Don't Lose Money on Your Tax Refund

by Miriam Caldwell | More from this Blogger

22 Dec 2006 11:31 PM

The approaching new year means that it is time to begin thinking about filing taxes. You have seen the advertisements for the tax preparation places that offer to not only prepare your taxes, but also actually will give you your refund a lot faster than waiting for your refund from the IRS. It is important to realize that you are actually taking out a loan against your return, and you are paying high fees and interest rates in order to receive the money sooner.

Unless you are in dire need of the money (they are about to foreclose on your house type of dire) you should wait so that you will receive more money back. The rapid refund options are similar to the payday loan scams in the amount of interest that you pay, and the people who they take advantage of. It is important to educate yourself. You can receive your refund from the IRS if you e-file in about two weeks. This is not a long wait.

If you do not have a checking or savings account at a financial institution you will likely be charged a fee for cashing your refund check. The fee can slide depending on the amount of the check that you are cashing. You may want to consider opening up a savings account and depositing your check there. You will avoid the fees, and be able to access the money, as you need it.

Tax return time is a big money making time for many banks. When I worked at the bank as a teller, I always felt bad for the people who would come in with their four thousand-dollar refund loan checks. I knew that they had already lost four or five hundred dollars of their refunds in order to receive the checks. Many paid an additional four hundred dollars to cash the check with us. You could tell that many of these people needed the money. I also heard plans of how it was going to be spent all in one weekend.

If you are in a situation where you can not open a savings or checking account, you should call around and find the lowest check cashing rates that you can. You should also wait for the refund check to come by mail rather than opting for the quicker check. You will have more money in your pocket that way.

Related Articles:

Are You Having Too Much Withheld from Your Paycheck?

Do You Have Questions About Your Taxes?

Have You Been Reported to Chex Systems?

Learn more about Miriam Caldwell

Miriam is a SAHM mom of three children. She has a daughter who is seven, and two sons, four and two. She loves being a parent and spending time with her children.

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queenofcoupons912 (51) 23 Dec 2006 03:55 AM

Hello~

First off let me explain that I am a tax preparation specialist for the NUMBER one tax prep place in the nation. Secondly I have been doing taxes professionally for 3 years and have done my own for over 20 years. I have NEVER gotten a tax refund in '2 weeks'... and depending on the time that you do your taxes and send(am talking e-file here) them in it may easily take 3-4 weeks. (there are two 'peak' times and each time takes a bit longer). Where as I deal with the 'working' poor (people who receive EIC) and the 'rich' (those who make over 70k) if you are getting $4k back paying a little over $100 may be money well spent.

I too have heard the stories of how the money would be spent in a weekend or to use to purchase a new car. But I have also seen and heard where the money was going for a family vacation or to catch up bills.

I just take serious offense to you calling rapid refund and such a 'scam'.

You say 'scam' I say this is how over 70% of people need/like/want to receive their tax refund.

Miriam Caldwell (8030) 23 Dec 2006 08:04 PM

Personally I have received my refunds the last few years in about two weeks time. I file early so I do not get caught up in the rush that comes towards the end tax season. I also believe that people should have the information available to them in order to make an informed decision. If they choose to lose the money because they do not want to wait, that is their individual choice. I also know that e-file with direct deposit (which speeds the refund significantly) is not available to those who do not have checking and savings accounts.

I worry about the truly poor, because I feel that they are often taken advantage of. The people who make over 70k a year, probably wouldn't blink an eye at the $100.00 fee. But if they truly need the money, then that $100.00 would help them as well. This blog was intended to inform people about the options available to them.