Say No to Rapid Refunds: 6 Ways to Get Your Refund Faster

It’s tax season and many taxpayers are anxious to get their tax refund. The Office of Comptroller of the Currency and the IRS permanently blocked companies such as Hallmark, H&R Block, McAnnally & Company, HSBC and other companies from offering rapid refunds because they were predatory products targeted to low and middle income taxpayers.  Fees included: an application fee, transmission fee, preparation fee, tax preparer fee, electronic filing fee and interest for the rapid refund loan. Rapid refunds have very high interest rates starting around 40% up to 500% or more.

When taxpayers opt for electronic filing with a company that advertises refunds within a few days you don’t get your refund faster.  Instead, you receive a check in the amount of your loan. This is because the IRS cannot process tax returns in the time periods advertised by tax preparation companies.

Some companies are still offering products in place of rapid refund loans (RALs) called refund anticipation checks (RACs) or other names but taxpayers should avoid using them. H&R Block offers RACs if you use direct deposit for $34.95 plus an additional $20 if you don’t use direct deposit. Liberty Tax Service offers electronic refund checks for $38.95 which includes a $9 transmittal fee. They also offer RALs for $39 plus finance charges for loans up to $3,000.

Jackson Hewitt offers an Assisted Refund for $49.95 for refunds up to $9,999. Tax payers can get the remainder of the refund through direct deposit, by check or on a Jackson Hewitt prepaid Visa card which charges a monthly fee of $5.95 plus a $2.50 fee for ATM withdrawals.  

Certain companies such as Jackson Hewitt are offering small personal lines of credit based on your credit score for a fee instead of receiving a rapid refund check. Their SmartLine personal line of credit provides up to $1,000 which can be repaid in monthly installments.  The product charges a $6.95 monthly maintenance fee, a late fee up to $35, an interest rate of 35%, and an access fee of 3% or $10, whichever is greater to transfer funds to your bank account.

AIT Financial Group is offering to buy part of taxpayers' refunds for a fee with their Simple Cash Option. After a tax return is completed consumers can go online to make a sale of their tax return, if a company accepts the offer the company issues the taxpayer a check.

Instead, use the IRS where’s my refund tool to get the status of your tax refund www.irs.gov/Refunds. Here are 6 ways to get your tax refund faster without a rapid refund.

1. Comparison Shop. Find a company that can process your tax refund in 30 days or less and avoid waiting until the last minute to provide your paperwork for filing.
2. File Online.  File your tax online by using a free tax preparation site with the IRS or 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.
3. Verify. If you prepare your taxes yourself use an automated tool that provides an error check features. Errors on taxes delay processing and refund payments.
4. Deposit.  Deposit your tax refund check into your bank account and skip using a rapid refund, check cashing store or liquor store to cash your check. If you don’t have a bank account open one to get your refund faster.
5. File early. If you expect to get a refund file your taxes as soon as you get your W-2.  Early filers receive their tax refund quicker than those who wait closer to the April 15^th deadline. 
6. Assistance.  Use tax preparation software, free tax preparation centers or get professional assistance from a licensed tax preparer or accountant to prepare your taxes.  This will minimize your chances of 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.