Your local Certified Public Accountant is spending time
gearing up for the upcoming holiday. Tax season! As the rest of the worked is
focused on the end of December, CPAs all over are focused on the end of
January. The first electronic filing day is January 22, 2013 and it will be
here before you know it.
You might have seen advertising for holiday tax loans. Be
careful. The IRS is not giving out any returns before tax time begins. To
process a tax return for the IRS, you will need to have an official W-2 form to
make your claim. A tax loan with a reputable company will get you a loan
against your upcoming tax return, but there will be heavy fees charged for this
money. The company will estimate your taxes from the information off your
latest pay stub and a payment arrangement will be set. Your financial adviser
will probably try to talk you out of taking out a loan against your taxes, but
they may know a reputable tax preparation company that will process a tax loan
if you truly need one.
Be careful that you will be using a company which will
not rip you off. As with many types of short-term loans, a tax loan is one more
opportunity for vulnerabilities to be abused. Try to hold off for another month
and fill out your electronic tax refund. The IRS is quick to get refunds out in
a week or two. Seriously consider if the amount charged to get this tax loan is
worth getting the money a month early.
The IRS is not going to be cooperative with these loan
companies. It will no longer provide information to these refund processing
companies. In the past, these companies would check with the IRS to see if
there were any liens, back child support or past due student loans owed. This
is private information which the IRS will no longer share. The IRS has taken
their stance against these for profit loans. In 2009, there was approximately
750 million in fees paid into companies for 8 million people who requested
these tax loans. The quick turnover rate for electronic filing tax payers
should help prevent the need for the tax loans. There are reputable tax
companies offering these loans as one of their services, but the IRS and many
Certified Public Accountants do not recommend them.
Of course the companies that offer these tax loans are
fighting back with the argument that these loans help people out of a financial
hardship. But when the average fees for one person's loan is on average $950,
it seems like the companies are fighting for more than just the tax payer's
rights. For now, these loans continue to be an option for tax payers. There is
no other replacement service in the works for this tax season.
Call your local financial adviser to discuss other options
involving your money and tax return. Together, you may find another way to
juggle money available to use without having to pay a few hundred dollars
towards fees. continue reading chartered accountant
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