4 Things That Contribute to a Poverty Mindset During Tax Season

4 Things That Contribute to a Poverty Mindset During Tax Season

1) Spending upwards of $300 to have JH, H&R Block or other big name tax preparer file your returns because a) you want to get a Refund Anticipation Loan (RAL) b) you don’t realize they base their filing fee off the amount of your return. The bigger your return, the more they charge (doesn’t make sense when you say it out loud either) and c) You don’t realize you can push the exact same buttons yourself with a program/software like TurboTax. To make it worse, they tell you that the fees are “computer generated” and they have no idea how much you will pay until they are finished.

2) Getting a refund Anticipation Loan RAL. This is a loan, with interest and fees. You’ll pay money to get your money. Doesn’t make sense at an ATM, makes even less sense here. Of course, emergencies arise so it might be useful to get the money sooner. In that case, see number 3.

3) Not having a bank account. Check cashing facilities (i.e. Currency Exchanges) will charge you even more money to cash your refund check. A bank account allows you to deposit your money into your account– for free. The bonus? If have your return sent via direct deposit, it takes about the same time (if not less time) than the RAL. Many Turbo Tax customers receive their refunds within 2-3 weeks with direct deposit.

4) Not realizing that a bigger return doesn’t mean Uncle Sam likes you best. It means that you’re overpaying during the year. Check with human resources at your place of employment to determine which deductions/withholdings you can change to keep your money in your pocket during the year.

Note: If you do go to a major chain and realize the fees they charge are more than you want/should pay, you should know that the tax preparer must return your documents to you in the event you decide not to file with them (which you can do at any point before submission. Some large chains will charge a fee if you decide not to file through them after the tax preparer starts the process).

In summary, you end up paying hundreds of dollars to these large, chain tax preparers to file your taxes (a process that takes 30 mins on your own). Then you pay the bank fees to get a Refund Anticipation Loan, then you pay the Currency Exchange/check cashing location more money to cash the check. There are many opportunities in this process to keep more of your money in your pocket.

*Note: I have no affiliation with Turbo Tax nor have I received any compensation for my recommendation.



  • Elizabeth
    Posted at 03:07h, 02 February

    Amen on these points! The first time I paid someone to do my taxes at the age of 21 I cursed myself for paying someone to fill out the 1040EZ that I had been doing on my own for years. I couldn’t and still can’t figure out why my peers pay so much every year to have simple taxes done.

    • Erica Thurman
      Posted at 17:25h, 02 February

      Elizabeth, I felt the same way after I discovered a much cheaper way! Like a lot of people, I thought filing taxes was something that required an advanced degree in that area. Then I watched what the person at a large chain did, asked what training she had and figured I could at least try it myself. Sadly, people who need the money most are more likely to pay higher filing fees in order to get the money faster.

  • Katie
    Posted at 03:35h, 06 February

    I think this is such a good post!

    I worked at a bank during college, and it would astonish me the number of people would would walk in during tax season with multi-thousand dollar RAL checks, pay our non-customer cashing fee, and then walk out with so much cash (I would be very paranoid to carry so much). We would always ask if they wanted to open an account, as tellers are trained to do, but nearly all would say no, get their money and go.

    I understand that sometimes emergencies come up, perhaps necessitating the RAL check for some, but the other fees, fees, fees could be easily avoided…and they would already have the money if they’d set up tax witholdings a bit better. Even many of my friends today don’t seem to understand that it isn’t “free money from Uncle Sam,” it’s money you’ve been lending out interest-free.

    PS-I found your blog after a gawker article’s comment said to google AAVE code-switching…I’m glad I did! I’ll be putting you in my reader 🙂

    PPS-Gorgeous hair.

    • Erica Thurman
      Posted at 04:53h, 07 February

      Katie, thanks for taking the time to comment. Please visit often 🙂 You certainly have reason to be concerned for those walking out with large amounts of cash. I hope as word the spreads about programs like TurboTax, people will find ways to save those high filing fees and interest fees. Thank you for telling me how you found the blog! It’s always interesting to hear that.