Another year has passed and it is “Tax Time” again.
If you are one of the lucky ones, or one that has planned well, you can be looking forward to a big fat refund. Now comes the challenge of getting that refund. Can your choice of tax preparation professional, whether an individual, a CPA firm or a National chain, make a difference in how fast you will get your refund? Actually, no. The key is not in the preparer, but rather in the method. No preparer can get you a refund any faster than any other. Anyone who says different is misleading you, or worse, just out right lying.
How rapidly you will receive your tax refund depends on the method of refund and filing that you choose. If you prepare your own returns and mail them to the government, then wait for that interesting looking official government check to also come in the mail. You may have to wait six to eight weeks, or even longer as the calendar approaches April 15th.
Not good enough I am sure.
If you have your return prepared by someone who can e-file both your Federal and State returns together, and you take advantage of electronic direct deposit of your refund, you can have your money in your account before you know it. The IRS processes electronically filed returns more rapidly and accurately than paper filed returns. This coupled with their weekly electronic funds release schedule, can ensure the absolute fastest refund possible.
Each Thursday at or around noon, the IRS releases for payment, the direct deposit refunds for all returns processed and accepted by their computer systems. These funds (pending direct deposit refunds) are sent through the federal banking system and are deposited in taxpayer accounts the following Friday (not the next day, but a week later). Consequently, an electronically filed tax return with direct deposit refund will be in your account in as little as 8 days and usually in no more than 14 days.
Is there any faster way?
For your refund, no. But to get your money before the refund arrives, yes. Many National chains and some companies as well, promote that you can get your refund before you leave their office. This is not what it seems. It is generally not in your best financial interest. In every one of these cases, known by many different names, the company is making you a “Refund Anticipation Loan”.
A Refund Anticipation Loan is a very high rate loan to provide you with most of your refund immediately instead of making you wait no more than 2 weeks. Although these may advertise that there is no money out of pocket to you, they do not point out that there is a substantial percentage taken from the refund being funded. When comparing the amount borrowed for 2 weeks to what the effective cost would be if done for a full year (effective annual percentage rate), you may find that you are paying 2 or 3 times the rate charged by most credit card companies. Since it is structured as a fee, they do not have to point out this APR cost.
If you have absolutely no choice…
You cannot wait a mere 14 days. Then there is your answer. If you want to make the most of your refund, wait the two weeks and keep the extra fees in your refund. Either way, please remember, the fastest way to get your annual tax refund is to file electronically and take advantage of the Free direct deposit of your refund. This will provide the Federal tax refund to your account in as little as 8 days and usually in no more than 14 days.