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Be careful about tax refund anticipation loans

Do you know exactly when tax season starts? It really depends on whether you are a taxpayer or an accountant.  For accountants, the last week of January signals the beginning of tax season because people anticipating refunds want to collect on their windfall. For taxpayers, however, tax season may just start with the holiday season.

Why is this? Some tax preparers believe that consumers will forego their tax refund if they can borrow on it for holiday shopping.  Because of this, consumers may be seduced by refund anticipation loan programs. Basically, the tax preparer will estimate your potential refund and loan money based on this projection. While this may seem like a great idea, there are two important alternatives that consumers should consider. 

Electronic filing and direct deposit – If you haven’t e-filed your federal income tax return, chances are that you will next year. The benefit is that you are more likely to receive your refund sooner (as soon as 14 days) compared to filing a paper return. With getting back money so quickly, you may not need to rely on an anticipation loan.

In store financing – For those who are in need of an appliance or television, there are a number of retailers that will finance your purchase with the anticipation of your tax refund. Chances are that you may have to qualify for the store’s financing program, but the savings may be worth it.

Ultimately, if you are in need of cash during the holiday season, it is best to research your options before sacrificing your income tax refund before you receive it. 

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Law Offices of Charles R. Frazier
5258 Murfreesboro Road #B
La Vergne, TN 37086

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