Right now, modest-income families and senior citizens can be taken advantage of by predatory loans at tax time. Don’t be one of them.
If you have yet to file your taxes but want a fast refund, don’t use the “refund anticipation loans” heavily advertised during tax season. Instead, use an existing deposit account with a financial institution (or open one) to get a fast, free tax refund via direct deposit.
If you need help filing, use the free assistance provided by free tax preparation sites around the state. The sites operate in a variety of community settings with coordination from the Department of Revenue, IRS and AARP. Besides preparing tax forms, many sites offer assistance – through credit union volunteers – to open or use existing accounts for direct deposit.
Besides avoiding charges for tax preparation, consumers who receive their tax refunds via direct deposit into a savings account pay nothing to receive their refund – and they get it just as quickly as if they had used an anticipation loan through a paid tax preparation firm.
Refund anticipation loans, which are nothing more than high-cost, short-term loans secured by an expected refund, are bad for consumers and for Wisconsin. A typical loan siphons as much as $250 off a typical refund of $2,600 – money that low-income people can’t afford to lose. Douglas County lost a whopping $196,750 to RAL costs in 2006.
What’s more, they siphon away from filers the tax benefit they should be receiving in the form of the Earned Income Tax Credit. In 2006, as much as $123,750 in Earned Income Tax Credit benefit was taken away from low-income tax filers in Douglas County using high cost anticipation loans.
These costly loans also drain activity from local economies – from the businesses where we all work, shop and recreate. It is estimated that money flowing out of low- and middle-income neighborhoods can have a multiplier effect of 1.5 to 2 per dollar. In other words, the estimated loan fees extracted from federal Earned Income Tax Credit recipients in Douglas County alone in 2006 actually had the effect of denying Douglas County nearly a quarter of a million dollars in total economic activity.
If your personal household income is below $49,000 for the 2009 tax year, I urge you to visit the free tax preparation assistance site at Metro Credit Union, 25 Belknap Street, Superior. They’ll be open on the Saturdays of Feb. 6, Feb. 20, March 6, March 20 and April 10 from 8:30 a.m. to noon. Call the Northwest Wisconsin Community Services Agency at (715) 392-5127 to make an appointment. They cannot accept walk-ins. Representatives from Metro Credit Union and Northwest WI Community Services Agency will be on hand to help you prepare your forms and file; as well as open a deposit account, if necessary, to expedite your refund.
Even if you plan to use a paid preparation service, or e-file on your own, you can still use a new or existing deposit account to get your refund with no additional fees.
Visit www.freetaxrefund.org for more information.
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