Q: My wife and I filed our tax returns jointly and we received a tax refund check that was written out to both our names. We do not yet have a joint bank account. Is it possible to deposit the tax refund check into one of our own checking accounts?
- Daniel P.
A: With most checks written to two people or more, it’s important to look at what the check writer put down on the “Pay to the order of” line. There is a major difference between “Party A and Party B” and “Party A or Party B.”
Difference between “and” and “or”
If the check states that the funds are paid to either party, then either of you can deposit the check in your individual bank accounts.
If the check states that the funds are paid to you and another party, then the check deposit could become much more of a hassle if you do not have a joint bank account with the other party.
According to Section-110(d) of the Uniform Commercial Code, if a check payable to two or more people is ambiguous in terms of the payee(s), any of the stated payees can deposit the check into their individual accounts.
In every case, all other payees must endorse the check with their signatures.
Since refund checks from joint tax returns are paid out to both filers, you’ll have to follow your bank’s policy on check deposits that contain multiple payees (each bank has its own policy). Banks must account for the risk involved in the possibility that a check was written out to multiple individuals and one of the individuals attempt to deposit all the funds into his or her own account.
Some banks can be very strict. For instance, Bank of America requires that both people must have their names on the account that receives a check with two payees. Popular online bank Ally Bank has the same policy.
Chase and Wells Fargo requires that, if you want to deposit a check that is payable to two individuals, both payees must go to a branch in person and present government identification to verify the signatures on the back of the check.
Other banks are rather lenient. Citibank and online bank Capital One 360 simply required that checks are properly endorsed by all payees. They don’t stipulate that all payees must provide identification or maintain joint accounts.
What you should do
It would be best to call your bank ahead before you deposit the check. Also, do not deposit the check through an ATM and hope that the bank will accept it. If the bank finds that the check deposit was in violation of its policies, it may become much more of a hassle to get the situation cleared up.
In most cases, you would be better off asking the payer to write two separate checks.
For checks issued by government agencies, you’d have to contact them for a reissued check. For tax refunds, you can call the IRS at (800) 829-1040 and ask for a new check.