Tax Refund Advance
Tax season comes but once a year, and there are many options available to the taxpayer for handling their tax returns. Those who wish to prepare their own returns, there are on-line resources and various software programs available. Others may have more detailed and difficult paperwork to complete during tax time, and may hire a personal accountant, or CPA, to handle the chore. One of the more popular choices seems to be to use one of the commercial tax services like H and R Block or Jackson Hewitt. The reason for their popularity generally is associated with the promise of a quick tax refund when one is anticipated.
Tax laws are constantly changing, so there are numerous ways for individuals and families to qualify for various tax refunds. For many people the anticipation of a refund brings about much excitement, as well as impatience. For those who prepares their own taxes, they must file and wait a matter of weeks for their funds to arrive. Yet for those individuals who have taxes prepared by a commercial preparation service, they can get money back in a matter of days, or even hours.
In order to receive a rapid return, commercial tax services offer what is called an “anticipated refund tax advance loan”. This service actually issues a loan from a participating lender in the amount of the anticipated refund. In actuality the taxpayer is taking out a personal loan which is secured by what their refund is supposed to be, meaning that there are costs attached to that privilege. The fees for this service are quite high, and most people do not actually realize just how much money they are loosing in this process.
Tax preparers will generally charge inflated fees simply for the act of preparing tax paperwork. This service is considered to be worth the headache for many people, and in those cases seem acceptable. It seems that those who select the option to get their money back faster are also not bothered by the tax preparation fees, or the extra “minimal loan” fees, added for the speedy refund. In most cases, the refund amount seems to be a substantial enough amount, that those people might not immediately miss the several hundred dollars they spend to receive it.
On average, a minimal loan fee might be as little as $30 dollars, but can become as high as several hundred dollars, depending on how much the actual return is worth. For example, if an expected return would be as much as $1000, the taxpayer then might then be charged a $200 fee for the benefit of preparation and quick return. This fee of course depends on the service provider, but in this example the fee amounts to loosing as much as 20% of the given tax return.
Most people are anxious to get their anticipated monies back at the end of the year. For some it is a necessity as economic times are still hard for so many. For others it is the result of a large scheduled project such as a home remodeling, a shopping spree, buying a new car, or any need that requires a substantial chunk of money. It is important to first understand what choices are available to handle tax returns and refund options, know what the benefits and costs are, and then choose wisely according to what the individual needs might be. Smart choices will make tax time less stressful and costly for the taxpayer.