Michelle Singletary — Jan 30th, I'm sure you've seen the ads by now. Walk out with a check. What these firms are advertising are "refund anticipation loans," which are short-term loans backed by a taxpayer's refund. My deceased brother was disabled and often needed money. When tax time came around, I practically had to wrestle Mitchell to the ground to prevent him from forking over what I knew was an unreasonable amount of money to get a rapid tax refund.
Nonetheless, I understood Mitchell's desperation. When you don't have much money, the chance to get your hands on some fast is tempting. A recent study released by the Brookings Institution's Center on Urban and Metropolitan Policy concluded that tax preparation fees and refund loans are eroding the benefits of the federal Earned Income Tax Credit, which is intended to help working families with low wages.
Paying with your federal refund is not required for the Refund Advance loan. Not all consumers will qualify for a loan or for the maximum loan amount.
Your loan amount will be based on a portion of your anticipated federal refund. You will not receive a final decision of whether you are approved for the loan until after you file your taxes. Loan repayment is deducted from your federal tax refund and reduces the subsequent refund amount paid directly to you. Fees may apply for other products and services. The Turbo Visa Debit Card opening is subject to identity verification.
Visa is a registered trademark of Visa International Service Association. Deposits under any of these trade names are deposits with Green Dot Bank and are aggregated for deposit insurance coverage. Green Dot is a registered trademark of Green Dot Corporation. You may access your loan proceeds by multiple methods without paying additional fees. Other fees apply to the card, which are viewable prior to applying.
Please see Deposit Account Agreement for details. Approved pending confirmation of loan tier amounts in contract and state licenses approved. Privacy Settings. The IRS eliminated a code that let tax preparers know if customers would get their entire refund, or if some money would be withheld to cover things such as unpaid back taxes. Tax-preparation companies used the code as a form of credit check for the loans. Skip to content Share Icon.
While this strategy is risky enough that some investors have balked, the change is good for consumers and has been generating more walk-in business.
Getting a rapid refund may now come with little to no inherent risk, but don't let your guard down too quickly. Tax preparation services are using the fast cash to get you in the door. Once you're there, the plan is to upsell you as much as possible. First, ask how much the tax preparation fee is.
Many companies have substantially increased their fees to cover the cost and potential losses of the new rapid refund structure.
Once you determine that the preparation fee is acceptable, stay wary. Don't agree to sign up for unnecessary services and add-ons, as these will only serve to increase your costs.
One preparer, for instance, offers to give you a debit card secured by your refund. This card comes with a percent interest rate and an annual fee. The same company offers to set up a short-term bank account for customers who can't afford to pay their tax preparation fees.
When your refund gets deposited into this account, the money pays for the tax preparation, and the remaining balance is yours.
0コメント