Paying to file a tax return can drain money from a worker’s tax refund. Many people feel confused or intimidated when faced with filing a tax return. They often seek commercial tax preparation for help which can cost $50 to $500. Tax preparers may persuade tax filers to get a “refund anticipation loan” or “refund anticipation check” to get their refund quicker. These options are additional fees and do not expedite refund delivery.
The most recent IRS data indicate that about 54 percent of EITC recipients pay someone to prepare their tax returns. The National Consumer Law Center estimates that EITC recipients spent about $2.3 billion per year on commercial preparation and quick refund products in 2013! Lower-wage workers are giving up a substantial portion of the tax benefits they have earned. They need every penny of their tax refunds and may not realize that they do not have to pay fees that drain money away from their refunds.