If a tax preparer offers you a tax refund product such as a refund advance loan or anticipation check, experts recommend reading the fine print first.
That's because nearly 16% of US taxpayers paid more than $842 million in fees to get their 2023 refunds. Of those, about 96% used a refund anticipation check, or RAC, the Treasury Inspector General for Tax Administration estimated. report Last week. Another 4% used a Refund Anticipation Loan or RAL.
These products may appeal to taxpayers who are anxious to get their refund and who do not want to wait days or weeks for the IRS to deposit the money in their accounts or cut a check. And while the seven tax return preparation companies, which account for about 80% of total refund products, “are largely complying with the applicable guidance, not all information was clearly available to consumers,” the agency said on their websites. According to the review.
It says, “In some cases, fee and cost information for these products were not clearly advertised, and some required reading the fine print or reading several pages to find the cost information.”
Fees for Advance Tax Refund Loan and Check
According to the report, RAC fees for filing season 2024 ranged from $25 to $55. The average refund for these taxpayers was $3,841, indicating that RAC costs were approximately 1% of total refunds. The average refund for fee-based RAL was $6,696.
Refunds may come on prepaid cards, associated fees can vary greatly, and many out-of-network ATMs charge fees, alert Consumer Financial Protection Bureau.
Additionally, many taxpayers qualify for free assistance from preparers certified by the IRS.
“Many taxpayers receive their refund from the IRS in 10 to 21 days,” the CFPB advises. “Waiting a week or two could save you money.”
Here's how to find volunteers in your community or online:
- Go to Irs.gov and search for “free tax return preparation.”
- Go to AARP.org and search “Tax-Aid Locator”
- For online tax preparation visit GetYourRefund.org
- Visit MyFreeTaxes.com for help preparing your return