Bank account ineligibility for income tax refunds is usually caused by incorrect account/routing numbers, account validation failures, or a mismatch between the name on the PAN/tax return and the bank records. Common reasons include closed accounts, using a credit card account, or exceeding the limit on direct deposits to one account.
Bank Account Issues (Incorrect Details or Not Pre-validated)
Incorrect bank details, invalid IFSC, closed/inactive accounts, or name mismatches are common reasons for refund failure. Always ensure your bank details are accurate and the account is active.
Why was my direct deposit refund returned to the IRS? (Updated January 15, 2025) A financial institution will reject a refund for a variety of reasons. Most often, the personal information on the direct deposit doesn't match its records: Name.
If you wish to EVC-enable that bank account, you will need to update your contact details on the e-Filing portal to match your details registered with the bank or update the mobile/email at bank's end same as your e-filing registered primary mobile/email. Once details are updated, revalidate your bank account.
The phrase "not eligible for refund" functions as a descriptor indicating ineligibility for a monetary return. The phrase "not eligible for refund" is a grammatically correct expression used to denote that a refund will not be provided under specific circumstances.
This could be due to a variety of reasons, such as the cardholder closing the account or the card expiring. In this case, the cardholder's payment method cannot be refunded. Another common reason for a Refund decline is fraud.
Refund eligibility often depends on the condition of the product and whether a receipt is provided. State laws may dictate specific requirements for refund policies. Refunds can be issued as cash, store credit, or exchanges. Time limits for returns are often established by the store or state law.
Prerequisites
In case, Bank Validation Status is showing as “Failed”, you can:
Contact your financial institution to ensure they will accept your direct deposit and verify your account and routing number. Verify your account and routing numbers with your financial institution and double check the accuracy of the numbers you enter on your return prior to signing and submitting it.
Your routing number is just as important as your account number since it tells the IRS where to send your funds. Messing up a single digit could derail how fast you receive your tax refund. Double-check the routing number for your bank when filling out your information.
Some common culprits that could cause a rejection are mismatched names, SSNs, employer EINs, electronic signature numbers, or an expired TIN. File early. Another action to take is to file your return early. This gives identity theft criminals less time to file a fraudulent return using your information.
You may call us toll-free at 800-829-1040, M - F, 7 a.m. - 7 p.m. Generally, if the financial institution recovers the funds and returns them to the IRS, the IRS will send you a refund by other means to your last known address on file with the IRS.
If you are denied access to the Mobile Deposit, you will be presented with the error “No eligible accounts were found for this service based on requirements established by your financial institution”. If you receive this error, you must speak to a customer service representative for information on why you were denied.
You may have negative information in your file if you had a checking account before and you: Have an unpaid negative balance on that account, such as from an overdraft, that you have not repaid and the account was closed by the bank or credit union (this is called an “involuntary closure”).
Click Re-Validate under the Action column for the bank account you need to revalidate. You can revalidate the added bank account also if there is any update in your mobile/email linked with bank or in e-filing profile or if your account type/account status is updated.
Understanding the Restricted Refund Status on Income Tax Portal. Many tax filers come across the “Restricted Refund” status in the bank account section on their profile dashboard in the Income Tax portal. If your bank account name and the name linked to your PAN are different, this error will appear.
Refund shall be issued to the pre-validated bank account only. In case of refund failure, taxpayer can raise the service request in e-Filing portal upon receiving communication from CPC. Go to Services ' menu and click on 'Refund reissue'. Create Refund Reissue request.
Your bank account can't verify due to mismatched personal details (name, SSN, address), issues with the linked bank (unsupported, system errors, or closed), incorrect routing/account numbers, insufficient funds for micro-deposits, or problems with third-party verification services (like Plaid or Chex Systems) having outdated or wrong data. Common solutions involve double-checking your info, using a different verification method (like a voided check), ensuring funds for small deposits, or contacting support to clear up data errors.
The pre-validation process is automatic. Once your request is submitted, it is sent to your bank. The validation status is updated in your e-Filing account within 10 - 12 working days.
Providing an incorrect bank account number is a common reason for the delay. Ensure the bank account number entered in your tax return is accurate. The IT Department mandates the pre-validation of your bank account to ensure that the refund is credited to the correct account.
There are many reasons why the IRS may be holding your refund. You have unfiled or missing tax returns for prior tax years. The check was held or returned due to a problem with the name or address. You elected to apply the refund toward your estimated tax liability for next year.