Keep More Money in YOUR Pocket at Tax Time
Authored By: Iowa Legal Aid
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Did you know that paying fees for tax preparation and refund anticipation checks is like losing as much as four days' pay? Here are some ways you can avoid giving away your money during tax time.
Use a Free Tax Preparer
In 2010, typical costs for commercial tax preparation were between $129 and $229. This was just for the preparation.
You don’t have to pay big money to have your taxes done right. Free tax preparation sites are located throughout the state of Iowa. The Volunteer Income Tax Assistance (VITA) Program offers free tax help to low to moderate- income individuals (generally those earning $50,000 or less) who cannot prepare their own tax returns. Volunteers receive training and are certified to help prepare basic tax returns in communities across the country.
VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations. Most locations also offer free electronic filing.
You can locate the nearest VITA site, by calling 1 800 829 1040. Additionally, the AARP offers free tax preparation sites to older Iowans. To find a local AARP tax site, call 1-877-227-7844. Start Early! Your employer should have your W-2's to you by February 1st. Call in January to find a free site and plan to visit your free tax site or make an appointment as early in the tax season as possible.
Tax Loan Products:
In 2012, there may be no more providers of Refund Anticipation Loans. These were short term loans provided to taxpayers to get their checks just a few days faster. This option wasn’t a good idea for most people because e-filing your taxes and having your money deposited directly to your bank account would get your refund to you in as little as ten (10) days. Using VITA and AARP would get rid of tax preparation fees, too!
What other Products are there?
Refund Anticipation Checks- These are often offered to taxpayers who can’t afford to pay for tax preparation up front. There is usually a fee to set up the account that issues the check maybe as much as $30. This fee and the tax preparation fees are deducted from your refund before you get it.
Pre-paid Debit Cards- If you don’t have a bank account and can’t qualify for one, some financial institutions are offering deposits on debit cards. These debit cards may be available thru your local VITA site. Before choosing the debit option, you should be careful to read the fine print. Ask questions like:
What transactions are free?
- Most debit card providers offer free point of sale transactions at places like your grocery store, and allow cash back with a purchase.
- This is good unless you need to get out more than $20-$50 at a time.
- Does the card charge for withdrawals at ATMs?
Also ask about fees for things like:
- Checking your balance
- Replacing a lost card
- Inactivity – not using your card for long periods of time
- Withdrawals of your entire refund at once
Keep more money in your pocket! Evaluate your options and consider free tax preparation. This service is available to help low and moderate income people maximize their refund. Put your refund to work for you by paying down debt, putting it towards basic expenses, or maybe even saving for a rainy day.
The information in this article was not intended or written to be used and cannot be used to avoid penalties under the Internal Revenue Code.
Last Review 8/8/12