I Want It All & I Want It Now: A Savings Savvy Guide to Filing Taxes Affordably

by Kate Mielitz, AFC®, Kansas State University, PhD Student. You can find her on Facebook, Twitter, or online at financialwellnesscoach.wordpress.com

“I want the world, I want the whole world. I want to lock it all up in my pocket, it’s my bar of chocolate, Give it to me now!” – Veruca Salt, Charlie and the Chocolate Factory (1971)

Every year the rush is on to file taxes and get our returns as quickly as possible. Having that money in fast order is great—I love a good tax return as much as the next gal! We need to be cautious, however, that our desire to get our money doesn’t get us dumped in the chocolate river, sucked up a tube, and waiting for the Oompa Loompas to recover us farther down the line…which means avoiding the “refund anticipation” options that preparers offer at all costs.

Sometimes there is a true need for the tax return money—catching up on a past-due loan, paying an overdue utility bill, unexpected car repairs—the list can go on and on. The challenge is making sure that we don’t overspend on the cost of getting that tax return so we can handle the things life throws our way.

On average, a direct deposit of your tax refund is delivered in 2-3 weeks. A refund anticipation product, provided by many commercial tax return preparers, can have the money to you in as little as a couple of hours to a couple of days, but the cost of the refund anticipation option is so expensive, you’re actually losing money!

According to Fox Business, refund anticipation products may be in the form of a prepaid debit or credit card, a line of credit, or even direct deposit with payment of a fee. Prepaid cards, whether debit or credit, typically require fees to withdraw cash plus maintenance and possibly access fees. Credit cards and lines of credit require the funds be repaid either immediately when the tax refund shows up—in which case you have paid very high fees for the convenience of having your money just a few days early—or over time, with the addition of monthly maintenance fees, access fees, and high interest rates. Finally, you should never be charged a fee for having money directly deposited into your own account. For additional information, you can also check out Investopedia.com’s Refund Anticipation Loans Generally A Ripoff.

Here are a few tips to keep your tax preparation costs to a minimum and get your refund in your pocket—and your savings account—in an affordable and timely manner:

  1. Consider e-filing by yourself. If you gross less than $60,000 per year, you may be able to use brand-name tax-prep software and file for FREE!
  2. If you don’t qualify to file for free, you may consider purchasing tax preparation software, such as TurboTax, TaxACT, or H&R Block, which allow you to do the work yourself, but pay only for the software and possibly a nominal filing fee.
  3. Use a certified tax preparer. Absolutely there is a time and a place for professional help. The IRS provides Tips for Choosing a Tax Return Preparer and they warn “Under no circumstances should all or part of your refund be directly deposited into a preparer’s bank account.”

I want my refund, I want my whole refund. I want to lock it all up in my pocket, it’s my hard-earned money, give it to me…in approximately 21 days, through direct deposit, directly from the IRS. 

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