On this page
- The short answer: direct deposit needs a U.S. account
- What counts as a U.S. account or a correspondent account
- How the payment method gets decided
- How the cheque is mailed to an address outside the U.S.
- Comparing the ways a refund can arrive
- What a Canadian bank may do with a U.S. Treasury cheque
- Questions to put to your branch before depositing
- Where U.S. Tax Recovery fits in
- Frequently Asked Questions
You won at a U.S. casino, the cage withheld 30% under the rule for non-residents, and a U.S. claim is how a non-resident asks for some of that back. The next question is where the money would land. The IRS deposits refunds only to a U.S. account or through a foreign bank’s U.S. correspondent account. Otherwise it mails a paper cheque. This article explains which of those two routes applies to a Canadian account, and what to ask your branch before depositing a U.S. Treasury cheque.
The short answer: direct deposit needs a U.S. account
The IRS states the rule plainly. A refund can be deposited electronically only into an account at a U.S. bank or other financial institution that is a member of the Federal Reserve System, or through a correspondent bank that keeps an account at a Federal Reserve Bank. An ordinary chequing or savings account held at a branch in Canada does not meet the first test on its own.
The correspondent route is how some foreign banks receive U.S. government payments. The refund goes to the correspondent’s account, and that bank passes it along. Holding money in U.S. dollars does not settle the question. What matters is where the account sits and how it connects to the Federal Reserve. Whether a particular Canadian bank has such an arrangement is something only that bank can confirm.
When no qualifying account is given, the IRS does not attempt a deposit. It mails a paper cheque in U.S. dollars, drawn on the U.S. Treasury. This affects only how the money arrives. The amount of any refund is whatever the IRS accepts. For how a claim comes together, see what Form 1040-NR is for Canadian casino winners.
What counts as a U.S. account or a correspondent account
The IRS looks at two things: where the account is held, and how the institution holding it connects to the U.S. Federal Reserve. An account at a financial institution located in the United States that belongs to the Federal Reserve payment system meets the test. A foreign bank can also meet it through a correspondent arrangement, where a U.S. bank that keeps an account at a Federal Reserve Bank receives the deposit on the foreign bank’s behalf.
Currency is not part of that test. Many Canadians hold a U.S.-dollar account at their Canadian bank, but it still sits at a branch in Canada. A U.S. account is identified by a nine-digit U.S. routing number, while a Canadian account is identified by institution and transit numbers, which belong to a separate payment system.
Some Canadian banks also own U.S. subsidiaries or offer cross-border accounts that are opened and held in the United States. Those are different from a U.S.-dollar account at the Canadian parent. Whether a particular arrangement qualifies is a question the bank itself answers for its account holder.
How the payment method gets decided
The choice between a deposit and a cheque is made when the claim is prepared. A direct deposit needs a U.S. routing number, an account type and an account number, and a Canadian transit and institution number does not fit. When no usable U.S. details are given, or a deposit cannot be completed, for example because the account does not qualify, the IRS sends a cheque rather than holding the refund for corrected details. So for a Canadian without a U.S. account, a cheque is the ordinary route. The IRS still decides the claim itself.
How the cheque is mailed to an address outside the U.S.
By default, the IRS mails the cheque to the home address on the return. For a Canadian filer, that includes the street and city, the province, the postal code and Canada. A filer who wants the cheque sent to a different address outside the United States can say so on the return, and the instructions for the year being claimed show how.
Address errors are a common reason a cheque goes astray. A missing unit number, a postal code in the wrong place or a province left blank can leave a cheque undelivered or returned to the IRS. A move after the claim has been filed is a separate matter, because the IRS has to be told of the new address. If a cheque never turns up, tracing a lost IRS check explains how a missing refund is followed up.
Comparing the ways a refund can arrive
None of these routes comes with a published delivery time. The IRS sets the pace, and it varies from case to case. Choosing a deposit over a cheque changes how the money arrives. It does not change how the IRS decides the claim.
| Route | What the filer provides | What arrives |
|---|---|---|
| Deposit to a U.S. account | Details for an account the filer holds at a U.S. bank | An electronic deposit into that U.S. account |
| Deposit through a correspondent bank | Details the Canadian bank gives for its U.S. correspondent account | An electronic deposit to the correspondent account, which the Canadian bank credits under its own arrangement |
| Cheque to the home address | A complete mailing address and no bank details | A paper U.S. Treasury cheque mailed to that address |
| Cheque to a different address | A separate mailing address outside the United States | A paper U.S. Treasury cheque mailed to that address |
What a Canadian bank may do with a U.S. Treasury cheque
A refund cheque from the IRS is issued by the U.S. Treasury in U.S. dollars and drawn on an account in the United States. When a Canadian deposits it at their own branch, Canadian banking rules decide how the bank treats it. The Financial Consumer Agency of Canada (FCAC) publishes guidance on how long a bank may hold deposited funds, with maximum hold periods for ordinary cheques and a list of exceptions.
