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Diane Miller

What you should know about Refund Anticipation Loans

    Have you ever needed cash and you are due a tax refund? While you may welcome this refund with open arms, be patient. Investment companies make money by offering Refund Anticipation Loans (RALs) through many paid tax preparation services. An RAL is your tax refund, a few days earlier than if you wait for a check from the IRS, minus fees.
    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 loan, just say no. 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 an RAL worth having your money just a few days earlier? No. If you need the money that bad, avoid high-cost 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 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 are paying for when you use a tax preparation service.
    For more information on money management, contact Diane at (912) 871-0504, or

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