For many small-income earners getting a tax refund becomes a costly appeal. In such cases the income-earners opt for a refund anticipation loan. In this system the taxpayer will get their expected tax refund. The taxpayers will get different slabs, which includes is $37,263 for a married couple with two or more children. The highest tax credit, $4,400, is for a parent supporting two or more children. A parent with one child is eligible for a $2,662 credit. Though a quick refund loan is easy to get it is costly to afford as the interest can span from 40 percent to 700 percent, draining all the money from the tax-payers refund. As per The Consumer Federation:
The cost of refund anticipation loans drained $900 million from the tax refunds of the working poor in 2004, reducing the effectiveness of the federal government’s largest poverty fighting program.
Therefore it is always better to wait for tax returns through e-file rather than go for a high cost refunding loan.