According to the FCAC, the maximum hold periods do not apply to a cheque that is not issued in Canadian dollars or that is drawn on an account at a branch outside Canada. A U.S. Treasury cheque meets both conditions, so the length of any hold is a matter of the bank’s own policy, and policies differ.
The guidance also describes another option. A bank may send a foreign cheque back to the issuing bank to be collected, or ask the person depositing it for a secured form of payment, such as a bank draft or a cashier’s cheque. The bank is not refusing the money when it does this. It is choosing a way of handling a foreign item that it can verify.
Questions to put to your branch before depositing
Because the FCAC guidance leaves a bank room to set its own approach, the practical answers sit with the branch. It helps to ask whether the bank takes U.S. government cheques for deposit or only for collection, whether the cheque can go into a Canadian-dollar account or only a U.S.-dollar account, and whether the name on the cheque must match the account holder exactly. It also helps to ask what the hold policy is, and whether funds are credited right away or only after the cheque clears.
Currency conversion is the other part. A U.S.-dollar cheque deposited to a Canadian-dollar account is converted at a rate the bank chooses, so ask which rate applies, when it is fixed and whether a fee or spread is added. A U.S.-dollar account keeps the funds in U.S. dollars until you decide to move them. Each bank sets its own terms, so the branch is the place to confirm them.
Where U.S. Tax Recovery fits in
U.S. Tax Recovery prepares and files the claim for you, and it is an IRS Certifying Acceptance Agent, listed on the IRS’s Acceptance Agents directory for Canada. That credential means it can review a passport and certify it for an ITIN application, so the original does not have to be mailed to the IRS. It is not an endorsement from the IRS, and it does not change how the IRS reviews a claim.
If you have a U.S. account or a correspondent arrangement your bank has confirmed, those details can be used. If not, the claim points to a mailing address instead. Getting those details right matters because the IRS acts on what the claim says. A routing number that does not belong to a qualifying account, or an old address, can send a refund somewhere you did not expect. The steps of a claim are set out separately.
U.S. Tax Recovery is not affiliated with the IRS. The IRS decides each claim, including whether a refund is issued and for how much, and it sets the pace. A filer waiting on a cheque can follow the IRS’s own tools, described in how to check on a refund.
Frequently Asked Questions
Can I use my Canadian bank account for direct deposit of my IRS refund?
No, a Canadian account on its own will not work for direct deposit. The IRS deposits refunds only into a U.S. account or through a foreign bank’s U.S. correspondent account. If no valid U.S. details are given, the IRS mails a paper cheque instead.
My Canadian bank gave me a U.S. dollar account. Does that count as a U.S. account?
Not automatically. A U.S. dollar account held at a Canadian branch is still a Canadian account. What matters is whether the deposit can move through a U.S. routing number, which means either an account at a U.S. bank or a correspondent account the foreign bank holds at a U.S. bank. Some Canadian banks have U.S. affiliates, and the bank itself can confirm which details apply.
What happens if no bank details are given?
The IRS mails a U.S. Treasury cheque to the address on the return. That is the default when no usable U.S. account details are entered. For a non-resident, that address can be outside the U.S., including a Canadian address. The IRS sets the pace for issuing and mailing the cheque, and it varies from case to case.
Will my Canadian bank actually cash a U.S. Treasury cheque?
Many Canadian banks accept U.S. Treasury cheques, but each bank sets its own rules. A branch may place a hold on the funds, convert the amount to Canadian dollars at its own rate, or charge a fee for a foreign item. Asking the branch before depositing shows what hold applies and whether depositing into a U.S. dollar account avoids the currency conversion.
Can U.S. Tax Recovery get the IRS to pay my refund straight into my account?
No. U.S. Tax Recovery prepares and files documents and does not control how or when the IRS pays a refund. It is an IRS Certifying Acceptance Agent, listed on the IRS’s Acceptance Agents directory for Canada, and it is not affiliated with the IRS. The payment method follows the account details given, and the IRS makes the decision.
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