02 Feb 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.