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To qualify for a rapid refund, the filer has to have taxable income. Wages, taxed unemployment or self-employment income can all be used to determine eligibility for a loan.
The filer has to be entitled to a refund for a refund anticipation check to be issued. The tax preparer will determine if the filer has an estimated refund, and if so, how much. The refund anticipation check will be based on the amount of the refund, less the processing fees.
A credit check is required to determine the percentage of fees that will be charged for the refund anticipation check. Filers with lower credit scores will pay a higher percentage of fees than a filer with a higher credit score. In some cases, the credit score can disqualify a filer from receiving a refund anticipation check.
Once the tax preparer completes the filer's tax return and determines that the filer qualifies for a refund anticipation check, the filer will receive documentation regarding the disbursement of the check. The filer can opt to have the refund direct deposited into a bank account or placed on a pre-paid debit
card, or he can receive a paper check. Direct deposit and the pre-paid debit card are the quickest methods of receiving the refund, most arriving in eight to 15 days. Paper checks can take up to six weeks to arrive. Once the filer has chosen a payment method, he must sign all the required paperwork and complete the filing of his taxes before the check will be issued. The IRS will send the actual refund amount to the tax preparer so the business can recoup the monies given to the tax filer.
Refund anticipation check fees are rather high. For example, if a filer has an estimated $1,000 tax refund, a 10 percent fee could be applied, which takes the refund amount from $1,000 to $900. It is also important to note that although a filer could get his refund sooner through a refund anticipation check, electronically filing a tax return without the anticipation check might only increase the wait time a few days. Finally, a filer should remember that if for any reason, his refund is seized or he's entitled to less than what was anticipated, the filer is responsible for repaying any shortages to the tax preparation company.