Family & Consumer Science News
What You Should Know about Refund Anticipation Loans
By Terri Black County Extension Agent

Have you ever needed cash and you are due a tax refund? While you may welcome this refund with open arms, make sure you remain patient. Investment companies are trying to make money by offering a Refund Anticipation Loan (RAL) through many paid tax preparation services. A RAL is your tax refund, a few days earlier than if you wait for the IRS, minus fees that are charged by the company that makes the loan.

Investment companies have come up with a way to make money and get you a quick tax refund. The bad news is that this comes at a higher price than you may realize. When asked if you want a refund anticipation loans, the best answer is "No, thank you." With electronic filing and direct deposit of your refund, you can usually expect your refund to appear in your bank account in 7 to 10 days- often sooner. Is the extra cost associated with a RAL worth having your money just a few days earlier? Definitely not. If you need the money that badly, avoid highcost Refund Anticipation Loans so you will receive your full refund.

When you go to a tax preparation service, you will have to pay a fee for them to prepare your tax return. You may be asked to pay an additional fee for electronic filing of your return. If you opt for the Refund Anticipation Loan, you will also have to pay a fee to the lender. If you are a senior citizen or have low to moderate income, you may be able to obtain free assistance preparing your return. The Internal Revenue Service trains volunteers throughout the state who provide free tax assistance to low and moderate income households through the Volunteer Income Tax Assistance Program (VITA). AARP also offers free tax assistance through the Tax Counseling for the Elderly (TCE) program. Call the IRS at 1-800- 829-1040 to find out about a VITA or TCE site near you.

With tax season coming up just around the corner, it is important to be knowledgeable on your taxes and what you're paying for when you use a tax preparation service. For more information on making smart financial decisions, contact the Burke County Extension Office at (706) 554-2119.