You may have seen companies advertising instant refunds. Beware of them. Have you heard that there’s no such thing as a free lunch? Well, there’s no such thing as an instant refund either.
How do these companies get your refund instantly for you?
They don’t, is the short answer.
- They will complete your tax return and file it for you.
- If their calculations show you are due a refund, they’ll pay it to you instantly.
What’s the catch?
- The IRS may not agree with the calculations and you may not be due a refund.
- The company is making you a loan of the amount they expect you to receive.
- Interest and establishment fees are added to the loan, which is deducted from your tax refund.
That’s right - you’re paying them to loan you what they think you’ll get, and they take their interest out of your tax refund.
How can I get my full refund?
The IRS says that electronically is the fastest way to file your tax return. If you are due a refund, you can have it in as little as five days, deposited directly into your bank account. That’s your full tax refund, sitting in your bank account, no fees or hidden charges, in as little as five days. It’s not quite instant, but you will get the full refund that’s due to you.
If you don’t feel confident about preparing your own tax return, you can get help, free of charge, through IRS programs such as VITA (Volunteer Income Tax Assistance) and TCE (Tax Counseling for the Elderly). These services are offered in all states. Wisconsin, for example has more than 200 locations where you can get free tax assistance. To find a location near you, call the IRS on 1-800-829-1040
You can read more about tax help at http://taxassistonline.com
Don’t be tempted by companies offering you an instant tax refund. There’s no such thing and you’ll end up worse off.
Alternative Minimum Tax Fix
Filed Under IRS News, Tax Refunds, Uncategorized | Leave a Comment
First, the good news. A last minute deal in Congress has seen the alternative minimum tax adjusted for inflation, meaning about 23 million households will avoid a tax increase of about $2000.
However, the not quite so good news is that the IRS says it will take about seven weeks to reprogram and test its systems to accommodate the change to the tax rules affecting the alternative minimum tax (AMT). That applies to electronic and paper returns, and it means that even if you file your return early, you won’t be getting any refund due to you until at least February. In the words of U.S. Treasury Secretary Henry Paulson, “It is likely there will be some delays, including the delays of some refunds.”
The AMT was introduced in 1969, with the intention of preventing a small number of wealthy households claiming excessive deductions. But it wasn’t linked to inflation, so as the years have gone by, the number of households affected has increased. There’s no denying that the fix needed to be made and that the outcome will be a positive one for many taxpayers. But the timing will be causing more than a few headaches - for those rushing to implement the changes, for the Congressmen associated with a delayed tax refund in an election year and for those taxpayers who like to file early and get their refund at the end of January.
Well don’t count on it this year.
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