Friday, February 13, 2009

Fast Refund?

Are you familiar with the ads on the radio and TV about getting your federal tax refund fast -- sometimes in as little at three days? Is this a good deal? Let’s examine what these "refunds" actually are:

Suppose you have Company X prepare your return. They complete your tax return and then offer to get your refund to you in three days. Your first thought might be "Wow, that’s a down payment on a car!" and agree to the deal. You return three days later and your refund check is substantially less than you expected. What happened?

These fast refunds are not coming from the IRS. The company that prepared your return is actually lending you this money. They then get your refund when it comes from the IRS. The company is charging you a fee for making the loan, a separate fee for preparing your return, and could even be charging you interest.

The best idea is to say no to the offer. Have your refund direct deposited into your checking account by the IRS and the state. You will have your money in two to three weeks. You can then make that car down payment and probably have a little money left over.

Another good idea is to go to my blog at www.thomstaxtalk.com and look in the January archives. Check out the posting called File your return Free with the IRS. If you have a fairly simple return you can file it, get direct deposit of your refund, and pay no fees for the preparation of your return.

1 comment:

Meg said...

Thom - these posts great - I enjoy reading them!

Meg