IRS returns, will there be rapid refunds businesses available that will take paystub w/new filing problems?

Question

I read in paper that due to some upgrade with the irs, people who used to get rapid refunds with last paycheck stub will no longer be able to? That the IRS did away with that? Does anyone know?

Answer 1

The paper got it wrong.

1. Preparers were NEVER supposed to file with paycheck stubs. If a taxpayer is missing their W-2, they can file a substitute form AFTER Feb 15.

2. What preparers did was LOAN people money based on what they thought the refunds might be. So many people failed to pay these loans back that the banks underwriting them stopped offering them.

3. The IRS is expecting a short delay for some taxpayers (1040EZ, some 1040A, but not if child care or education credit is claimed). The banks won't loan in those cases because they won't know how long the loan will be. The Refund Anticipation Loans were based on refunds taking less than 2 weeks.

Answer 2

You can't file a legal return without your W-2. The banks that use to lend money based upon your last pay stub have pulled out due to heavy losses.

Once you get your W-2 and actually file, many of the tax prep mills will arrange a "rapid refund" loan. Skip that unless you are about to be evicted or need to put food on the table for your kids. The fees are extremely high -- as much as 2,300% APR in the worst of cases -- and it only gets you your money a week or so faster than e-filing with direct deposit of your refund to your bank.