If you’re like most people, taxes are the last thing on your mind when you start off the new year. Everything is running smoothly until you start getting rampant emails from Turbotax asking if you’re ready to file. A sizable refund can be a great way to save up for future purchases—but what if you find out you owe more than you get back? You may be racking your brain trying to determine where you could have gone wrong. Not to worry—a tax loan is the perfect way to pay off what you owe without breaking the bank. To make things a little easier, we’re going to review the ins and outs of tax loans, and how they can help you jump-start your debt payoff.
What are tax loans?
A tax loan is similar to any other loan you’d sign up for. They’re offered from various online lenders, credit unions, and banks. Repayment terms are often ideal for paying off unexpected taxes without accumulating too much interest along the way. In fact, competitive interest rates make them a lower-cost alternative to IRS payment plans.
When and why would I need a tax loan?
Though most Americans do get a refund each year, there are a few circumstances that would make you owe more money in taxes. These circumstances include, but are not limited to, self-employment, changes in deductions, and extra income. In some instances, the taxes you owe may even exceed the return you were expecting back and you’ll end up owing money to the IRS rather than getting a refund.
Whether you knew it before tax day or not, you still have to pay these dues or face penalties and fees as months pass by. This is where a tax loan comes in—to help you pay off your dues on-time even when crisis strikes.
Are they a good idea?
Yes! Tax loans are the perfect solution when your tax refund doesn’t live up to expectations. Whether from self-employment or unintentionally altering your W-4 with an employer, certain circumstances may leave you with a large sum of money to pay back. Without the help of a loan, you may find yourself drowning in interest for missing payments. Ultimately, paying the low-interest rate associated with your loan will likely end up costing far less in the long-run than penalties inflicted by the IRS. Need another reason? Failing to pay your taxes, commonly known as tax evasion, is a serious criminal offense and could land you in jail for 3-5 years if you get caught.
How do I find the best deal?
Each filer’s needs are unique, so finding the perfect tax loan isn’t a one-size-fits-all solution. Depending on your annual income and how much you owe, you may need a longer term to pay off the loan. Conversely, you may want a lower-interest rate and shorter repayment term.
Depending on your specific wants and needs, your search could be a click away or may require a little more investigation. Just like any other loan, be sure to research thoroughly and ask plenty of questions. Some lenders will offer a special promotional discount around tax season, so it’s important to plan accordingly and get those taxes filed as soon as possible.
Tax return not exactly what you’d anticipated? With rates as low as 9.99%, paying your taxes has never been easier than with our ongoing tax loan promotion. To learn a little more about repayment options and interest rates, give us a ring or reach out via email today!
Haven’t started your tax return yet? Now’s a better time than ever! Common Trust Federal Credit Union has teamed up with TurboTax to help you save up to $15 on federal tax products. Moreover, our team is highly knowledgeable and here to help you with every step of your application.