Big name tax preparation services are a waste of money

You need your personal taxes done and they're not that complex, so you think you'll just run right over to H&R Block, Jackson Hewitt, or some other tax preparation franchise. It's easy and they must be good or they wouldn't have so many locations and be in business so long, right?

Wrong. The fact of the matter is that you're taking a big risk if you have your taxes done at one of the large tax return sweatshops or a similar smaller service. These companies have a few major drawbacks that most consumers are unaware of:

The prices they charge are generally too high. Even the simplest of tax returns can cost you well over $100, and that type of fee is just too much. Add in some things like a rental property or an in-home business, and watch your tab for the tax return run up fast.

The name of the game at the tax return franchises is turning out as many tax returns as fast as they can, at the lowest possible cost. This means that most of the employees are inexperienced data entry clerks who really know next to nothing about the tax law. They couldn't spot an opportunity or a problem with your tax situation if their life depended on it. Do you really want to risk having your taxes prepared by someone who took a day-long class to learn how to enter data into a computer program?

These places make a lot of their money by selling you other products, like refund anticipation loans or other nifty-sounding services to get your money to you fast. Selling these worthless products is how they really make their money. The fees for these things are way too high and not worth the cost. If you file your taxes electronically and request direct deposit of your refund, you should have your money from the IRS within a few weeks. Why waste money on a service you don't really need when you can get your refund so quickly for free?

What's the alternative to the H&R Blocks and the Jackson Hewitts? If your tax situation is very simple, you can purchase tax software to do the taxes on your own. If you're not comfortable with that, look for a local Certified Public Accountant who does lots of income tax returns. They are generally much more experienced with taxes and can be priced very competitively.

Forensic accountant Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations through her company, Sequence Inc. Forensic Accounting. The Association of Certified Fraud Examiners honored Tracy as the 2007 winner of the prestigious Hubbard Award and her first book, Essentials of Corporate Fraud, will be on bookshelves in March 2008.