New York State Tax

Tax Refunds by Debit Card

The Treasury Department launched a new program for 2010 tax returns where they offered to give people their tax returns by means of debit cards. This program was targeted for low to moderately low income families and those without bank accounts. It was designed to offer a safe and convenient way for people to receive their tax refunds without receiving a physical check. With a check, a person must go to a bank to cash it; whereas with a debit card, the person is free to use the card wherever debit cards are accepted.

The benefits of a debit card are numerous. Someone who receives his refund on a debit card can use the card for purchases or can use it at an ATM to receive cash. It can also be used to pay bills online or over the phone.

Another benefit of a debit card for this purpose is for people who do not have a bank account. A person that does not have an account often must pay a fee to cash a check at a bank. This debit card eliminates the need for people to pay this fee. Another benefit for people who do not have bank accounts is the speed at which a refund is received. With a bank account, most people choose to have their tax refunds deposited directly. Without a bank account, a paper check must be mailed. According to the IRS, to receive a paper check, most people wait approximately six weeks. With direct deposit, most taxpayers receive their refunds within 10 days or less. Therefore, the use of prepaid debit cards allows taxpayers to receive their refunds sooner than they normally would.

The US Treasury issued four different types of cards. On the down side of this, two of these debit cards have fees that amount to $4.95 per month. The other cards do not have a monthly fee; however, with all of the cards there are fees that could apply. If a person used a debit card at an ATM machine that is not in the correct network, the person could be charged between $0.50 to $2.50 per transaction. Another feature of these debit cards is that they allow people to add to the balances. If a person does this; however, there are fees that apply. The fee is generally $4.95 per transaction.

For people interested in this option, it is imperative to find out the fees and charges that apply. In many cases, these debit cards are beneficial for people, but users of these cards should use caution regarding the places they use these cards.

If you need help filing your income tax return or need to speak to a professional about your tax refund click these links for local bookkeepers, accountants and CPAs.