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.

Avoid Tax Time Fraud

It's tax time, and that means financial documents are being taken out of locked filing cabinets, copied and dropped into mailboxes across America. In other words, this is prime "dumpster diving season" for identity thieves.

Here are some tips to protect individuals and business owners from fraud,provided by myID.com:

*E-file. When you file your taxes electronically, there will be no paper tax return sitting in your mailbox waiting to be stolen. There are a lot of other benefits to filing your taxes electronically as well. You will get your refund sooner. The IRS can check your returns for accuracy and skipped fields. Use a secure computer when filing electronically; update your anti-virus software

*If you choose not to file electronically, take your envelope straight to the post office rather than dropping it in your mailbox. Personal information privacy means knowing where your documents are at all times.

*If you vacation during tax season, have the post office hold your mail. An overflowing mailbox full of W-2s, 1099s, and end-of-year statements is a gold mine for identity thieves.

*Use your shredder. Consult a tax professional to know what documents to keep and what documents should be shredded. It's extremely important to avoid throwing away anything containing any personally identifying information. Put everything through a shredder before throwing it into the garbage.

*It's okay to store copies of tax returns on a hard drive - this is more secure than e-mail and can be a good way to back up your previous returns. Just be sure to properly dispose of the hard drive when you throw out the computer.

*Be aware of phishing scams. Identity thieves will call or e-mail during tax season and claim they are from the IRS. If you receive a supposed IRS e-mail, it is a fraud. The IRS does not e-mail any correspondence regarding your taxes. If you receive a call from the IRS, take down an extension number and employee name and call the IRS office at 800-829-1040. If the call is genuine, they will be happy to redirect your call back to the right department.