Thursday, January 29, 2009

Tax Time in America

Tax season leaped into full bloom on January 16, when the IRS opened its computer systems to begin receiving E-Filed returns for the 2008 tax year. And what a day it was.

For those who don't know, I work for a company who makes business solutions for accountants and professional tax preparers. Our largest product line is tax preparation software. As a result, I'm able to stay pretty well informed about what's happening in the world of taxes.

On opening day of e-file season this year, we processed as many returns as we did the first WEEK last year. And we've maintained a very high performance every day since. It's been phenomenal.

It's also another sign of the recession. Millions are trying to get their refunds as quickly as possible. And a high percentage of Americans are paying a sizable fee to get their money instantly. The RAL (refund anticipation loan), is a big money earner for tax preparers, banks and software providers alike.

I would never take a RAL. Simply put, I'm a cheapskate and I am not willing to pay someone to get my money 10 days or two weeks earlier than if simply let the system pay out on it's normal time table. The treasury dept. is very quick these days if you have direct deposit.

Of course, I don't normally get refunds. My goal is to even out or pay the Govt as choices preferable to a refund. A refund means I have loaned the Govt. my money interest free all year. I'd rather keep it myself. I believe I handle money much more wisely that Uncle does, so I'm not letting him have it unless and until it's absolutely necessary. If the Govt gets it, they keep any interest earned and give me the principal. If I keep it, I get both the money and the interest. That's a much better deal in my estimation.

I look on it as my personal stimulus plan. And it's a darned good one.