Financial Focus: Post-Tax Season 2018, Winners & Losers

By PROF. ANTHONY RIVIECCIO, MBA PFA

So who was the big winner of tax reform?

The lower class taxpayer? The middle class? The wealthy? Small businesses? Big businesses? Grandparents? Children?

Well, some yes and some no were some winners but the big, big, big winner is the same as it’s been for the last 20 years:

Big banks and big tax preparation service firms.

How? Well, by taking advantage of the biggest losers: low-income taxpayers.

Sadly, most taxpayers use their tax refund as a forced (yes, a twisted view) savings account. Therefore, these taxpayers need their income quickly, especially low-income workers.

And big tax preparation companies help everyone by even being able, if applicable, to even get your “refund” (an interest loan) even before you file. But of course, don’t worry, if you wait until you filed, you of course received a wonderful “bank card” to use that “refund” immediately.

Banks include items such as refund advances, refund anticipation loans, and refund transfers. For example, with refund transfers, a bank account is opened to receive the IRS refund. When the refund is available, tax preparation and other fees are paid from the account.

Sounds good, right? Except for those nasty little thing called fees!

So banks offer tax companies either “loans” or cash cards, mostly at $2.95 per transaction. Tax preparation companies will take these resources by either offering you “a much higher interest rate loan” than the one they received (and tell you it’s a loan/refund) or you give you a brand new tax ATM “refund card.”

And correct me if I’m wrong, but mostly because of the changes in tax law most 2018 tax refunds went down.

So did you have to do this? Yes and no. Yes, because you’re surely no expert on taxes, but no because we have government tax preparation clinics to assist you for free.

But they are closing all over the United States. And the non-for-profits are limited as far as capability. Most now work two to four days a month during tax season, meaning those places, which are first come first serve are swamped!

So can you buy software! Sure! Is it cheap? Yes and no. Will it make you all of a sudden a do-it-yourself tax expert? Good luck with that one. And don’t forget that old commercial that has “who to complain to” if the software is not working correctly or the taxes are competed wrong …”ask the box!”

Can you learn? Sure! You can read, take a class or workshops, but that will cost you big time. But I guess I should say in full disclosure that it might be worth it long term. You can find these “tax preparation/tax planning” classes at your local college.

So we congratulate the big banks and big tax preparation service companies on their tremendous profit that I am sure they will be reporting in their June profit statements so their shareholders can also celebrate. The big losers again, people making below $40,000, who wanted their money “in 24 hours for several upcoming fees” versus just asking your tax preparation company to just waive the ATM card and have the money electronically put into your bank for free.

Example. You have a $2,000 refund, on a big bank ATM card. Spending that amount on retail things, let’s say, from groceries to the Rent you use the card 18 times in three months. That’s $54! That’s five percent annual interest. Of wait, that was in three months, I apologize, that’s 20 percent interest. Don’t make the same mistake next year!

Professor Anthony Rivieccio, MBA PFA is the founder and CEO of The Financial Advisors Group, celebrating its 20th year as a fee-only financial planning firm specializing in solving ones financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Klipingers Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News, thisisthebronx.com and The Bronx Chronicle. Mr Rivieccio is also currently an Adjunct Professor of Business , Finance & Accounting for both, City University of New York & Monroe College, a Private University. For financial assistance , Anthony can be reached at (347) 575-5045. If you would like a FREE copy of The Forbes Magazine 2018 Tax e-Guide just give our office a call. Feel free to visit their FACEBOOK Business page for past Financial Focus articles: www.facebook.com/iwantmytaxmoney

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