Kathleen G. Kane - Pennsylvania Office of Attorney General - Protecting Pennsylvanians

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"Show me the money"

Should I take advantage of "rapid refund" when I do my taxes this year?

If you are like most families, your tax refund is the single largest cash payment you'll receive during the year. With the average refund totaling more than $2,000, most consumers have big plans for their refund and want it as soon as possible. Keep in mind, however, that many of the "rapid refund" offers available to you are really high-fee loans which, for most consumers, are unnecessary.

Although the quick turnaround may sound attractive, you?re actually paying money to in effect borrow your own money. Finance charges on the average refund could be $100 or more ? that's more than 140% APR. This interest rate does not include any fees that you may be required to pay to have your taxes prepared.

In addition, some rapid refund services provide your refund just a few days before you would have received it if you filed your own return electronically. Since there are plenty of alternatives available to you that will not cost you anything you should carefully consider whether a "refund anticipation loan" is right for you.

Should I consider filing my own return?

Filing your own return may not be as difficult as you think and tax forms and publications are available at public libraries and from the IRS free of charge. You can file your tax returns electronically and if you select the direct deposit option, you should receive your refund in about 10 days.Some consumers may also qualify to have their taxes prepared for free by volunteer tax preparers.

The Volunteer Income Tax Assistance (VITA) program offers free tax help each year to low and moderate-income ($49,000 and below) consumers in communities throughout the state. Consumers are typically directed to neighborhood centers, libraries, schools, shopping malls and other convenient locations to meet with volunteers. Most locations offer free electronic filing. Information on the VITA site nearest you is available from the IRS toll-fee at 1-800-829-1040.

Seniors can also take advantage of the IRS-sponsored Tax Counseling for the Elderly (TCE) and AARP?s Tax-Aide programs. These programs provide free tax help to people age 60 and older. For more information on TCE, call the IRS at 1-800-829-1040. To locate the nearest AARP Tax-Aide site, call 1-888-227-7669.

What about using a professional tax preparer?

If you choose to use a tax preparation service, always ask for a breakdown of the various fees upfront before the return is prepared. This should include the charge for preparing the return, electronic filing and rapid refund fees. Consumers are not obligated to purchase many of these services which are considered optional. Say no to any service that you do not want.

Professional tax preparers can also provide tax assistance tailored to your needs. For example, if during the past year you married, divorced, withdrew money from an IRA or started a business you may need additional help preparing your return.

In many cases, the tax preparer will also provide future assistance in the event that you are audited for a return that they prepared. Finally, some consumers simply feel more secure or would prefer to pay for the convenience of turning everything over to an expert.

Consumers seeking additional information on tax preparation or who wish to file a complaint regarding a tax preparation problem should contact the Bureau of Consumer Protection at 1-800-441-2555 to file a complaint. Complaints can also be filed electronically by visiting www.attorneygeneral.gov.