (like the Federal Reserve) and the originator. The ODFI ensures that the transaction complies with the relevant regulations. In this example, Bank of America is the ODFI.  Bank of America (the ODFI) converts the transaction request into an ACH entry and submits it, through an ACH operator, to the Receiving Depository Financial Institution (RDFI), which in this case is Chase bank. Chase credits (deposits) the paycheck in Bob's account.  The Federal Reserve fits into all of this in several ways. Through systems like Fedline and FedACH, the Fed acts as an ACH operator, and the banks themselves also maintain accounts at the Federal Reserve, so it's the institution that actually performs the settling of accounts between banks. "Short answer: Yes. For Federal income tax purposes, you are taxed on your total income, adding up positives and negatives. If business A made, say, $100,000 while business B lost $20,000, then your total income is $80,000, and that's what you'll be taxed on. As @littleadv says, of course any business losses you claim must qualify as business losses under IRS rules. And yes, there are special rules about losses that the IRS considers ""passive"". If you have wage income in addition to business income, business losses don't offset wage income for social security and medicare tax purposes. You can't get a refund of the social security tax deducted from your paycheck. I don't know if this is relevant to you, but: If you have businesses in different states, each is taxed by that state. For example I have two tiny side businesses, one in Michigan and one in Ohio. Last year the Michigan business made money while the Ohio business lost money. So my federal income was Michigan minus Ohio. My Ohio income was negative so I owed no Ohio income tax. But I couldn't subtract my Ohio losses from my Michigan income for Michigan income tax purposes. Thus, having, say, $10,000 income in Michigan and $10,000 in Ohio would result in lower taxes than $30,000 income in Michigan and a $10,000 loss in Ohio, even though the total income in both cases is the same. And this would be true even if the tax rates in both states were identical." Federal income tax refunds received during 2016 are not taxable income for 2016 (or any other year) on either the Federal or the State tax return. The State income tax refund for 2015 received during 2016 is not taxable income on the State tax return for 2016. It is taxable income on the Federal tax return for 2016 only to the extent that you received a tax benefit (reduction in Federal income tax due) from deducting State income tax as an Itemized Deduction on your 2015 Federal return. If you didn't deduct State income tax because you deducted State sales tax instead, then the State income tax refund is not taxable income on the Federal tax return. Multistate Impact of the American Taxpayer Relief Act of 2012  In general, states with rolling conformity will follow this change. States with specific date conformity will continue  to follow the date of conformity currently in effect and will not follow the change. A few states may have their own  QSBS rules and will not conform to or be impacted by this provision of the Act. The chart that follows summarizes  these principles as applied to the enumerated states:  STATE: QSBS Exclusion Conformity:  California statutes refer to the IRC QSBS provisions but modify and limit their  applicability, and would not be impacted by this provision of the Act. However, California’s provisions were ruled unconstitutional in recent litigation and the California Franchise Tax Board has recently taken the position that gain exclusions  and deferrals will be denied for all open tax years. Florida Florida does not impose an income tax on individuals and therefore this provision of  the Act is inapplicable and will have no impact.  Illinois Due to its rolling conformity, Illinois follows this provision of the Act.  Because New York effectively provides for rolling conformity to the IRC, through  reference to federal adjusted gross income as the state starting point, New York  effectively follows this provision of the Act.  Texas does not impose an income tax on individuals I would not take any action with the check (neither return it nor cash it), but instead contact the bank.  We live in the modern era where you can call someone on the phone or email them, and get nearly instant feedback.  Use this to your advantage.  Find out why they refunded you the money twice: was it an error on their part (in which case you just tear up the check or return it to them and be done with it)?  Is it possible you're wrong about it being twice refunded (maybe the first check didn't go through properly or was only for half the amount, and you're just wrong)?  Maybe they had some sort of guarantee that they failed to live up to and are correctly refunding you double your money. Probably the first, of course.  But you should call them and ask, and verify what they want you to do, before you take any action - particularly one that costs you money.  And certainly don't just cash the check; if it is a mistake, they'll be asking for that money back later, with interest, and be within their rights to do so. "Following up on this, here is what I did. First, I called my benefits provider.  They had documentation of my election over the phone, which then allowed them to retroactively fix the problem. Had they not had this documentation, I would have been out of luck. Second, the next step for ""fixing"" occurred when I received my W-2 for this position. This W-2 mistakenly showed the amount for my medical FSA in box-10 of my W-2 as the same dependent care FSA. This requires calling/emailing my benefits and payroll department to get an updated W-2..." You'd have to consult a lawyer in the state that the transaction took place to get a definitive answer.  And also provide the details of the contract or settlement agreement. That said, if you clearly presented the check as payment (verbally or otherwise) and they accepted and cashed the check, and it cleared, you should have good legal standing to force them to finalize the payment.   While they had every right to refuse the payment, and also every right to place a hold on the credit until the transaction cleared their bank, they don't have the right to simply claim the payment as a gift just because it came in a different form than they specified in the contract.  Obviously this is a lesson learned on reading the fine print though.  And, to be frank, it sounds like someone wants to make life difficult for you for whatever reason. And if that is the case I would refer back to my initial comment about contacting a lawyer in that state. "First, congratulations on the paycheck!  :-) On the holds: Is it possible that by allowing your account balance to go negative (into overdraft) that you triggered such treatment of your account?  Perhaps the bank is being more cautious with your account since that happened.  Just how long did you have their $150 on hold?  ;-) Or, perhaps it's not you specifically but the bank is being more cautious due to credit conditions that have been prevalent these last years.  Consider: allowing you to cash a check immediately – when it technically hasn't cleared yet – is a form of credit.  Maybe it isn't you they don't trust well enough yet, but the company that issued the check?  Checks bounce, and not by fault of the depositor. I once had a new account, years ago, and discovered a 5 day hold on deposits.  The irony was it was a check drawn on the same bank!  I called my banker and asked about it – and suggested I'd take my business back to my old bank.  I was in the process of applying for a mortgage with the new bank.  Holds were removed. But you may have some trouble with the ""I'll walk"" technique given the climate and your recent overdraft situation and no leverage – or if you do have some leverage, consider using it. But before you assume anything, I would, as JohnFx suggested, ask your bank about it.  Pay your branch a visit in person and talk to the manager.  Phone calls to customer service may be less successful.  If it's not a big issue and more a minor technical policy one, the bank may remove the holds.  If they won't, the manager ought to tell you why, and what you can do to solve it eventually."