By Rebecca Rose
Killeen Daily Herald
As the April 17 federal tax deadline looms, some consumers may be able to take advantage of free tax preparation offers.
But several national tax preparers and one local resident say customers need to be aware that some tax returns have additional costs attached.
David Young, a 30-year-old who works for a local apartment complex, earned more than $12,000 in 2011, according to the W2 his employer provided in January.
A radio commercial about free tax preparation service led him to the Jackson-Hewitt kiosk inside the Copperas Cove Walmart in early February.
He told the tax preparer he wanted the free service and asked to be informed if it would not be free. But at the end of the session, Young got a big surprise.
The tax preparer turned the computer screen around to verify information, and "then they asked 'how would you like to pay,'" said the maintenance worker.
Because Young qualified for an earned income tax credit, which required an additional form, the Jackson-Hewitt preparer said he had to pay for the service.
Young received a $102 tax credit, according to documents obtained from him, and Jackson-Hewitt charged him $88 to complete the form to obtain it.
In addition to the form charge, Young's itemized receipt showed that Jackson-Hewitt charged him $39 for the company's "gold guarantee," which includes its audit assistance; $29.95 for bank fee for direct deposit and $20 for a transmission fee.
When he was asked to pay the $176.95 in tax preparation charges, Young told his preparer he didn't have the money. "They said they would deduct it out of my refund," he said.
"What's the point of giving me $102, if you're going to charge me $176?" asked Young, whose refund dropped to $400.05 after Jackson-Hewitt took its cut.
In an email, Melissa Connerton, spokesperson for Jackson-Hewitt, said the company's national free offer is a free filing of the federal 1040EZ form in its Walmart kiosk locations.
Taxpayers only are eligible for the free tax return if they meet certain qualifications, said Connerton.
For example, consumers must not file as Married Filing Separately or Head of Household. They must be born after 1945 (not 65 or older), not be blind and not have any dependents. In addition, the free service only covers tax returns with W2 wages and no more than two W2s.
In the email, Connerton specified that tax returns claiming any credits, such as the income tax credit or any tax deductions also aren't eligible for the free service.
Carol Mitchel, tax adviser with H&R Block in Austin, said her company offered free, simple federal tax preparations until Feb. 29.
"It's basically a (1040EZ) return," she said. "It's usually a single person or married, with just W2 income."
Consumers who have children, or who sell stocks and shares wouldn't qualify for the free service.
But customers like Young, who qualified for the income tax credit, would face an additional charge because a separate IRS form must be completed to go along with the tax return.
"We wouldn't charge for the (1040EZ)," said Mitchel. "Just the earned income credit form."
Mitchel said additional income such as interest over a certain amount, stock dividends and other ancillary income requires a separate form, too.
"Everything that's other than a W2 is filed on a different schedule (or form)," said Mitchel, adding that she makes sure clients know if they will have to pay a fee before starting the preparation process.
"We're not going to have (clients) sit here through the whole thing, and then tell them it's going to cost," she said. "We'll tell them straight away."
Young said consumers should be cautious about free tax preparation services. "If they fall in that earned income tax credit, it's going to cost money," he said.
Contact Rebecca Rose at firstname.lastname@example.org or (254) 501-7548. Follow her on Twitter at KDHBusinessNews.
Tax preparer offers advice
Carol Mitchel, a tax preparer for H&R Block with more than 20 years of experience, offered some tax-preparation suggestions as the federal filing deadline nears.
One of the biggest mistakes people make is forgetting to count sales tax when itemizing deductions.
Customers who have recently purchased or sold a home should also hang on to their closing statements, which are needed to get key tax breaks.
People who work for companies offering stock options as incentives need to bring backup paperwork to their tax preparer.
"Gains are reported on the W2, but we still need to see back up paperwork," said Mitchel. "People don't keep enough receipts."
For consumers who prepare their own taxes, H&R Block offers a backup program called Second Look. It's an opportunity to have a tax preparer check over the completed return for free.
If the preparer catches a mistake, customers can opt to have it corrected, for a fee. If the return is already filed, H&R Block will file an amended return for $99.
Most significantly, Mitchel stressed the importance of selecting a tax preparer who is accredited and registered with the Internal Revenue Service. "Make sure you got a professional tax preparer," she said.