Taxpayers hoping to get their 2014 refund faster should be careful to avoid some costly traps. Although refund anticipation loans essentially have been eliminated as an option, similar and equally problematic products such as refund anticipation checks and tax refund advances have stepped in to fill the void.
These products depend on a business model that carries high interest rates and added fees that can snowball quickly. Earlier this year, Intuit entered into a proposed class-action settlement agreement over allegations that it offered a refund-processing service with fees that violated prohibitions against refund anticipation loans.
Financial experts say that paying large fees to get a tax refund a week or two earlier is not worth the cost. Combining the established methods of electronic filing and direct deposit can expedite tax refunds without incurring high fees. The IRS reports that it issued 90 percent of 2013 tax refunds fewer than 21 days after receiving those taxpayers' returns. Electronic filing can start that clock running sooner. Using direct deposit to have a tax refund put into a bank account electronically also saves time. This may not get a taxpayer his or her 2014 refund instantly; but the filer will receive all of it, without paying extra fees.