Tax Shops

The shops to have your taxes done are beginning to post. While these jobs often pay very well and offer you the convenience of having your taxes done, be aware that many/most of them require that you be due a reasonably large tax refund because the test of the shop is requesting a 'Tax Anticipation Loan'.

You need to be aware that any time you request a loan--which this is--you are subject to a credit check. You get only a few (I believe it is 5) inquiries to your credit report per year before your credit score goes down.

These shops may be perfect for you, but read through them carefully as to what they require because only you know whether you can afford a 'hit' to your credit report in the current financial climate. Also recognize that since these shops generally require that the preparer electronically file or mail your tax return for you, you will get only one shop, so make it the best paying one you can live with if you decide to perform them.

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Years ago, these were called rapid refunds until the government mandated a name change to call them what they are - a loan. Tax anticipation loan, refund anticipation loan, different names, but each charges the taxpayer a substantial bank fee that reduces your refund. If you aren't familiar with these loans, take your time and calculator, ask the preparer detailed questions regarding fees.

Preparation fees and the loan fee are taken from your refund. Make sure the shop pays well enough to recoup these dollars.

It's your money. Make sure it's right for you.

Last year the tax anticipation loan shops I saw paid up to $100 for the return preparation and paid the loan fee and interest if I recall correctly. It did sound as though the shopper would come out whole on their refund because all the fees were covered. Plus the shops generally paid $75.

My major concern, however, is that shoppers be aware that like an insurance shop, a cell phone contract or negotiating an auto loan, there is the potential for a hit to their credit reports. While to some extent we can avoid this with insurance shops and car negotiation shops by stating 'I think my credit score is about _______. If I decide to go through with the deal I will of course give you permission to run a credit check' you don't get the option of keeping your social security number private on a tax shop.

Of the 3 major tax prep franchises, $100 fee may cover a standard deduction return, but it's doubtful.

There's a list of criteria to qualify for a refund loan - normally you have to have bank-product history, can't be active military, refund needs to be $1000+, Sch C can't be the only income. A credit check is automatic with the refund loan products, and that could be a double whammy.

In the event a credit report shows debt - unpaid taxes, child support, etc., the 24-hour refund is declined and the anticipated refund will pay the debt first, then fees. What $$ are left, will be paid in about two weeks.

I almost took one of these shops, but the credit check wasn't worth it for me. I wasn't sure if I had to take the refund loan for the shop.

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Tax Shops

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