Just say no to Refund Anticipation Loans


Back in the days when electronic filing didn't exist, there was a good market for Refund Anticipation Loans (RALs). It took several weeks (or maybe even months) to get your tax refund, depending on when you filed your taxes. The RALs were offered by tax preparers who would do your taxes, figure out your refund, and offer to give you money right then and there. In exchange for a fee, of course. The taxpayer could access the refund right away via this type of loan, and the tax preparer got paid back when the refund was actually issued.

Since electronic filing is so widespread, there is no longer a need for Refund Anticipation Loans, although they're still being offered and heavily marketed. In most cases, you'll get your refund in less than two weeks if you file electronically. Depending on which day of the week you file, you might even get your refund in a week or less. And electronic filing is usually free!

RALs are so ill-advised because they're expensive. The fee for one of these loans is typically $50 to several hundred dollars. That's a big chunk out of your refund. In 2007, well over 8 million taxpayers used RALs and paid almost $900 million in fees for the privilege of doing so.

Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.


Take Advantage of Two Education Tax Credits
The American Opportunity credit and the Lifetime Learning tax credit can make higher education costs more affordable.
Read MoreBrought to you byTurboTax.com
Can I Deduct My Computer for School on Taxes?
You may be able to get back part of the cost of that computer you're using for school on your income taxes.
Read MoreBrought to you byTurboTax.com
Bigger, Better College Tax Credit
The American Opportunity tax credit, which replaced the Hope Scholarship credit in 2009, covers more years of college and offers bigger, better benefits to more taxpaying students or their families. Here's how the American Opportunity tax credit and Lifetime Learning credit, another helpful education tax credit, can help offset the rising cost of attending college.
Read MoreBrought to you byTurboTax.com
EA vs. CPA Tax Professionals: What?s the Difference?
If you?re interested in professional help with your taxes, you might be wondering what types of specialists there are and which one you need. An enrolled agent and a certified public accountant are both tax experts, but when you should work with an EA vs CPA differs based on your needs. Here's an overview of both.
Read MoreBrought to you byTurboTax.com