Tax season is almost upon us. There is no consensus as to whether one should adjust your W-4 Withholdings so you do not get a (big) tax refund. On the one hand the money stays in your pocket all year long, not Uncle Sam’s, while on the other hand there are many Americans who prefer to get a tax refund. They argue it is their “savings account”, and each year, they are anxious to get their money and use it.
Tax preparers know this and offer refund anticipation loans. They give you your refund the day you file your taxes–for a fee. However, that fee can range from 36% to even higher amounts.
Refund anticipation loans, like payday loans, should be reserved for only the most desperate of times. If you are going to have your car repossessed if you don’t make a payment immediately or you have absolutely no money to put food on the table, both refund anticipation loans and payday loans can offer you a respite. For most people who take refund anticipation checks, this isn’t the case.
If you are getting a refund and want your money quickly, follow these steps instead:
- Keep all of your records together in a folder. Keep all of your W-2s, bank statements and other documents you need to file your taxes together in one place. Then, as soon as you have all of the documents you need, you can head to the tax preparer’s office, maybe as early as the end of January.
- Check online for necessary paperwork. Rather than wait for your employer to send your W-2 via snail mail, see if you can access it online. If you are able to do this with all off your necessary documents, you could easily shave a few weeks off your wait time before you can file your taxes.
- File electronically. Paper filing is going the way of the dinosaur, and getting your return this way can take weeks, 4 to 6 to be exact. Instead, file electronically and ask for your return to be automatically deposited in your checking account. The refund will be yours to do with what you wish in only 8 to 10 days.
Unless your situation is desperate, there is no need to resort to a refund anticipation check. With a little organization, planning ahead, and filing electronically, you could get your refund as early as the beginning of February.
Post by Melissa