There are ads on the radio and TV promising to get your federal tax refund fast -- sometimes in as little at three days? Is this a good deal? Let's examine what these "refunds" actually are:
Company X prepares your return. Once completed they offer to get your refund to you in three days. Your first thought might be "Wow, that's my down payment my new car!" and agree to the deal. Three days later you have your money but it is substantially less than what you expected. What happened?
These fast refunds are not coming from the IRS. The company that prepared your return is actually lending you this money. They then intercept your refund when it comes from the IRS. The company is charging you a fee for making the loan, a separate fee for preparing your return, and charging you interest.
The best idea is to say no to the offer. Have your refund direct deposited into your checking account by the IRS and the state. You will have your money in two to three weeks. You can then make that car down payment and may have a little money left over.
Another good idea is to go to my previous blog File Your Income Tax Return for Free. If you have a fairly simple return you can file it, get direct deposit of your refund, and pay no fees for the preparation of your return. You can do the same thing with Massachusetts, but its a little more complicated.