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5 Tax Season Pitfalls to Avoid

5 Tax Season “Gotchas” for the American Borrower to Beware

Gotcha #1: Watch out for Refund Anticipation Loans offered by tax preparers that promise filers immediate access to their projected refund, the effective interest rate can be 50% to as much as 500%

Gotcha #2: Don’t pay your taxes by credit card; it can add another 30% to your tax bill

Gotcha #3: File for an extension, there’s a failure-to-pay penalty of 5% per month – until it reaches 25% of the amount owed and a monthly rate after that

Gotcha #4: You can borrow money from the IRS at low rates and buy time to pay high-interest credit card debt while repaying the IRS

Gotcha #5: Do not increase your withholding. This “forced savings” sounds like a good idea, but you’re actually providing a cheap loan to the IRS

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