There are many places you can sell your tax return to get an instant refund.
These discounters are purchasing your refund and charging a fee so that you can get your tax refund right away.
The history behind discounting tax returns started many years ago when paper tax returns meant that it took two weeks or more for you to receive your refund cheque. Now that tax returns are filed electronically, refunds arrive sooner.
Does it still make sense to sell your return to a discount tax service?
Here are some points to consider.
How much can they charge?
What a discounter can charge for this service is regulated by the Tax Rebate Discounting Act of 1985. They are allowed to charge 15% on the first $300 and 5% on everything over $300.
They are not allowed to charge any additional costs for tax preparation fees. If you are charged more than this, it needs to be reported as fraud.
This means that if you are owed a $1,500 refund, they can charge
- 15% on the first $300 = $45.00
- 5% on the remaining $1,200 = $60
This all adds up to a fee of $105.
How soon do you get the money?
The discounter is required to pay tax refunds immediately. You can get instant cash on the same day through a prepaid credit card or cheque.
If you owe money, it will take longer
If you have debts owing to student loans, child support, training allowance, garnishment or require to pay order, this will reduce the amount of your refund and it will take longer to process.
There are restrictions to qualify for instant refunds
You will not be able to get an instant refund if any of the following are true:
- You have not filed in the past years, you need to pay for all previous years.
- You may be able to sell two years if you do not have any debts owed to the government, student loan, family enforcement or garnishments.
- You cannot discount if you are bankrupt, self-employed, have not filed a tax return, first time disability claim, or if child support is split by another person ** supporting documents are required if you have shared custody of your children
If you do not qualify for the discounter service, you may be offered a different service from the discounter. These services are often at a considerably higher fee than the above.
What happens after you file the tax return?
The discounter buys your tax return before getting the money from the government. This may mean that you are entitled to a larger or smaller refund than calculated, or that you owe taxes.
- If the refund is the same amount or within $10.00, they do not have to pay you any more money
- If it’s more than $10, they will contact you to calculate the new refund amount
- If you owe money or if there was missing information when the tax return was filed, the actual refund is less. The discounter is required to collect on the monies owed. If they cannot contact you, this debt can go to collections and affect your credit score.
Why not use our service? It’s efficient and affordable – with no hidden costs
At Hands on Accounting, we offer affordable tax services. We do a thorough job on your tax return by gathering all the facts and determining the best options for you.
With the new changes in electronically filing your taxes with direct deposit, you can get your TAX REFUND in approximately 8 business days from the filing date. *prior years will take a few more days
We are offering a worry free tax service starting at $75.00.
Contact Ina to get started.