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Anticipating Your IRS Refund Can Cost You Plenty
While accountants are reaching for aspirin, millions of Americans are reaching for some fast cash this tax season. Unfortunately, those who reach for fast cash in the form of a "refund anticipation loan" are getting hit with interest rates and fees that are out of this world. The tempting ads are plastered in newspapers and on television for "fast cash refunds", "express refunds", or "instant refunds." The ads offer to get your refund in a day or two, or in some cases even instantly. What is a "refund anticipation loan"? It's a loan that borrows against your anticipated tax refund from the IRS. Refund anticipation loans, or RAL's as they are known in the tax industry, carry annual percentage rates (APR's) of about 60% to over 700%, a fact that many consumers either don't realize or simply overlook. RAL's are marketed to people who need money the most such as low and moderate income workers. A report by the National Consumer Law Center notes that "about 40% of the 12 million refund loan customers in 2000, were families who received the Earned Income Tax Credit, the largest federal poverty assistance program." And since the RAL's often use the term "refund" in their ads, many of those who take the bait don't realize that they're receiving a loan and not their actual refund from the IRS. The fees associated with RAL's are expensive. For example, let's say the IRS owes you a refund of $2,000. In order to get a RAL you pay the following: RAL loan fee = $75, Electronic filing fee = $40, tax preparer's fee = $100. Total fees associated with your RAL = $215 which is more than 10 percent of your estimated refund. The APR on your refund loan equals a whopping 142 percent! Many low and moderate income workers are without bank accounts and wind up paying an additional fee to set up a one-time-use account so that their IRS refund can be direct deposited. Before giving in to the temptations of refund anticipation loans, ask yourself if you really need your money that quickly. If you can wait just a bit longer for your refund you'll line your own pockets with extra cash rather than forking it over to a RAL lender. A great way to save money at tax time is to go to a Volunteer Income Tax Assistance (VITA) site. VITA sites provide free tax preparation to low and moderate income taxpayers and are sponsored by the IRS. They can be found in libraries, community centers and other locations during the tax season. To find a VITA site call the IRS general help line at 1-800-TAX-1040 or visit www.tax-coalition.org. About The Author James H. Dimmitt James is editor of "TO YOUR CREDIT", a weekly free newsletter with personal finance news and tips. You can subscribe to the newsletter by visiting www.yourfreecreditreportnow.com. He is also author of "Identity Theft - How to Avoid Becoming the Next Victim!"
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Reducing Taxes Through Dividend-Salary Mix Calculations Should I take wages or dividends from my privately owned corporation? What is the best way of taking money out of my company? In other words, what will result in the least amount of income taxes?A Canadian accountant will perform a dividend-salary mix calculation to determine the best way of withdrawing money from the corporation.Even though Canadian income tax laws are different from other jurisdictions, some of the same principles of tax planning will still apply. Tax Tips for Home-Based Business Owners As tax time approaches, many home-based business owners begin completing their forms or paying their accountants with trepidation. This nervousness comes from two sources: a fear of being audited and a fear of having to pay a lot. Home Based Business Tax Deductions Running a home based business reaps many wonderful tax deductions that other businesses some times may not claim. Unfortunately to many small business owners end up paying the government taxes every year because they are unaware or several small business deductions that are available. Requirements To Produce Tax Information (Whats Up With That?) "What we've got here is a failure to communicate." --Strother Martin in Cool Hand Luke Statutory Law Governments pass laws, it's what they do. Seven Key Tax Deductions for the Self Employed As a sole proprietor, it's wise to familiarize yourself with the some key deductions that may reduce your tax bill for 2004.Small-business consultants generally recommend that you hire an accountant to prepare your tax returns, payroll and financial statements. Tips and Simple Guidelines on How to Calculate Payroll Taxes Managing a business small, medium or big requires you to pay your taxes, as well as your employees taxes. Managing a payroll can be an arduous and taxing job, no pun intended. IRS Reports Tax Gap of $300 Billion The Internal Revenue Service is reporting that the difference between what U.S. Access to E-records by Taxing Authorities: A Case for Pakistan (Part I) Background issues of access to recordsTo assess the records at hosted remote retained out of the jurisdiction of Pakistan root many legal issues which are needed to be addressed. Hereinafter there is description of the emerging legal issue of access to e-records. Rearrange Your Affairs For Maximum Tax Savings One way to maximize your business profits is by reducing your taxes. Frequently, income and other taxes could be lowered significantly if only the taxpayer were willing to plan ahead. Highlights of IRS List of 2005 Tax Scams Each year, the IRS lists various scams taxpayers get caught up in. The top 2005 scams include several that manipulate laws governing charitable groups, abuse credit counseling services or rely on refuted arguments to claim tax exemptions. Uncle Sam is Ready...Are You? Organizing Tips for Tax Time Anyone who is closely related to an accountant knows that there are not four, but five seasons in a year: Spring, Summer, Fall, Winter, and 'Tax Season.' During the other seasons, we accumulate leaves, snow, and mosquito bites. Hurricane Katrina - How To Use Your Business Loss To Get A Refund on 2004 Taxes With the massive losses caused by Katrina, the economy of the Gulf Coast region is in extremely bad shape. Fortunately, there is a quirk in the tax code that can help you generate a large refund from your 2004 taxes. Get Uncle Sam To Pay $36,000 For Your Childs Education! Let's assume that you would like to begin saving for your children's education fund. At the end of each year, for the next 8 years, you will contribute $2,000 into a Coverdell Education Savings Account (Education IRA), using your after-tax dollars. Take Control of Your Taxes As everyone in the U.S. Tax Trap #2 -- Double Taxation: Isnt Once Enough? Have you been thinking about incorporating your small business or self-employment activity? The advantages are many!For starters, you'll be protecting yourself and your family from the possible of a business ending lawsuit. Forming a corporation is Step One on the path known as "Asset Protection" -- you are moving from the world of unlimited liability to the world of limited liability. How Likely Are You To Be Audited? Statistics for IndividualsUnfortunately, the IRS increased its rate of auditing individuals in 2003 when compared to 2002. The increase was approximately 14%, but still constituted only 6. To Tax or Not to Tax - This is the Question To tax or not to tax - this question could have never been asked twenty years ago.Historically, income tax is a novel invention. How To Get An Extension To File Your Business Tax Returns Yes, the tax season is upon with the first filing date for some businesses being March 15, 2005. If you can't imagine getting your tax returns together by that date, you need not worry. Some Folks Pay A Lot Less Tax Than Others On Very Same Income-Did You Pay Too Much Tax In 2004? Someone once remarked, "Next to being shot at and missed, nothing is quite so satisfying as an income tax refund." There's no question that saving money in taxes is high on everybody's list of financial priorities, especially small-business owners. Amending Procedural Laws for Collection of E-taxation The electronic transaction ordinance defines the certificated copies in which are to be presented for adjudication. Where any law requires or permits the production of certified copies of any records, such requirement or permission shall extend to print outs or other forms of display of electronic documents where, in addition to fulfillment of the requirements as may be specified in such law relating to certification, it is verified in the manner laid down by the appropriate authority.
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