Get your tax refund fast—without the fees
By Attorney General Roy Cooper
Tax season is here and the April 17th deadline will be here before you know it.
During these tough economic times many families are stretched thin and their refund checks can’t come fast enough. We all want our money quickly, but think twice before you opt for an “instant” or “rapid” refund.
The good news is that most banks have stopped offering the short-term high interest loans known as refund anticipation loans or RALs, thanks to new federal regulations. However, some tax preparers and smaller banks now have resorted to a new product known as a refund anticipation check or RAC. This new product is geared toward taxpayers who either don’t have a bank account to receive a direct deposit of their tax refund or who don’t have the money to pay for their tax preparation services upfront.
A RAC acts as a temporary bank account where the IRS direct deposits a refund check. Consumers access that money through a check or prepaid card. There is typically a $30 fee to set up the account. Once the prepaid card gets loaded the tax preparer can deduct a number of fees which can quickly add up.
The good news is that you don’t need a “rapid” refund to get your money quickly. You’ll likely get your refund in less than two weeks if you file your taxes electronically and sign up for direct deposit—without having to pay lots of fees. If you don’t have a bank account, you can still file your taxes electronically and opt to receive a paper check in the mail.
So before you pay extra to get your refund, consider these free options for filing your taxes and claiming your refund:
- The IRS has partnered with Free File Alliance to provide use of their tax preparation software free for taxpayers making $57,000 or less. The program is completely free and secure, and when used with direct deposit refunds, you may receive your refund in as few as 10 days. For more information visit www.irs.gov/efile.
- Volunteer Income Tax Assistance (VITA) is a nationwide program that gives low and middle income consumers free help with their taxes. To locate the nearest VITA site, call 1-800-906-9887.
- In North Carolina, State Employees’ Credit Union and the Local Government Federal Credit Union both offer free tax help through the VITA program for families earning less than $50,000. Credit unions and other lenders may also offer more affordable ways to take out a loan against your refund if you really need one.
- You might be entitled to a refund even if you don’t have to pay income taxes. Call the IRS or visit www.irs.gov/eitc to learn more and to see if you qualify for an Earned Income Tax Credit (EITC). The EITC is a refundable federal income tax credit for low-income working individuals and families.
Considering getting help from a commercial tax preparer? There are many reputable tax preparation services that do a good job for their clients. If you’re considering using a tax preparation service, keep the following tips in mind:
- Check out the credentials and experience of the tax preparer. Check to see if they’ve had any complaints filed against them by calling my office at 1-877-5-NO-SCAM toll-free within North Carolina, or your local Better Business Bureau.
- Before you enter into a written agreement with a tax preparation service, be sure to find out the total cost for tax preparation and carefully read the contract or other paperwork before you leave the business.
- Be careful about emailing information to a tax preparer or accountant because email is vulnerable to hackers. If you’re using a website to file your taxes, make sure your information is protected by looking for the lock icon on the address bar.
- Never agree to give your personal information to someone you don’t know who calls or emails you and offers to help with your taxes.
- Beware of tax preparers who try to sell you an extra guarantee. These guarantees claim that the company will reimburse you if they make a mistake with your tax returns and your filing has to be amended.
- Be skeptical of ads that promise to help resolve your debt to the IRS for cents on the dollar. Many of these companies charge a hefty fee but rarely get results.
- If you have questions about something a tax preparer tells you about your taxes, check it out. You can contact the IRS at 1-800-829-1040 or the NC Department of Revenue at 1-877-252-4052.