Who knows when exactly tax season starts. For accountants, it is likely the last week of January; because that is when people who anticipate a refund want to get their returns in so that they can collect on their windfall. However, with the holiday season in full swing, some shoppers may see their tax refund as a way to fund their gift giving scheme.
Because of this, some tax preparers are advertising their refund loan programs. Essentially, the preparer will estimate your potential refund and loan money out based on what they expect to recoup. While this may seem like a good idea for temporary cash, there are two important alternatives that consumers should consider.
Electronic filing and direct deposit – It is no secret that the Internal Revenue Service, as well as a wide contingent of consumers, have embraced e-filing. With so many tax returns to be reviewed (and flagged) it is customary to electronically file your tax return. Even more beneficial, the IRS is more likely to issue your refund within 14 days if it is electronically filed and you designate an account for it to be deposited in.
In store financing – For those who are in need of an appliance, such as a washer and dryer, refrigerator or water heater, there are a number of stores that will finance your purchase with the anticipation of your tax refund. You may have to qualify for a store’s credit card or financing program, but the savings may be worth it.
Ultimately, if you are in need of cash during the holiday season, it is prudent to research your options before obtaining a tax refund anticipation loan.