Page Section Navigation
Go to: Header
Go to: Utility Navigation
Go to: Primary Navigation
Go to: Content
Go to: Footer
Blogging for Change Blogging For Change
by sitecore\kmcgrigg on January 07, 2009

When you are expecting a tax return, it can be hard to wait for those W-2 forms to come in the mail. Fortunately, you don’t have to wait too long; the IRS requires that they are in the mail by February 2 (because January 31 falls on a weekend). However, I’ve seen a lot of commercials recently from companies suggesting that they can help consumers access their money even before their W-2s arrive. I was very curious about this process, but had trouble finding a Web site that spelled out the details.

From my research (I actually let go of the mouse and picked up the phone!), I have learned that these companies are doing this in one of two ways:

1. They download W-2s directly from the larger W-2 providers (ex: ADP or TALX).
2. They estimate the amount a consumer will receive from his or her end-of-the-year paychecks(s).

Either way, there are fees for the tax preparation service.

Unfortunately, the next likely outcome is that the consumer applies for a refund anticipation loan. Basically, a refund anticipation loan is a short-term cash advance that uses the expected tax refund as collateral. The loans allows taxpayers to get their money a little bit earlier, but at a hefty price. Unless someone is facing a true financial emergency, the fees are just not worth the convenience.

My advice to taxpayers is to be patient. Refunds come quickly through the use of e-file and direct deposit. The IRS even has a program called Free File that allows most taxpayers e-file their federal tax returns for free.


Posted in:  Loans & Credit, Taxes


Abigail says:
January 07, 2009

The biggest thing that needs to be pointed out here: The companies are LOANING you the money. This means that a) you won't get the full amount (even before preparation fees) and b) if the estimate is incorrect, you can potentially owe them money back. It's just a bad, bad idea. Take a breather and wait the extra three weeks. You'll save a lot of money. (And don't go to a tax preparer anyway unless you have a home-based business. Many people will be eligible for free tax preparation software. Others can just invest in some from Staples etc.)

Please provide the comments.
Security Code:
Please correct the code.