Fiscal Fitness 2004

By for CAES News

By Michael Rupured
University of Georgia

As tax season rolls around, many people begin to look for help to prepare and file their returns. Some prepare their own returns. But most turn to local tax services and pay to have their taxes filed.

When you shop for tax preparation services, remember that not all services are alike. Comparison shopping can save you money both in the fees you pay for the service and the amount of taxes you owe or the refund you're due.

Free tax help may be available

Before you pay someone to prepare and file your tax return, find out if you're eligible for free tax help. The Volunteer Income Tax Assistance program provides volunteers trained by the IRS to prepare, and in most cases, electronically file returns. These services are free in most cities and in many rural areas.

The VITA program targets people eligible for the Earned Income Tax Credit. These are working families with children and household income less than $34,500. Call 1-800-829-1040 for the VITA site nearest you.

Senior citizens can often get free help preparing and filing their returns through the AARP Tax Counseling for the Elderly program. TCE will usually prepare returns for EIC-eligible households and senior citizens. The IRS can help you find a TCE site near you.

If you're not a senior citizen and earn too much for VITA, you can either prepare and file your own tax return or pay for help. Options range from professional accountants to commercial preparation chains with in-house training.

If you have to pay for help, shop around

When you use a paid tax preparer, expect to pay a fee. This varies greatly from one provider to another. It pays to shop around.

The fee you pay will also depend on the complexity of your return, the number of forms required and any extra schedules needed.

Most paid preparers will also charge for electronic filing, typically $10 to $15. Electronic returns are processed much faster than paper returns. A refund from a return electronically filed on Thursday of this week will generally post to your account by Friday of the following week if you designate it as a direct deposit.

Many companies now promise to give you your tax refund on the spot. These refund anticipation loans may sound like a good idea but these short-term loans are an expensive way to get your refund.

With electronic filing and direct deposit, the IRS will deposit your refund into your bank account within seven to 10 days. It doesn't make good financial sense to spend several hundred dollars to get your refund a few days earlier.

Whether you pay for your tax return or do it yourself, always choose electronic filing with direct deposit of your refund instead of a high-cost refund-anticipation loan.

Sharon Omahen is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.
Michael Rupured is an Extension financial management specialist with the University of Georgia College of Family and Consumer Sciences.