On this Martin Luther King Day, let’s talk about a sore subject: Refund Anticipation Loans and Refund Anricipation Checks. Large Tax Preparation services have been offering RALs for years. After efiling your return they offer to loan you your refund for the 2 weeks it takes for direct deposit to put the money in your checking account. What a ripoff! They reduce the amount they give you by interest fees and their tax preparation fee (I am sure there are RAL setup fees also) then when the refund comes, they keep the total amount. The IRS finally had enough and told all the large banks not to fund these loans anymore. Now the big Services have a Refund Anticipation Check which isn’t a loan; they charge you to set up a checking account for your refund; after the account gives notice they have your refund, they give you a check for the refund less account set up and the tax prep fee. Cheaper than an RAL, but you don’t get the refund much sooner – another ripoff. Here is a link to an article spelling it out in detail: Article on RALs and RACs http://www.stltoday.com/business/columns/savvy-consumer/article_29f04b30-c421-581f-a6ab-ed1dc24df757.htmlThe amount you pay for these things is way too expensive; [...]
Brian’s Financial Musings
Even though I don’t normally blog on Saturday, I thought I would talk a little about rebate credit cards. If you pay off your credit cards every month, rebate cards are like found money. We have three, one that pays 5% on gas and 1/2% on everything else, one that pays 3% on meals, 2% on travel and 1% on everything else and one that pays 1% on everything plus a 5% bonus on certain items that change every three months. None have annual fees and they can generate hundreds of dollars in cash and merchandise coupons. You should shop around and find a card or combination of cards that fit your lifestyle and will give you the rewards you are going to use.
Brian’s Tax Musings
Today I will talk a little about meals and entertainment. Taking your client out to lunch or a ball game is a 50% deductible expense. You have certain rules to follow to get the deduction, including documentation of the meeting or the event, what business was discussed, etc. Here is a link that breaks it all down:http://biztaxlaw.about.com/od/taxdeductionsatoz/a/mealentertain.htmSome people like to keep a calendar of lunch meetings with clients, attach the receipt for lunch and write down what the lunch meeting was about. Or get out the old scanner and set up a folder on your computer; just write the info on the receipt and scan it in.This is an area the IRS looks at during a lot of business audits, so documentation is important, especially if you have a large deduction.