TAX SEASON WARNING ON 'PAY STUB LOANS'
This is today's main editorial in the Daily News.
IF IT'S JANUARY, it must be time for our annual request for special places in hell for those who see tax season as a time to fleece poor people.
This year, it looks like we're going to need a lot of space down there. Case in point: the "pay stub loans" being offered by large tax preparers such as H&R Block and Jackson Hewitt. One advertisement making the rounds proclaims, "I got $1,500 without a W2. I got people."
The promise: an easy advance on your tax refund, without even having to wait for your W2.
The reality: a high-interest-rate, expensive loan based on a guesstimate that could be wildly inaccurate, rope people into expensive services, and trap them into having to take out bigger, more expensive loans later on.
Here's one way this plays out, according to the Campaign for Working Families and Community Legal Services, which sent testers out to the large tax-preparation services to see how these loans work: You go to, say, H&R Block with your pay stub and it calculates what your tax refund might be based on your salary. You get a loan for that amount; in most cases, you can't get a loan for only a portion of your anticipated refund. You could pay up to 295% APR interest on that short-term loan, and be forced to pay for a dummy bank account and to sign up for tax-preparation services.
Not only is this an expensive way to get cash, but it can lead to big problems if your actual refund is less than what the tax service calculated and you must take out another expensive loan to pay the difference.
A much better route? Get your tax return prepared for free, and make sure you get every dime of the Earned Income Tax Credit -an extra refund for low-income people - to which you may be entitled. The Campaign for Working Families, which works to steer low-income people clear of financial services that can hurt them, offers free tax-preparation services. Each year, it also puts out a call for volunteers to be trained to prepare tax returns for its clients. These are the kinds of people we all need more of. Find out more at www.phillyfreetaxes.org or call 215-686-2599.
Comments (8)
I just had to borrow 300 dollars at thecash cow. It costed me 45 dollars to pay them back, and it will costed me 120 to refinance it if I need more time (for another week). :( But it has to be done. No other choice. times are tough.
Posted by: palomino on January 18, 2007 13:01
Must be Bush's fault.
Posted by: Todd Levari on January 19, 2007 12:18
No, he didn't say that.
It is interesting to me that you immediately defend against an argument that wasn't made. I am sure you will counter that people blame Bush for everything. But when it comes down to it, all I know is what I see, and I don't see the windmills you tip at. You are an apologist. In the psych feild, you would be refered to as an "enabler".
Someone invited you to a beer in Arizona. wink wink. (Whatever that means). I sincerely hope you and whomever have a good time being polite and diagreeing. Laughing and drinking and whistling while your country goes down the tubes. Pointing fingers with polite righteousness.
No, I am just a normal guy, trying to make it through, shaking my head at the "W"'s I see on peoples car, and wondering to myself how on earth there can be so many delusional people on God's earth. Naivete knows no single party or religion, or economic class. It's time, however to stop being polite and pushing guys like you back into the woodwork where you can do little damage. I will never be politically correct. Bush is a fool, and you support, if not him, then the ideology of selfishness that he and his cohorts feed upon. They cater to our worst desires. It's not worth it to me. I will never blame anyone, the media, the government, or Bush, for the little things. I haven't given in to his selfish siren call of tax breaks and 'shock and awe' wars fought by others.
Posted by: Reggie on January 19, 2007 14:03
I don't drink (anymore) but I still laugh and occassionally whistle. Don't recall pointing any fingers and don't even know what polite righteousness is. Don't have a "W" on my car (compact pickup actually) either. Have a fish and dove though.
Lighten up Reg. I'm teasing and unwinding a little after the intense but insightful and respectful debate I had with the blog's conventional posters. Need to recover B4 engaging in additional debate. I learn by sharing my feelings with and listening to people who have come to think differently than me.
No need to push me back into the woodwork (I thought liberals were suppose to be relatively non-violent). I spend my days playing engineer, hanging with my wife and cats, and pastoring kids (about God, not politics). Oh, and I box too for exercise. Don't have the authority or desire to schedule tax breaks or shock and awe. However, if my shared thoughts, which will differ from most everyone else on this blog, are going upset too many people, then I will seek another learning source and leave you guys be.
Now be nice.
Posted by: Todd Levari on January 19, 2007 14:41
No need to push me back into the woodwork (I thought liberals were suppose to be relatively non-violent
There's a completely new breed out here.
Posted by: on January 19, 2007 15:39
I, for one, have enjoyed Todd's contributions to this blog. He is not afraid to voice his opinions and take part in some lively and civil discourse. So Todd, please keep posting. It is nice to see that we can have polite and civil debate still. Cheers to you, mate!
Posted by: pasha on January 22, 2007 09:27
Most kind of you to say Pasha. You made my day.
Bad weekend for our military men and women. Things had been quiet for a while and I didn't want to tempt fate by making note of it. Let's keep praying for peace in Iraq.
Posted by: Todd Levari on January 22, 2007 12:01
Amen to that.
Posted by: Joseph on January 25, 2007 17:18