IRS direct deposit: Here’s a helpful breakdown that will tell you if it’s a tax refund or credit

With the Internal Revenue Service scrambling to distribute various types of payments to millions of taxpayers, one result of its efforts is that money is showing up unexpectedly in millions of people’s bank accounts.

As we reported last week, many people were surprised to wake up to an additional tax refund on Wednesday, after the IRS corrected their 2020 returns and determined—due to changes in the tax law—that they overpaid on unemployment compensation. Although the IRS is sending hard-copy notices to people who are owed refunds, the money often shows up by direct deposit before the letter arrives—leaving many recipients pleasantly surprised, albeit a little suspicious.

It’s been a similar situation with the monthly advance payments for the child tax credits. No matter how many tweets and press releases the IRS sends out to inform people of the pay schedule, social media still lights up with shocked recipients each time a payment is made. Ditto for all three stimulus checks. There’s always someone who doesn’t know it’s coming, or doesn’t know what the payment is for once they get it.

Now you no longer have to wonder.

The Taxpayer Advocate Service (TAS) put out an update last week that breaks down the mysterious reference codes for three types of payments. These are the codes that appear in your bank account along with the funds. Each code starts with “IRS TREAS 310,” but then the code descriptions differ depending on the payment type. They are as follows:

TAX REF: This is what shows up if your deposit is a refund, including the refunds that are now being distributed to unemployment recipients with corrected returns.
TAXEIP3: This is the code that shows up for the third stimulus check, also known as Economic Impact Payments. Most, but not all, of those payments have been delivered.
CHILDCTC: This is what shows up if you receive an advance payment for the child tax credit. Those are being distributed monthly through the end of the year.

Sharing this information with taxpayers may seem like a no-brainer, but an explanation of these codes was surprisingly hard to come by until now. We found one buried in an FAQ page from the U.S. Treasury when surprise refund deposits showed up in people’s bank accounts back in June, but not even the IRS spokesperson we reached out to at the time could confirm what the codes meant.

At any rate, unexpected deposits are likely to be an ongoing issue as the IRS works through its tremendous backlog of tax returns, and payments from tax credits, refunds, and the occasional stimulus check continue.