2. Tax Saving Info Avoid Tax Scams
Each year around tax time, many people lose hundreds of dollars by falling prey to scams and using services that charge excessive amounts of money. Learn about some common tax scams here, and how to avoid them.
The IRS doesn’t send email to taxpayers asking them for their personal information. If you receive this type of email, it may have been sent by phishers. These are Internet criminals who try to steal your identity and money by asking you to give them your private information. Scams can also take place by phone, fax, websites and social networking sites. Visit the official IRS site to find consumer alerts and report scams.
Tax refund anticipation checks are offered by some tax preparers as an expensive loan in addition to the tax return preparation fee they charge. With new regulations that protect consumers now in place, refund anticipation loans may not be available in 2013. You should still know what they are and how to avoid them. Refund anticipation loans are a way for people to get their tax refunds in as little time as 24 hours, however they’d pay between 50% and 500% in interest on the short-term loan. In 2012, based on a refund of $1,500, the price of a typical refund anticipation loan was $61.22, and $29.95 for a refund anticipation check. If you file online and use direct deposit, you will get your refund in 5 to 10 days–without paying extra fees.
If you use a tax preparation company, ask about their fees and make sure they don’t have additional charges such as “application,” “administrative,” “e-filing,” “service bureau,” “transmission” or “processing” fees.
You don’t have to pay high fees to cash your tax refund check. Instead, use direct deposit to put the money straight into your checking or savings account, automatically. To use direct deposit, be sure to have your savings or checking account number and bank/credit union routing number handy when you file your taxes. You’ll get your tax refund fast — in 5 to 10 days — and keep all of your hard-earned money. If you don’t have a bank account, find out how you can open one today.
Remember, the deadline to file your federal and state taxes is Monday, April 15, 2013.