Other Tax Preparation Chains

Jackson Hewitt and others

After H&R Block, Jackson Hewitt (*Est. $190 for an average return) is the largest tax-preparation chain in the country, with almost 7,000 storefronts that prepare about 10 million returns annually. Unlike H&R Block, Jackson Hewitt doesn't offer tax-preparation software, but you can file your return on their website. You can complete a simple federal tax return and e-file it free of charge (state returns cost extra), with e-mail support; pay $28 for a more complicated return and e-mail and online chat support; or pay $46 for any type of return, with unlimited online or phone support and audit assistance. In addition, beginning this year a free cloud-computing service called My Tax Manager lets you store and organize electronic tax-related documents on a secure server and submit them electronically, so that a tax preparer can start on your return before you go to a Jackson Hewitt office. You also get discount shopping offers and tax tips throughout the year.

Currently, the Jackson Hewitt website advertises refund-anticipation loans (RALs) of up to $1,500 (for a fee of $61.22), as well as an "assisted refund" that is essentially the same product as H&R Block's refund-anticipation check (RAC). The assisted refund promises taxpayers their refunds in eight to 15 days, with tax-preparation fees and other charges deducted automatically. You can have your assisted refund loaded onto a Visa "smartcard" similar to H&R Block's Emerald Card, with many of the same drawbacks (lots of associated fees).

If H&R Block has been given a hot bath by customers and regulators, Jackson Hewitt has been boiled alive. In April 2008, the U.S. Department of Justice filed suit against 125 Jackson Hewitt locations (all of them franchised rather than company-owned), claiming millions of dollars in tax fraud, and in 2007 the firm paid $5 million to California to settle charges related to its marketing of RALs. Consumers are no kinder; almost 40 people give the service an overall rating of 2 out of 5 stars at Epinions.com.

The third-biggest chain in the U.S. is Liberty Tax Service (*Est. $190 for an average return), which was started a few years ago by one of the founders of Jackson Hewitt. Despite the downturn in the economy, business experts say the number of Liberty Tax franchises is growing rapidly. As of this writing, Liberty has about 3,800 outlets, up 1,500 from 2010, and it was recently listed by Forbes.com as one of the "Top 20 Franchises to Start." Liberty offers the same range of services as Jackson Hewitt, including online filing with prices ranging from a free federal return and e-filing to $50 for a more complicated return and more online support. Also like Jackson Hewitt, Liberty Tax Service offers refund-anticipation loans of up to $1,500 and either an electronic-refund check (ERC) or an electronic-refund deposit (ERD), which is essentially the same product that H&R Block calls a refund-anticipation check and Jackson Hewitt calls an assisted refund.

We haven't found many reviews of Liberty Tax Service. Local reviews of a Liberty office in San Francisco posted on Yelp.com, a site where customers can post impressions of local businesses, give it a 5-out-of-5-star rating from more than 40 people, so customer satisfaction evidently varies from location to location.

Free tax-assistance programs

If you're not interested in visiting a tax-preparation chain, be sure to see our report on tax-preparation software, which includes information on the many available free options. Preparation of state taxes isn't always free, however, and not everyone is comfortable preparing their taxes online.

The IRS offers free tax-preparation and filing services through its Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs at locations throughout the U.S. The programs are aimed at low- and moderate-income people; if you had a household income of less than $49,000 in 2010, you may qualify. AARP's Tax Aide program is a TCE partner program, and offers help to people age 60 and over at more than 7,000 locations in the U.S. Experts say that these free tax-assistance programs can be better options than using tax-preparation chains as long as you meet the income requirements.

In addition, this tax season the federal government initiated a pilot program that offers low-cost, prepaid debit cards called MyAccountNow cards to 600,000 low- and moderate-income taxpayers. Those who don't have bank accounts can use the cards for their tax refunds, thus allowing them to receive and access the funds more quickly, without paying for RALs or RACs. The program also encourages people who have payroll cards to use those cards for their tax refunds.