With tax season fast approaching, you will begin to see offers for loans that allow anticipated tax refunds as collateral. Be wary of these short term loans as they often have extremely high interest rates and require you have your tax return prepared by the original lender for an additional fee. Below are some tips that will help you avoid common pitfalls and choose a reputable tax preparer.
- DO choose a preparer who has a permanent office and will be around throughout the year and beyond, in case there is a problem with your tax return.
- DO ask about the preparer’s qualifications. Tax professionals should be properly trained and should keep up with yearly changes to the tax code.
- DO ask about the fees up front, before the tax return is prepared. Ask if there are any costs for additional schedules or forms and e-filing. Avoid preparers who base their fee on the amount of your refund.
- DON’T sign up for “Fast Cash Refunds” or “Instant Refunds.” Most of the quick refunds are actually refund anticipation loans (RALs). When you get a RAL, you’re borrowing against your refund, not getting your refund earlier. These loans are expensive and can cost hundreds of dollars. If you need your refund fast, use direct deposit.
- DON’T work with anyone who suggests you lie or alter numbers. You will be responsible for errors.
- DON’T sign a tax return that is blank or completed in pencil. Sign the return or authorize e-filing only after you have reviewed it with your preparer. Ask questions about anything you don’t understand. If there are mistakes on your return, you—not the preparer—are responsible for them.
- DO make sure your completed return includes the preparer’s name, address and Employer Identification Number (EIN) or Social Security Number or Preparers Tax Identification number (PTIN). This is required by law.
- DO make copies of all the documents you give the preparer. Be sure to get a copy of your completed return and keep it on file for at least 3 years.
In partnership with the IRS’s Volunteer Income Tax Assistance (VITA) Program, ACFB’s Atlanta Prosperity Campaign (APC) provides FREE tax preparation services for households with incomes of $49,000 or less at over 40+ sites in 12 metro Atlanta counties. To learn more, please visit http://www.atlantaprosperity.org/services.
-Cicely Garrett, VITA Program Manager
The Atlanta Prosperity Campaign (APC), an initiative of the Atlanta Community Food Bank, started in 2007, in partnership with the IRS. The campaign manages 45+ Volunteer Income Tax Assistance (VITA) sites in 12 metro-Atlanta counties offering FREE tax preparation to working families and individuals with household earnings of $49,000 or less. Since 2007, APC VITA sites have served more than 50,000 metro-Atlantans and helped deliver over $66 million in state and local refunds! To learn more about this FREE tax preparation service, please visit www.atlantaprosperity.org.