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E-Filing: the Good and the Bad
By JLP | February 20, 2006
There was a good article in the Dallas Morning News by Pamela Yip about Filing Taxes Electronically. The article also talks about Refund Anticipation Loans (RAL), which are essentially a faster way for people to get their refund. My advice: WAIT FOR THE REFUND! RALs are a scam and hurt lower income people who either don’t have bank accounts or they do not bank online.
Topics: Taxes | 4 Comments »
February 20th, 2006 at 11:57 pm
Refund loans are only marginally less evil than payday loans. If it takes two weeks to get a refund, the fee is $75, and your refund is $2000, you’re paying 97.5% interest!
February 21st, 2006 at 1:21 pm
I prepare taxes for H&R Block, and I practically BEG people not to take the banking products. Most of them do it anyway, either because they:
a) don’t want to pay for the return, and the only way they can have the cost of the return deducted from the refund is to use one of the banking products (minimum $25 charge)
b) don’t really care that when they’re getting a $4000 refund that they’re paying over $100 in banking fees to get their money in 1-2 days. These are the people I work on the most – but frequently, their refund is 20-40% of their annual income(!!) so they just want their money NOW.
It kills me to watch this, but once I advise people as strongly as I can (professionally), it’s still their choice. My experience has taught me that you can’t protect people from themselves, you don’t need a large income to be financally sound, and that many of the people that are “poor” are in that state because they won’t do what is necessary to help themselves (like paying for their return to avoid the banking fees, or better yet, learning to do their own taxes when they’re really easy…)
February 22nd, 2006 at 2:28 am
I don’t understand e-filing; I can send my taxes in for free (excluding postage). If I do this, the IRS has to pay someone to read my taxes, and re-enter all the information in their computers. That must be an enormously expensive process.
E-filing should eliminate that employee. It should save the IRS money. It should be easier for me. Everyone wins! Then why am I required to go through a third party who either charges me money or subjects me to product pitches?
Back in the 90s, the IRS offered a service where you could print out and send in a more compact OCR-able tax form. My typical 10-20 pages of forms could be reduced to a couple pages that the IRS could easily scan in, but that capability seems to no longer be available.
February 23rd, 2006 at 10:58 am
I filed for free using TaxAct Online The whole thing was free except for the stamp I used to mail my signature for the online acceptance and agreemant.. I got my refund in about 10 days, the exact day I was told I would get it. It also has the benefit of saving information so I’ll be able to do the filing process in even less time next year. I know those same people that the same day they get their W2 they’re down at some tax refund service office and are begging to spend good money they don’t have yet on a very poor financial decision… and I have to feel sorry for them.