Monday, April 04, 2011

Rapid Refund Has a Cousin

Rapid Refunds have been called many names such as Refund Anticipation Loan, RALS and now Tax Refund Advance. The Office of Comptroller of the Currency has blocked Hallmark, H&R Block, McAnnally & Company and HSBC from offering rapid refunds because the IRS was unable to determine if a tax filer was credit worthy to receive a rapid refund loan. In the past tax filers who owed taxes were still able to get a refund. The glitch was only found after the rapid refund was received by the tax filer. Chase (JP Chase Morgan) stopped offering rapid refunds in 2010.

In place of rapid refunds, H&R Block now offers RACs, Refund Anticipation Checks that provides tax filers with a refund checks in 8 to 15 days for refund amounts up to $9,999. You don’t pay any interest but the fee is deducted from your refund. You can get the money deposited in your bank account or have a check written in the refund amount. Getting a check will cost you an additional fee. Rapid refunds have very high interest rates starting around 40% up to 500% or more. Tax preparation companies don’t guarantee that you will get your money before the normal wait time from the IRS.

You can save yourself a fee by just being patient and waiting the normal wait time. Jackson Hewitt still offers rapid refunds for refund amounts up to $1,500. Liberty Tax still offers rapid refunds in additional to several accounting firms.

The IRS is taking steps to prevent more tax filers from using rapid refunds by processing tax returns quicker in real time so refunds can be received in 2 to 3 days starting next year. Here are 5 tips to get your tax refund faster and save money.

1. File early. If you expect to get a refund file your taxes as soon as you get your W-2. Early filers receive their refund quicker.
2. Assistance. Use a tax preparation software or get professional assistance from a licensed tax preparer or accountant to prepare your taxes to minimize getting audited or having errors on your tax returns. Many tax preparation software programs now guarantee that you will not be audited and that your tax returns are correct.
3. Direct Deposit. Have your tax refund deposited in your bank account to reduce processing time.
4. File Online. File your tax online by using a free tax preparation site with the IRS or a tax preparation software such as Turbo Tax or Tax Cut that can file your taxes electronically to reduce processing time. You can get your check within 14 days from the IRS or your local state taxing agency.
5. Deposit. Deposit your tax refund check into your bank account and skip using a check cashing store or liquor store to cash your check.


Harry said...
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Mary Lopez said...

Lol...good post! It has made me more informative than ever!