For many people living paycheck-to-paycheck, a big, fat federal income tax refund just cannot arrive soon enough.
This season's tax refunds, though, are going to be one week late because the Internal Revenue Service couldn't begin processing the vast majority of returns until Jan. 30 because of the fiscal cliff debate.
A week might not mean much to some. But many lower-income households could be more tempted to jump at fast-cash products offered through a tax preparer.
Consumer advocates are pleased to report this is the first year in decades that overpriced refund-anticipation loans will no longer be available from banks on a large-scale basis.
Even so, some high-cost products remain for getting cash quicker.
Liberty Tax Service, for example, has a refund-transfer product called its Instant Cash Advance. A taxpayer could apply if he or she has at least a $1,500 federal tax refund.
Liberty notes that no credit check is needed. Liberty offices in states such as Florida, Virginia and Texas, also can offer the cash advance products.
H&R Block no longer offers a refund-anticipation loan. But H&R Block does have refund-anticipation checks, which allow you to deduct your tax-prep fees from the refund. There's an extra charge of $24.95 for a refund anticipation check to have your federal income tax refund deposited onto H&R Block's debit card, called the Emerald Card. Or there's an extra charge of $34.95 if you have your own bank account for direct deposit and use a refund-anticipation check to cover the cost of tax preparation. Or there's an extra charge of $54.95 to have a paper check mailed to you as part of the refund-anticipation check program.
The refund-anticipation check program is used when people typically do not have a bank account and want to receive a refund faster than regular mail — or when they don't want to pay immediately for tax-preparation fees and would rather have those fees deducted from a refund, said Gene King, an H&R Block spokesperson in Kansas City, Mo.
Consumer advocates question the notion of paying extra fees when lower-income people could qualify for free tax assistance and have refunds directly deposited into a bank account. Some free tax-help programs offer prepaid debit cards for tax refunds for those who don't have bank accounts, too.
"We're always concerned when consumers don't receive the entire balance of their tax refund," said Tom Feltner, director of financial services for the Consumer Federation of America.
Volunteer tax sites across the country are open now or will open in early February and will process returns for free if the family has an income of up to about $50,000 or the individual has an annual income up to $35,000 in many cases.
If your adjusted gross income was $57,000 or less in 2012, you can use the Free File program at irs.gov and select your choice of tax software for free.