Instant Tax Refunds

| January 1, 2012

Every year when tax season comes around every consumer has to decide whether they should file online or file in person, then they have to decide if they need a refund right away or if they can wait. Many people opt for the instant tax refund, which is basically a loan against their anticipated tax refund.

Instant tax Refunds

These types of refunds are sufficient if the consumer really needs their money right away for a family emergency. The only downside to these loans is that if the tax payer owes any back taxes, student loans or child support, they will still owe that money to the government after they receive their refund. In other cases the IRS may audit their accounts and make them pay back the refund that they received.

An instant tax refund is useful in emergency situations, but if it is not an emergency and individual could just have their refund directly deposited into their bank account and they can have their money within two weeks. A regular refund can take up to 21 days, but if the money is not needed right away, the consumer can wait. Another problem with instant tax refunds is that they come with high finance charges and tax preparation fees. The lenders and tax preparation companies make a very good profit from these refunds.

Another alternative for filing taxes that is much cheaper is to file online, and this allows refunds to be sent much faster. When an individual goes into a tax preparer to have their taxes done, one of the first questions they ask after computing the numbers is would you like a refund anticipation loan or RAL which is the same thing as an instant tax refund. In most cases if the individual is single with no children or a single parent they will usually opt for the instant refund, because they need the money so badly.

The tax preparation companies know this and they jump on the opportunity, if the tax payer just wants the money right away they are not concerned with the fees and interest that come out as long as they are getting a nice portion of it to keep for themselves. That is why these instant tax refunds are so popular, because so many people anticipate their refunds and they already know what bills they are going to pay with the refund. It is a necessity for some.

Category: Tax

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