The Economy’s Tough – But Rapid Refund Loans are Tougher
Sunday, January 18th, 2009Tax season is upon us, and really, it’s one of my favorite times of year, even if I owe money to the IRS. I know, that sounds strange, but it gives me a chance to clean through a ton of paper, file, and organize my house a bit. Plus, in the years I get refunds, I like tearing through it to get my refund quickly and put it to good use.
One thing I don’t do no matter how badly I want/need my refund is to use a tax service that advances me my refund. Here’s why….
The “rapid refund” type services are in the business of making money by taking a percentage of your refund as a loan fee for service. It goes without saying then that there are some services out there that are going to find ways to get you the largest refund out there they can, and some have been known to use unscrupulous tactics to do it, leaving you open to an IRS audit. The more they “find” you, the higher their cut of your tax refund.
If you can file in a quick enough manner using a reputable service like Turbo Tax, and you have it set up to electronically deposit your funds into a checking account, you can receive your tax return from the feds in as little as 9 business days. When all’s said and done, even if you’re facing a tough time with money, waiting that few extra days can save you as much as 10-20% in loan fees, keeping all the money in your pocket. Turbo Tax is free to e-file your Federal taxes if you have a very basic tax return, and if you wind up having to upgrade to a paid version, the money you’ll spend will still be cheaper than the refund loan.
Even worse are the refund loans that front loads the balance on a pre-paid Mastercard. HR Block, whose Tax Cut software is similar and comparable to Turbo Tax, offers the pre-paid Masercard as an option for getting their Refund Anticipation Loan product. The fine print is that there may be additional fees on top of the loan fees. So if you feel you have no choice but to go down the refund loan path to get your tax return this year, don’t let anyone talk you into the pre-paid Mastercard option – it will only eat even more of your hard-earned money.
Ultimately, you need to do what’s best for your family. But the technology and software available to do your own taxes and get a rapid return on your own has cut the tax return process down to less than two weeks for most federal filers (your state return could take longer). If you need to do the refund loan option, stick with a reputable firm and not a fly-by-night outfit. HR Block might be your better choice. But if you can hang tight for the money, you’ll do better in the long run by filing on your own and waiting the few days for the IRS to direct deposit your funds. You’ll save several hundred much needed dollars that can go a long way towards paying bills or buying much-needed household purchases.
Our top three choices for do-it-yourself tax software:
For more information about tax filing for 2008, go to www.irs.gov.
The prices of ground beef can be pretty high with non-sale prices in some areas as high as $5.00 a pound. Good sales can be few and far between but if you are willing to put a little effort into saving on meat you can shave some of the cost on ground beef.
