Filing your taxes can be a very confusing process. The IRS doesn’t make it very easy! That means that many of us end up looking for help. However, not everyone knows that the help offered by some private companies isn’t as nice as it seems.
You can get your taxes prepared for you for FREE at many VITA sites around Syracuse.
There is a site right outside our office at 800 North Salina Street that will be offering this free service on the following Saturdays: February 6th, 13th, 20th, 27th; March 6th, 20th, 27th, and April 10th. These Saturday sessions go from 9am-1pm. No appointment is required.
There are also free tax prep sites at many libraries and PEACE, Inc. Family Resource Centers. You can contact PEACE Inc. at 634-3756 to set up an appointment at a PEACE center near you.
Some tax preparation businesses specialize in “Refund Anticipation Loans” (RAL’s). Often these loans have names like “Rapid Refund” which hide the fact that they are loans secured by your tax refund. These loans are attractive because they are an instant way to get a large amount of money. However, they come with very high fees attached that take a bite out of your refund. That is your hard earned money, and you can keep it all if you have a savings or checking account and can wait just a little longer.
According the Council of Better Business Bureaus, an average refund of $2,000 could come with fees of $250 for an RAL, which is comparable to an Annual Percentage Rate (APR) of about 521%. Compare that to an interest rate of 16% on a vehicle loan, for example, which would be an average APR for almost anyone. So, what do you get for your $250? You get the tax preparation service and the privilege of having the rest of your money within two days. If you wait just a few more days and have a savings or checking account you can have your whole refund directly deposited into your account with no fees.
There are Volunteer Income Tax Assistance (VITA) sites at many locations all over Onondaga County. If you qualify (most people do) you can have your taxes prepared for free and have your refund directly deposited within 8 to 15 days (many times even sooner). This way you get all of you hard earned money that you deserve and no one takes a cut. What could you do with that money if you didn’t need it right away? If you put your whole refund of $2,000 into a certificate of deposit savings account, at a 5% Annual Percentage Yield (APY), you would have your $2,000 plus another $100 next year at tax time.
Many states have laws protecting consumers from these predatory loans. New York State’s laws aren’t that strong yet, but many people are trying to make change. In the meantime, be careful before you go to one of these agencies next year. Their offers may look attractive on the surface, but watch out for those fees!
