Are You Dependant On Tax Refund Loans?
Are You Dependant On Tax Refund Loans?
Are You Dependant On Tax Refund Loans?Are You Dependant On Tax Refund Loans?
It has been announced by the IRS that starting in 2011 the tax preparation companies will have tough time in providing refund anticipation loans to people who want it. So if you e-file your 1040 online and are planning to get your refund money back instantly through a loan, you better be prepared to wait for the your money. Refund anticipation loans are expensive short-term loans that are typically aimed at the working poor and come with fees that translate into annual percentage rates of 50% to 500%. These types of loans have long been criticized by many consumer advocates. Their reason for opposing these is that according to them it does not make sense to pay anything for borrowing what is essentially your own money i.e. your tax refund.
Typically in the past the IRS provided the preparer with something that was known as a "debt indicator". This let the prepare know whether a taxpayer would get his refund or whether it would be seized by the IRS for back taxes, child support etc. If the preparer realized that a person will not get his refund then he did not give the person the refund anticipation loan.
Thus even though it was not meant for this purpose, the debt indicator was used by the preparers for screening their potential loan clients and this pre-screening was done by the IRS for the tax preparers. Be sure to ponder about this fact when you efile tax online this year.