Wait for tax refund to maximize it

All of us want to enjoy this holiday season, even if the economic downturn has pinched family budgets. Illinois families may be tempted by aggressive marketing plans that encourage taking an "advance" on anticipated tax refunds to buy presents, take winter vacations or purchase new clothes in time for the holidays.

These innocent sounding advances are really Refund Anticipation Loans (RALs) and come at a high price with expensive fees, high interest rates and possible future debt. Some well-known tax preparation companies are aggressively promoting pay-stub or holiday loans to boost their corporate bottom lines ahead of the start of tax season.

These companies don't tell their customers that the loans can cost as much as one third of their total refund in interest and fees. Worse yet, they can force a borrower into even greater debt by overestimating a family's refund. By waiting just a few short weeks, working families can get their entire tax refund.

Illinois refunds come in about a week if filed electronically. Federal refunds can be processed in about two weeks. Families that opt to have their refunds direct-deposited instead of mailed will have access to their refunds as soon as they are sent.

The Illinois Earned Income Tax Credit (EITC) provides hundreds of thousands of Illinoisans a larger refund or credit than they would otherwise receive. Sadly, lower-income workers who are eligible for the EITC are the most profitable targets for RALs.

We therefore want to remind taxpayers: It's your refund, get it fast and get it all. We urge every taxpayer to wait a few more weeks and then in January file electronically. Taxpayers can ask their tax preparer to file their Illinois return electronically, file electronically using tax preparation software or file their return for free attax.Illinois.gov.

Brian Hamer

Director

IDOR

Michael T. McRaith

Acting secretary

IDFPR