Filing your taxes with a big-box chain has benefits, risks

They say that only two things in life are certain: death and taxes. And those are also two of the things that people are scared of the most.

If the idea of filing your taxes fills you with as much dread as contemplating your own mortality, then you may consider outsourcing that work. 

But before you step into a brightly-lit tax corporation, you should understand what you’re getting in return. Here’s what you should know before hiring one of the big places to handle your taxes.

What are big-box tax prep companies?

Companies like H&R Block, Jackson Hewitt and Liberty Tax are as ubiquitous as McDonald’s or Burger King. 

And, like those popular fast food chains, many of them are franchises, meaning they’re individually run and managed. This also means that your experience at one chain might be dramatically different than your experience at another.

And like the cheeseburger you might order, the quality can differ greatly. There can be excellent tax preparers at one branch and inexperienced ones at another.

“Chains tend to use general approaches to tax filing, which means they can overlook strategies tailored to your specific situation,” said Arron Bennett, chief financial officer and founder at Bennett Financials.

Should you use a big-box chain?

When you’re deciding where to go to file your taxes, some people like the idea of visiting a place in person, handing over all their documents and then walking out with a completed return. Plus, many of these companies have dozens of chains, making it easy to find a location near you. Jackson Hewitt even offers tax filing services at 5,200 local Walmart stores.

“If you have a very simple tax return, a big box chain might work,” Bennett said.

Simple tax returns include those that only have one W-2, mortgage interest, daycare expenses and student loan interest. 

“However, if you're self-employed, own a business, or have more complex finances, these chains often miss opportunities,” Bennett said. “They’re focused on volume, not maximizing your tax savings.” 

Filing your taxes through one of the main chains can cost less than $100 for just a federal return. And some even have a guarantee to get you the biggest refund — or your money back.

Could using a big chain cost you money?

When you’re filing taxes, there are two numbers you should care about: how much you’re paying the preparer and the total tax due. 

Often, the big chains might have lower tax prep fees than individual preparers. Also, they may be willing to deduct their fee from your refund. 

Let's say an individual accountant charges you $500 to file your taxes, but finds you an extra $1,000 in tax refunds. In this case, it would be worthwhile to hire the individual, even if it feels more expensive in the short term. 

“Those savings can disappear quickly if you’re missing out on deductions or credits that a specialized accountant would catch,” Bennett said. “The extra money spent on a professional accountant often results in bigger tax savings.”

Another issue with big chain accounting firms is that it’s tricky to find the right preparer for your situation. You will likely have to use the person who is available when you walk into the store. And there’s no guarantee of their skills.  

What an individual accountant can do for you 

A qualified accountant can also help you in other areas, like financial planning. For example, if you have kids, an accountant can suggest other ways to minimize your taxes, like saving in a Dependent Care FSA. You may not receive that level of proactive thinking with a large chain.

If you’re self-employed, hiring an individual accountant can be worth it for other reasons. They may be able to assist you in determining the appropriate business structure (S corp, LLC, etc.) and can even assist in filing paperwork.

“For anyone who owns a business or has more complicated investments, or any international income, then you definitely want an individual tax preparer who is an expert in that type of tax return as there are many nuances and best practices that just aren't discussed or known to generalist preparers,” said Crystal Stranger, enrolled agent and CEO at Optic Tax Inc.

Can’t I file my taxes by myself?

If your tax documents only include a W-2, mortgage interest and student loan interest, then you may be able to file your taxes yourself without any hiccups. 

The IRS has free tax software for those whose Adjusted Gross Income is below $84,000 annually. However, you can file your taxes for free with the IRS at any income limit — you just won’t have access to the free guided software.

Also, your local library may be part of the Volunteer Income Tax Assistance tax program. This program has qualified volunteers to help those who make $67,000 or less, have disabilities or speak limited English.

Some United Way centers may also provide tax return assistance for those who earn below $60,000 a year.