Pewaukee, Wis. – With the new year comes tax season – a great time to turn your refund into much-needed cash. But instead of paying fees to a tax preparer for a speedy refund, use a deposit account you already have (or open one) so you won’t lose a penny of what you have coming.
The website http://www.freetaxrefund.org explains how you can access a free refund whether you prepare your own taxes, use a paid tax preparation service, or use any of the hundreds of sites around the state offering people with limited incomes free help to prepare and file their tax forms. The site explains how to use direct deposit to get a no-cost tax refund, where to find free tax assistance sites and what to bring for help with filing.
According to the Wisconsin Credit Union League, which maintains the site, every one of Wisconsin’s more than 2 million credit union members already has a savings account that can be used to receive a free tax refund. Those who don’t have an account can open one at a not-for-profit credit union by placing as little as $5 on deposit – far lower than what for-profit financial institutions require.
Many low-income filers – who seek a fast refund to pay bills and meet immediate needs – turn to paid tax preparers charging interest as much as 521% APR to obtain what’s called a “refund anticipation loan,” or RAL. These short-term, high-interest loans – secured by the pending refund – can drain hundreds of dollars from a typical refund.
For example, a single worker making less than $32,000 and raising one child would qualify for a refund of as much as $2,600. But to obtain that refund using a RAL, the filer could pay more than $100 on top of a typical $150 tax preparation fee, losing more than $250 (a full 10 percent or more) of his or her total return. Put simply, if you use a RAL you’re paying dearly to borrow your own money.
Wisconsinites who took advantage of free tax assistance sites offering direct deposit in 2010, however, saved an estimated $14.8 million by avoiding RALs. Visit http://www.freetaxrefund.org to learn more.