In the month of January, the early filers will bombard the nation’s tax offices, looking to get their federal tax refund as quickly as possible. Most services offer same day, 24, and 48 hour refunds. These “refunds” are not your actual federal refund from the IRS. They don’t process returns that quickly. These are loans against your refund that allow you to get a advance loan against your federal refund. When your federal return is processed, usually within 7 to 21 days, the tax preparer, obtains the refund from the IRS. The process seems easy enough but it comes with a steep price. Refund Anticipation Loans, or RALs as they are more commonly known, increase the costs of tax preparation significantly. Some preparers have charged as “little” as $500 to as much as 50% of the refund. If you’re that desperate that you need to pay 50 cents on the dollar for your refund, this article may be lost on you. But for those who were not aware of the prohibitive costs involved, and if you can wait a minimum of 10 to 21 days, you will save hundreds of dollars in fees.
Electronic filing allows your return to be transmitted to the IRS without the long wait associated with a return sent by mail. When the return is processed, assuming there are no internal matters that would require that your refund be delayed, for example, injured spouse claims, bankruptcy, first time filer, non filer, or examination, your refund will be delivered to you in as little as 7 business days, up to the maximum of 21 business days, depending on the acceptance date of your return (Generally, for a refund to be issued within 7 days, it will need to be accepted into the IRS system no later than 10:00 am the Thursday prior. Returns that are accepted after 10 am Thursday will generally be available within 14 business days, assuming direct deposit was requested and not mail. Refund checks requested via mail require an additional 7 business days for processing. Conversely, a return that is mailed into the IRS can take a minimum of 4 weeks up to 6 weeks to process.
So, if your preparer asks you if you want to get your refund “superfast”, tell him that you can accomplish that through electronic filing. Better yet, learn how to prepare your own return and transmit it for free directly at the IRS website, www.irs.gov.
