United Way of Greater Knoxville

Home About Us Community Impact Where Your Money Goes Support United Way Get Help Partner Tools About United Way Annual Report Volunteer Leadership History & Mission Combined Federal Campaign Organized Labor Accountability United Way Community Impact Allocations & Fund Distribution Community Care Fund Non-profit Management Center Success by Six Community Environmental Scan Earned Income Tax Credit Gifts in Kind Medical Home Initiative Where Your United Way Donations Go Program Support Community Partner Contact Information Community Partner Program Descriptions What Your Donation Buys How Your Contribution is invested How You Can Support United Way Donate Online Campaign - Campaign Support Materials - Corporate Gifts - Workplace Gifts - Individual Gifts - Leadership Giving Honorary & Memorial Gifts Make a Planned Gift Volunteer Learn How to Get Help 211 - East Tennessee Information & Referral Community Partner Contact Information Helpful Tools for Partners Applications for Funding Quarterly Reports Donor Choice Reporting System

news & events

01.26.06
INSTANT "REFUNDS" MEAN TAKING OUT A LOAN ON YOUR OWN MONEY

Rapid refund and quick cash loan offers seem to pop out all over town during tax season. These offers are really just refund anticipation loans (RALs), which are short-term, high-interest loans that taxpayers take out based on their expected returns in order to get their money sooner.

Many people are unsure of how to file taxes properly, especially when there are additional forms such as the Schedule EIC (Earned Income Credit), and end up forfeiting part of their refunds by using these "services." The average family in Tennessee with an EITC refund of $1,785 will pay an estimated $100 to get a RAL, which translates to an interest rate of 216 percent.

RALs are actively targeted at lower-income taxpayers who need their money as soon as possible. These people often do not have the available funds to pay a preparer "up front," and so suffer from these high interest rates. If there is any delay in the IRS's payment of the refund, the interest on the loan continues to accrue.

There are over fifteen free tax preparation sites in the Knoxville area that cater specifically to low-income and senior taxpayers. The IRS-trained volunteers at these sites can file returns electronically and help taxpayers file for credits such as the Earned Income Tax Credit and the Child Tax Credit.

Electronically filed taxes can pay out a return in as little as ten days, and all for free! Information about dates, times, and locations of free tax preparation sites is available by calling 2-1-1 East Tennessee Information & Referral, a United Way community partner. Taxpayers can also call the IRS at (800) 849-1040 or AARP at (888) 227-7669 to locate a convenient site.

EITC is a valuable resource for low-income individuals and families which is often used to pay rent, utility, or other bills or to open a bank account. For some families, this UWGK/Instant Refunds and the EITC page 2 of refund can amount to a 40 percent boost in available income; however, according to the IRS, up to 25 percent of eligible Knox County residents fail to claim this tax credit.

Because the money received from the EITC can offer a unique wealth-building opportunity for low-income residents of Knox County, United Way believes it is one of the most effective ways to help people achieve self-sufficiency.

United Way of Greater Knoxville is a local, independent organization dedicated to improving lives by building a better community. In partnership with 50 agencies, local business, community leaders and ordinary citizens, United Way tackles issues that matter most. By working together, we provide a safety net of services addressing Knoxville's most basic needs while working toward lasting change.