Bird in the Hand or Tax Refund Later?

in Cash, Chutzpah, CRA

So if I offered you “free” tax return preparation, and with that, I would give you an instant Tax Rebate, once I am finished (no waiting for the mean old CRA to pay out), would you take it?

Let’s just say, I am finding more and more people who seem to think this is a great idea, and it really sickens me.

If you want a fast rebate, submit your tax forms early, and it will show up pretty darn quick. If you wait until “Tax Day” (April 30, 2012) and you are owed money, you have just loaned the government your refund for that much longer (and it is going to take a long(er) time to get your refund as well). Is that an excuse to use an “Instant Refund” service? No!

Suck it up and grow a patient bone in your body, will ya?

First, you really shouldn’t be waiting for that big a refund (unless you have discovered some important deduction that you have forgotten). Make sure that you declare all your credits to your payroll office and get as much back on your taxes during the year, then your refund shouldn’t be that big. Ideally, I would say if you are getting more than $500 back, you need to go back to your payroll office, so you get paid more during the year (and you are loaning the government more than you should during the year).

Second, if you are using an “Instant Rebate” for a $500 rebate, you are in pretty dire straights, and you have bigger problems than needing your rebate. Wait a couple of weeks, get your WHOLE rebate and then pay down some debt with it.

Finally, why are you loaning money to the government and then giving that money to some stranger for simply giving you a percentage of your actual refund? You will give $45 for your first $300 in rebate and then $5 off every hundred above that (with H&R Block at least). So you are giving someone 15% pay back for $300 for a 2 month period, so that pays out to about a 90% pay out (if you amortize this over the year and such), wow, I should open my own Instant Tax Rebate firm, that is some nice coin.

Why aren’t people patient for their tax refunds any more?

 

 

{ 8 comments }

  • nadine zeldovich March 11, 2012, 8:52 AM

    Sorry, but I thinnk Joe had it right. Uneducated means you don’t have the opportunity to learn about money. Stupid means you just ignore those opportunities. Mine is a relatively simple tax return which makes it possible to use telefile. Even though I tell my co-workers, many of whom have tax situations identical to mine, that by using telefile, they can have a refund in their bank account within 5 business days, the still trudge off to H&R block (Wal-Mart wouldnt’ let them set up there if it wasn’t fair, they tell me).

    Reply
  • Traciatim March 7, 2012, 10:29 PM

    Retirement Planning:

    From the Money mart Website:
    “On a $300 loan for 14 days, the cost of borrowing is $59.97, with a total payback amount of $359.97”

    From the H&R Block Website:
    “For the first $300 . . . we’ll give you 85% or $255.”

    From the Studio Tax Website:
    As always, StudioTax is made available FREE for personal use and regardless of level of income. NO questions asked, NO registration, NO key, and NO activation.

    So your choices are get a payday loan for 300 bucks and pay 59.97, use H&R Block and pay $45, or use studio tax for free and get your full 300 bucks in 2 weeks or less.

    Reply
  • Joe March 7, 2012, 6:12 PM

    I think you’re dancing around the primary reason that this scheme thrives in our economy: the average Canadian is stupid about money. I could point out other evidence such as the growth of payday loans, the prices that people are willing to pay for crap shacks, and the debt:income ratio (which is now higher than in America).

    Reply
    • bigcajunman March 7, 2012, 6:17 PM

      Stupid about money? Well, I think that is a little heavy handed, I think naive is a better way of putting it, and UNeducated (where our schools should be teaching more about money) as well.

      Reply
  • retirement planning March 7, 2012, 1:39 PM

    Why pay pad loan is the same service as H&R block? It is much cheaper to purchase U file that using H&R block though.

    Reply
  • Ross Taylor March 7, 2012, 6:53 AM

    Nice post big guy. I wrote a guest post at Preet’s site last month similarly themed – I hope you are not waiting for your RRSP tax refund. http://ow.ly/9vgUq

    Reply
    • bigcajunman March 7, 2012, 7:53 AM

      I do have a large refund coming, but that is due to transfers from my University Age kids, and I don’t count those as “money in the bank” until they let me have them. I read that post, it was a good one!

      Reply
  • Traciatim March 7, 2012, 6:20 AM

    What I find really funny is that the same people who can easily tell you that pay day loans are a bad idea will use H&R Block, which is exactly the same service.

    Reply

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