Tuesday, April 5, 2011

Talking Taxes

Last week, we talked about the NEFE survey on taxes and tax refunds.

If you're due for a refund, there are several ways you can elect to receive your money. We simply got a check in the mail and stuck it in a savings account.

But there are smarter, and more strategic, ways to get your refund:

Direct deposit: You can file a request to have your refund allocated among three different accounts, such as checking, savings and a retirement account. If you file electronically, the money should reach your accounts within seven to 10 days; if you file a paper return, it takes four to five weeks.

Paper check: It can take up to six weeks to receive your refund in the mail. Half of those who prefer getting a mailed check do so because they don't want to give out their bank account information online. Waiting a while for a check to arrive also gives them time to think and plan what to do with the extra money.

Debit cards: Your tax refund money can be loaded onto a debit card within two weeks of filing your tax return. A debit card gives you fewer options, however. You generally cannot transfer the money to a savings account, so you have to spend it.
You may be charged a fee for every transaction, checking the balance, or simply a monthly fee for maintaining the card.

Refund anticipation loans: If you choose a refund anticipation loan, you will get your money right away, but it could come at a very high cost. You will be subject to a significantly high interest rate. You also may be charged a filing fee and a same-day processing fee, which can add up to hundreds of dollars. You could end up in debt and unable to pay back the loan if you do not get the refund amount you were planning on.


However you choose to receive your money, here's how to check the status of your refund:

*Call the IRS Refund Status Hotline - 800-829-1954.

*Check Where’s My Refund? on the IRS website.

We'll be going through some advice for what to do with your refund later this week. For more tax tips on filing your taxes and receiving and spending your refund right now, visit Smart Money.

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