I don't mean to pick on any one company - don't let your friends use Jackson Hewitt either.
The point is that many of the best known tax prep companies charge excessively high fees. They also offer what's known as "refund anticipation loans" where the tax prep company loans the amount of your refund to you at shocking interest rates that can run from 50 to 700%. When you get your tax refund from the IRS, you have to pay back the loan and all that interest.
The Better Business Bureau found that nearly one-third of all
complaints against tax prep companies in the US and Canada were about
mistakes made by the company that cost people money.
If you (or your program clients) didn't earn a lot of money in 2009, there are alternatives. Local United Ways across the country are providing free tax prep help. That's right - no fees. Well-trained volunteers will prepare your taxes. They know all the ins and outs of tax credits like the Earned Income Tax Credit (EITC) and will make sure you get the credits you're eligible for. They'll also help you get your refund fast - no loans to repay.
Some call the EITC the nation's biggest anti-poverty measure. Tomorrow is National EITC Awareness Day. If you don't know about it, it's time to learn about it. Here's info from the IRS about the EITC, and a factsheet from the Center on Budget and Policy Priorities. According to CBPP,
In 2009, the EITC lifted an estimated 6.6 million people out of poverty, including 3.3 million children. The poverty rate among children would have been nearly one-third higher without the EITC. The EITC lifts more children out of poverty than any other single program or category of programs.
To get you started, here are links to the United Way tax prep pages in Los Angeles and Seattle. Find your local United Way here.
Help spread the word about the EITC. And don't let your friends use high-fee tax prep services.
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