Rapid Refunds

Those are the words that every taxpayer would love to hear, yes,
you\'re receiving an income tax refund. For many individual
taxpayers those refunds can be obtained through Earned Income
credit, a real refund of overpayment of tax, or through an
overpayment from previous years. Once you determine you\'re
receiving a refund, there are several options for actually
putting that money in the taxpayer\'s hands. Standard paper
filing, electronic filing with direct deposit, rapid refunds,
and refund anticipation loans are the options we have the choice
of exercising, and for many refund anticipating individuals, the
rapid refund or the refund anticipation loan is the refund of
choice.

Since the advent of the computer age, and the great invention of
the internet, the Internal Revenue Service has been fairly quick
to react to the benefit of electronic filing. The returns are
filed much faster, refunds are made faster, and money due the
IRS can be obtained faster. Let\'s take a minute to look at the
different refund options, and what each offers the individual
taxpayer.

The standard paper filing, although many are more familiar with
this method of filing, is slowing reaching obsolescence. There
will soon come a time that the old system of paper filing will
be entirely eliminated and replaced by the electronic filing
methods. If you are still one of the dying numbers of Americans
who files a paper return, you should anticipate receiving a
refund in about 6 weeks; today, thanks to the great use of the
internet, 6 weeks to receive a refund, seems like an extremely
long time.

The rapid refund, that is quickly replacing the standard paper
filing, is an electronic method used for filing your tax return,
and allowing you to receive your refund in about 10-14 days.
Much faster than the six weeks it used to take. There are
usually no excess fees attached to this type of filing, and
returns may be filed for free through many local, public access
facilities.

The refund anticipation loan, however, is a little different.
These must be administered by a tax professional through an
established alliance with a financial and lending institution.
There are several excellent choices available, and many
qualified tax professionals to complete your tax return, you
will however be required to pay a loan fee or a small interest
fee for the opportunity to obtain an anticipation loan. There
are several restrictions placed on receiving a refund
anticipation loan, and some of the restrictions may affect many
people.

For example, if you owe back taxes, back child support, or liens
and judgments, you can\'t qualify for the refund anticipation
loan. Most often, the individuals who apply for and use the
refund anticipation loan are recipients of earned income credit,
and their refunds are usually well into the thousands of
dollars. The refund anticipation loan can be processed in as
little as 3 hours, and back in the hand of the tax payer by late
afternoon; this is provided everything works exactly as planned.
The higher interest rates charged by the bank product providers,
and the higher processing fees charged by the tax preparers,
equate to less money for the tax payer, but many of these
individuals don\'t even blink when told how much it will be to
process their return, they just want the refund immediately.
This is just one more example of the instant gratification upon
which our society chooses to operate.

Even for individuals filing with the electronic returns, and
choosing to have their funds direct deposited, the turn around
time is usually no more than 10 to 15 days. You would think that
a turn around of less than 2 weeks would be quick enough for
many taxpayers, but typically, the bigger the refund, the faster
the necessary return.

It would seem to me, that this is just another way for the
system to profit from the poor; as it is usually the poor that
qualify for the earned income credit refunds, and these can be
extremely large, especially for families with 2 or 3 dependents.