|
| |
Moving Home – A Stressful Time
Moving home involves a lot of work. There are also a lot of financial considerations that people generally are not used to. Engaging a solicitor, arranging the mortgage, paying for bridging finance if it is necessary, seeking the best selling price for ...
Ten Ways Simplify Your Financial Life
A simple financial checklist designed to get your finances moving in the right direction. Finances can be a pretty daunting, and a lot of times we ignore them because we just don’t want to face them. Well, here's some news… if you want to improve ...
The Economics of True Love
In the real world, can there be romance without finance? A common saying: No romance, without finance. But what does it mean really? After a little thought about it and a hard look at the big picture, we see that it actually derives from the fact that in ...
|
|
|
|
| |
While accountants are reaching for aspirin, millions of Americans are reaching for some fast cash this tax season. Unfortunately, those who reach for fast cash in the form of a “refund anticipation loan” are getting hit with interest rates and fees that are out of this world.
The tempting ads are plastered in newspapers and on television for “fast cash refunds”, “express refunds”, or “instant refunds.” The ads offer to get your refund in a day or two, or in some cases even instantly.
What is a “refund anticipation loan”? It’s a loan that borrows against your anticipated tax refund from the IRS. Refund anticipation loans, or RAL’s as they are known in the tax industry, carry annual percentage rates (APR’s) of about 60% to over 700%, a fact that many consumers either don’t realize or simply overlook.
RAL’s are marketed to people who need money the most such as low and moderate income workers. A report by the National Consumer Law Center notes that “about 40% of the 12 million refund loan customers in 2000, were families who received the Earned Income Tax Credit, the largest federal poverty assistance program.” And since the RAL’s often use the term “refund” in their ads, many of those who take the bait don’t realize that they’re receiving a loan and not their actual refund from the IRS.
The fees associated with RAL’s are expensive. For example, let’s say the IRS owes you a refund of $2,000. In order to get a RAL you pay the following: RAL loan fee = $75, Electronic filing fee = $40, tax preparer’s fee =
$100. Total fees associated with your RAL = $215 which is more than 10 percent of your estimated refund. The APR on your refund loan equals a whopping 142 percent!
Many low and moderate income workers are without bank accounts and wind up paying an additional fee to set up a one-time-use account so that their IRS refund can be direct deposited.
Before giving in to the temptations of refund anticipation loans, ask yourself if you really need your money that quickly. If you can wait just a bit longer for your refund you’ll line your own pockets with extra cash rather than forking it over to a RAL lender.
A great way to save money at tax time is to go to a Volunteer Income Tax Assistance (VITA) site. VITA sites provide free tax preparation to low and moderate income taxpayers and are sponsored by the IRS. They can be found in libraries, community centers and other locations during the tax season. To find a VITA site call the IRS general help line at 1-800-TAX-1040 or visit www.tax-coalition.org.
James H. Dimmitt
James is editor of "TO YOUR CREDIT", a weekly free newsletter with personal finance news and tips. You can subscribe to the newsletter by visiting http://www.yourfreecreditreportnow.com. He is also author of “Identity Theft - How to Avoid Becoming the Next Victim!” available at http://tinyurl.com/bc45
jimdim815@aol.com
|
|
|
|
|
|
 
Fort Worth Star Telegram |
Personal finance apps, ranked by MobilewallaFort Worth Star TelegramMint.com Personal Finance (Free)* -- One of the most popular money-management apps. You can create a razor-sharp view of your accounts, track your budgets and better manage your expenses. (Mobilewalla score: 99/100) CheckPlease Lite Tip Calculator ... |
|
Friday's Personal Finance StoriesMarketWatchWell, it's that time of year again. Getting ready for the traditional start of summer, planning a fun Memorial Day barbecue, dreaming about a summer vacation, and defending your portfolio against a 30% drop in stocks and another debt-ceiling crisis.and more » |
|
Thursday's Personal Finance StoriesMarketWatchInvestors who take minimal risk can't expect much gain, but those who don't manage risk can expect much worse, Jonathan Burton writes today in his Money Talks column. Read about risk manager Keith McCullough's strategy. Also on MarketWatch today, ...and more » |
|
