Don't Fall for Tax Preparation Gimmicks

                                                         

According to FranchiseHelp Holdings there are approximately 38,287 tax preparations companies in the U.S. Approximately 144 million taxpayers filed tax returns last year. For several decades large chain tax preparation companies have preyed on low-income neighborhoods, inner-city and rural areas opening offices across the country. These taxpayers were lured into their offices promising to receive quick refunds in exchange for a fee knowing that most of these taxpayers were desperate for money and would jump at the opportunity even though it was a bad choice.

Offices are specifically located in areas where incomes are less than $50,000 or in areas where there are several check cashing stores and liquor stores. These tax preparation companies also lure these taxpayers into their offices with free coffee, snacks, and flat screen televisions in the waiting areas all to get repeat business and increase their profits.

In some instances customers are lied to and confused by the services offered and don’t realize that if they file their taxes online or through a free tax preparation center they can get their refund back in the same time period. These large chain companies are stealing money from low-income taxpayers who need their money the most.

The federal government stopped these large chain tax preparation companies from offering the refund anticipation loan or rapid refund. However, these tax preparation chains found a loophole around. H&R Block now offers taxpayers the gimmick to put your refund on an “Emerald Card” for a $45 fee or to you can get a “paystub loan” where taxpayers get a partial advance on their tax refund in December of January before the taxpayer receives their W-2. The interest charged on this paystub advance is 25% in addition to the fee charged to prepare their taxes.

H&R Block also has a “Second Look” gimmick where they offer to look over your taxes to find errors. When you file taxes the IRS will catch the errors and fix them for you so there is no need to waste time going to H&R Block or any other company.  Jackson Hewitt and Liberty Tax offer similar gimmicks. Jackson Hewitt allows taxpayers to go to Walmart to get their taxes prepared.  You have the following options:

• Get a Walmart prepaid debit card which requires you to load money onto the card for a fee.
• Receive a $10 Bluebird American Express gift card or get your tax refund for free if you get direct deposit
• Get at $20 Walmart gift card if you file your taxes online.
• Get a $50 Walmart gift card if you file your taxes in a Walmart store.

These are all gimmicks to get you in the Walmart store to shop. These companies charge higher prices, are inexperienced, make mistakes, use gimmicks, may not be honest, add a protection clause or an arbitration clause in their contracts which prevents taxpayers from suing them in court.

The alternatives to filing with the tax preparation chains are:

1.      File your taxes using a tax preparation software.

2.      File your taxes by mail.

3.      Hire an accountant or CPA.

4.      If you earn less than $60,000 go to a free tax preparation center by calling 800-906-9887 or using the site http://irs.treasury.gov/freetaxprep/ or use free tax preparation software which can be found on www.irs.gov.

5.      Use IRS Free File if your adjusted gross income is $60,000 or less.

6.      If your income is above $60,000 you can use Free File Fillable Forms available on the IRS website www.irs.gov.

7. Use an authorized tax efile provider which can be found on www.irs.gov.
8. Comparison Shop. Go to at least 3 companies to get price quotes to help you find the best deal.
9. Price match. Ask about price match guarantees that honor competitor prices.
10. Go with your gut. Use common sense. Go with your gut instinct, if you feel like the deal is too good to be true or if you feel like something is not right with the loan, don't sign it.
11. Ask questions. Ask lots of questions; have everything explained to you prior or during settlement.
12. If you still decide to use a tax preparation company and don’t want to pay their fee, you don't have to pay. You can take your paperwork, leave and look for another company to prepare your taxes.

Be wary of people or companies that brag about getting you large refunds, provide guarantees, or offer to get your refund quicker without ever seeing your taxes or knowing anything about you. When looking to hire a tax professional things to consider are:  qualifications, licensed in your state, experience, past references, work hours, professional reputation, trustworthiness, professionalism, professional memberships, your specific tax needs, comfortability and capability. 

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Change Your Financial Life Today

Tired of bad credit? Tired of creditors harassing you? Tired of getting rejected for a loan? Tired of employers turning your away?

