5. You’re subject to offset. It has long been the case that if you owe money, your federal income tax refund can be seized to satisfy your debt. That’s referred to as „offset“ since the seizures are part of the Treasury Offset Program (TOP). States can also ask IRS to intercept, or offset, federal tax refunds for state tax obligations or money owed to state agencies: this includes child support arrears. This is where those debt indicators used to matter, but even if the absence of a debt indicator, some of the triggers for offset can be discovered other ways. A credit check, for example, might reveal a student loan delinquency or default, and some municipalities publish notice of parents who are behind on child support payments.
6. Your circumstances have changed. More than tax laws can influence the amount of your tax return: Your personal circumstances can change, too. no credit check payday loans Eaton OH If you got married or divorced, had a baby, sent a child off to college, got or lost a job, or even moved to a different state, your tax picture can change. Your tax preparer knows this, too. If you always get the same amount, but your tax picture will look a little different this year because of a change in circumstances, your tax preparer may determine that your refund won’t support issuing you a loan.
Being subject to offset can make you a risk to the lender, and they may deny you on that basis
7. They’re crooks. Please do not misunderstand/misread/misrepresent my statement. While I am generally not a fan of RALs, I do recognize that many taxpayers rely on them. And it makes sense that when there’s demand, there are going to be companies that step in to fill that need. And many of those companies are honest companies, but not all. Some companies are dishonest and intend to deny your loan from the beginning but don’t tell you because they want the related tax prep, loan application, credit check and „junk“ fees. The IRS has shut some of these companies down, including Instant Tax Service (ITS), which was, at one time, the fourth largest tax prep company in the country. In 2015, a federal grand jury handed down a 23 count indictment against ITS officers Fesum Ogbazion and Kyle Wade related to these kind of schemes. In , Wade pleaded guilty to charges against him. In , Ogbazion was found guilty of a dozen charges against him; according to court documents, post-trial motions are still pending.
If you’ve been rejected for a refund loan, try reaching out to the company to find out why. It may be that it’s something that’s fixable (like not having the right documents) and it’s worth trying again. But if it’s something more serious, like an offset or credit problem, trying again may not be worth it. All is not lost, however: Tax season opens on January 29, and the IRS still anticipates issuing more than nine out of 10 refunds in less than 21 days.
The indictment alleged, among other things, that ITS collected approximately $15 million in application and tax preparation fees even though Ogbazion knew in advance that the majority of the loan applications would be denied
Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future, I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I earned an LL.M Taxation. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. At one such audit, opposing counsel read my report, looked at his file and said, „Gentlemen, she’s exactly right.“ I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax. Just like that, Taxgirl® was born.
4. You didn’t make enough money. The key part of „earned income tax credit“ is „earned income.“ The amount of the credit is based on earned income – but not unearned income – which means that taxpayers who rely on dividends and interest don’t qualify, only those who actually work for a living. If you don’t make enough money, your ability to claim certain tax breaks, like refundable credits, could be limited. Again, your tax preparer knows this and a lack of earned income could result in an RAL denial.