Before you go to a tax preparer, look into free or cheap tax services

If you are a low- to moderate-income taxpayer and you shell out any money to have your taxes done, you're likely paying too much. Nowadays, with all sorts of avenues for filers of modest means to get their taxes done for free, paying someone to do the job is an unnecessary expense.

Before you take your W-2 to a preparer, look first to see if you qualify for free help through federal and state governments as well as nonprofits.

Still, each tax season — and this one is no different — finds tax preparation businesses pitching high-fee products and services to low- to moderate-income filers who can use every penny they can get.

One positive sign this season is the decline of the refund anticipation loan, thanks to separate actions by the government. A refund loan is an advance on a tax refund. The fees charged are sometimes the equivalent of getting a loan at an annual percentage rate of a few hundred points.

The IRS abetted this lending practice for years by providing tax preparers and their partner banks with a "debt indicator" that signaled whether filers owed back taxes or other debt that would reduce their refunds. This information was used to decide whether a customer could get a refund loan.

Last summer, the IRS announced it would no longer give out the debt indicator because taxpayers had other ways to get their refunds in a hurry — by electronically filing and having their refunds directly deposited in their bank account.

On top of that, federal regulators last year ordered some banks to stop making refund anticipation loans.

As refund loans decline, be prepared to see more pitches for refund anticipation checks, warns Jean Ann Fox, director of financial services for the Consumer Federation of America. H&R Block, which isn't offering refund loans now, is promoting refund anticipation checks for $32.95.

With a refund anticipation check, the filer receives a temporary bank account in which the IRS can directly deposit the refund in eight to 15 days.

Any fees for tax preparation are subtracted from the refund and then the taxpayer is issued a check or a prepaid card for the balance. The bank account is then closed.

Refund anticipation checks appeal to those who don't have a bank account or don't have the cash up front to pay to have their taxes done.

But if you have an account, you can get your money just as quickly if you elect to have your refund directly deposited. Plus, with so many options for free tax preparation, you likely could avoid those fees, too.

Even if you don't qualify for free help, shop around for tax services, says Robin McKinney, director of the Maryland CASH Campaign, a coalition that promotes free tax-preparation services. There are plenty of low-cost software options, and some small tax preparers may offer a better price than large tax firms, she says.

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