1. Learn how to track your spending to increase your cash flow

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Want to Get Out of Debt Use a Budget

Many people continually complain about being in debt but when you ask do you have a budget, do you know how much you owe, or when you suggest they cut back on expenses they look like a deer in headlights or they just plain out refuse.  I am always amazed at this, how can you ever get out of debt if you don’t change your mindset, if you aren’t willing to work hard and make sacrifices.  There is no quick fix or cure all to get out of debt.  It takes a long time to get in debt and you will not get out of debt overnight. 

Many people do not know how to create a budget for themselves and many don’t even know where to start. Luckily learned at an early age how to create a budget for myself.  I knew how much money I spent and how much I had left.  This skill helped me when I became an adult and got into debt.   

The first step to getting out of debt is creating a budget.  The basic premise for creating a budget is to know what you have coming in and what you have going out. Track everything you spend money on, cigarettes, candy, bubble gum, etc.  Make the budget flexible so you have room for unexpected expenses such as house repairs or car repairs. If you don't have an emergency fund or savings to cover these expenses you can readily see in your budget what areas you can reduce expenses to get money to pay for those unexpected expenses.

Most people don't think about how much money they spend per week or per month but when you see all of your expenses written down it provides awareness of your spending habits. A budget and being in debt go hand in hand. Most people who don’t have a budget or don’t stick to it are in debt. Most people in debt don’t have a budget.  A budget is the first step to help you get out of debt. A budget will help you to determine if you have any money left over to pay down debt. If you don’t here are 20 ways to help you create a budget and pay off debt:

1. Admit that you have a problem and do something about it.
2. Take accountability for your actions. Don't blame others for your financial situation.
3. You have to know where you are before you can get to where you want to go. A budget will help you determine – what you spend, what you earn and what you owe.  
4. Use pen and paper, use a software tool like Quicken or Microsoft Money, a smartphone app or use the envelope method to track you spending daily, weekly or monthly. Once you visually see where you are spending your money it will make it easier to reduce spending.
5. Automate. Use online bill payment to pay bills.  Most banks also offer online budget tools to help you track your spending.
6. Notify. Set email or text alerts to let you know if you bank account balance is low and to notify you when bills are due.
7. Write down a list of all of your debts.  Set a payoff date and develop an action plan and beside each debt write down steps on how you can pay the debt off: reduce spending, use coupons, use money savings tips, earn extra income, etc.
8. Pay off small bills first. Focus on late payments such as collection accounts, judgments, liens or repossession first, next focus on paying off credit card debt, then focus on paying off loans.
9. Plan. Setup payment plans and negotiate with creditors to pay off debt.
10. Support. Surround yourself with at least three people who are doing better financially and gain financial advice from them.
11. Seek professional help. Get professional help if you are unable to create a budget on your own.
12. Needs vs. Wants. Buy more needs vs. wants to help reduce spending. Needs are food, clothing and shelter, everything else is a want.
13. Reduce spending. Buy in bulk, on sale, at discount stores, online or use coupons, buy generic brands.  Try websites such as groupon.com, coupons.com, freecycle.org, ebay.com or craigslist.com to find bargains. Reduce spending by 30%.
14. Groceries. Don’t go shopping when you are hungry, buy items on the lower shelves and ask about specials, join store clubs to get alerts on discounts.
15. Banking. Open accounts with little to no fees, ask about discounts and specials, and establish a relationship with the branch manager to get alerts about specials and new products and services that could save you money. Avoid using check cashing stores; cashing checks at the liquor store, payday loans or cash advances.
16. Driving. Buy gas in the morning, combine nearby trips on the same day, keep the trunk empty, get regular maintenance on your car, search for the cheapest priced gas and buy a gas efficient car.  Drive the speed limit to also save money on gas.
17. Medical. Buy at least basic medical insurance for you and your family, get a prescription card and fill prescriptions at discounts stores such as Wal-Mart or Walgreens to save money, negotiate medical services to save money and ask about programs for uninsured or low-income patients.
18. Insurance. Buy insurance for health, life, disability and your home.  Buy bundled services to save money, buy homeowners and car insurance with the same company and ask about discounts.
19. Compare. Comparison shop before making a purchase to get the best deal.  Use sites like www.bizrate.com, www.nextag.com, www.pricegrabber.com.
20. Clothing. Shop at discount stores, buy clothes in off-season, check out discount racks at stores and ask if stores if they honor competitor coupons. Buy a few jackets and mix and match pieces to stretch your wardrobe.