A lot of tax companies are offering incentives to get you in the door this tax season.
But are they worth it, and are there hidden costs? We found out all those offers of gift cards, cash now and refund advances will very well cost you in the form of higher filing fees.
“That’s the only difference is that the fees are a little higher, but we discuss the fees with them before they even do their return,” said Mariah Quezada, the Office Manager at the Liberty Tax Service in Spartanburg.
She says Liberty just raised it’s “cash now” offer from $50 to $100, but fees to file are now at $250 on average. In years past it was more like $180.
It’s a similar story for a refund advance, where places like Jackson Hewitt are offering 0% interest and no fees.
Sounds like a great deal but is there anything that the taxpayer should watch out for?
“The taxpayer when they go in to do their tax return needs to know what they paid in prior years when they didn’t have these addition gifts, additional services additional advances. Make sure that your fees are comparable,” said IRS Enrolled Agent, Dan Thomas.
The tricky part, you’ll have to agree to pay that filing fee, and process the return in order to find out if you can get an advance.
And it’s not that easy to qualify. You have to have at least a $1250 expected return, no major change in status that could slow down your return (like marriage or adding a dependent) and you have to pass a soft credit check.”
In other words, there’s no guarantee.
Crystal Ervin got an advance back in November from H&R Block which she says helped get her through the holidays. And yet she admits she never has checked to see how much they charge for filing her taxes.
“I probably should, but I don’t because you know I get so much money back.”
Here’s why you should if the fees have gone up and you’re not aware then you are losing out on getting a bigger return. And we spoke with several tax agencies that say if a client can show that they used to pay a certain amount, they will work with them to retain their business.
One more thing to note. Many preparers are offering the refund advance through the end of February, but keep in mind, you can file january 19th and get your return within 10 days, so an advance doesn’t really make sense past next week.