An expert advises us to check out the details of any offer by our tax preparer to give us an instant or "anticipation" tax refund. Gary Crawford has more.

PARTICIPANTS: Gary Crawford. Lauren Jones, Ohio State University Extension Consumer Policy and Financial Expert. Also, classic comedians, Groucho and Chico Marx.

Transcript

And now...

[Music] We are talking with those financial wizards Chico and Groucho Marx, and we're talking today about taxes.

Hey, I got an uncle lives in taxes.

No, no, no, no, no, taxes, you know, money, dollars, dollars.

Dallas, that's where my uncle lives.

Dallas taxes.

Oh, for Christ's sake.

Why don't you bore a hole in yourself and let the sap run out?

I agree completely, Groucho.

Now, most of us don't like to pay taxes, of course, but it helps if we think we're going to get a refund after we submit our tax forms.

However, if you are having a preparer work up your taxes for you, you may have had them in the past tell you that you could get your anticipated refund right then, even before they submit your tax forms to the IRS.

That way, you don't have to wait.

But really, it wasn't exactly just giving people instant refunds.

They were actually...

Refund anticipation loans.

Those are no longer legal.

Loans.

Ah, not legal.

But Lauren Jones, an Ohio State University Extension Consumer Policy expert, says the practice, in a way, is still going on, but instead of refund...

♪ Anticipation ♪ Loans, they are called...

Refund anticipation checks.

Checks.

Basically the same thing.

Essentially what these schemes do is, if you go in to file your taxes, say, in early February, you find out how much your refund's going to be, and the provider will say, "Rather than owing us any money for having us prepare your taxes, we'll just give you this check that is sort of worth the value of your refund.

You get the value of your refund now, and once the government pays your refund, we'll sort of take that money and subtract what you owe us for having done your taxes, along with an interest rate."

Interest rates?

Hmm.

The tax preparers are often charging very high interest rates for very short-term loans.

So, you know, if the refund preparer is charging a lot for the service, you can end up paying a huge interest rate on a very short-term loan, just to sort of have the cost of your tax preparation paid up front.

And to have your refund money, or some of it, instantly.

Now, back in the days before online submission, it could take several weeks between the time they mailed in your forms until you got the refund.

So maybe you really couldn't wait that long.

But...

"Now that most of the tax preparation process happens online, the wait between filing your taxes and actually getting the refund is pretty short."

So it really doesn't pay to get a so-called refund...

"Anticipation."

Anticipation check instantly and pay high interest rates for the convenience, when chances are you could have your full refund in as little as two or three days anyway.

Now, not all tax preparation companies charge interest on those instant refunds, but Lauren Jones says you should ask them about their policy on that.

Get clear on just what the deal is.

In Washington, Gary Crawford for the U.S. Department of Agriculture.