Rapid refund tax
Rapid tax refunds also known as Refund Anticipation Loans [RAL]. These loans basically are offered by some commercial tax preparation firms and banks to customers who would like to receive a fast refund of their excess tax paid of course for an up front fees. The tax preparation firms and banks who offer such a facility are like Pay Day Loan Companies. The upfront fee they charge will be taken out of the refund when it actually comes and often it will be very high as much as 20 to 30% of the refund.
Risks involved in getting a Rapid Refund:
In order to get the money early the providers of this facility will charge a loan fee ranging from $29 to $120. The APR [Annual Percentage Rate] on this loan facility can range from 40% to 700%. Electronic Filing fees and the fees for the tax preparers will also add up to the cost by making the total cost ranging between 20 to 30% of the refund. The major risks involved in this kind of facility is that one might end up in repaying this loan if the Internal Revenue Service [IRS] delays or denies the tax refund or gives a refund smaller than expected.
How to Avoid paying the high cost for a tax refund:
In order to avoid a situation of paying unnecessary fees for an early refund one can consider the following options:
a) Opening of a bank account which will enable direct deposit of refunds
b) Avoid check cashers as extra fees will be charged to cash tax refund checks
c) Use E-filing facility to file the returns which will speed up the processing and refund quicker
d) Use the service of a Volunteer Income Tax Assistance [VITA] site. Information regarding volunteer income tax assistance sites open during the tax season can be found by calling the Internal Revenue Service
The Conclusion:
To conclude you should keep on mind that if you file your tax returns correctly and on time through traditional routes; such as utilizing a direct deposit option or using the services of a Volunteer Income Tax Assistance ( VITA) site, it usually takes a few weeks to get your fund back. Wait, watch and be patient, your refund money is on the way and by staying away from these loan providers; your return will be greater.
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