Tax Prep on the Cheap? Wal-Mart to Offer Free 1040EZ Filing
Believe it or not, tax time is rolling around again, and while many dread it, there are others who view their income tax refund as the biggest cash bonanza of the year and they are rushing to cash in.
This is especially true for lower-income Americans who qualify for the Earned Income Tax Credit, which is designed to help offset the effect of payroll taxes.
This hasn't been lost on Wal-Mart Stores . The world's largest retailer has been taking steps to broaden the financial services it offers to its customers who are underserved by traditional banks and financial institutions.
The retailer has been opening up Wal-Mart MoneyCenters in its stores, where customers can cash checks, purchase prepaidVisadebit cards and pay bills using CheckFree, a company that helps people pay bills electronically.
Now, Wal-Mart is expanding the services it offers at tax time. This year, more than 3,000 Walmart stores will have either a Jackson-Hewitt or an H&R Block kiosk inside to help shoppers prepare and file their tax returns, and all consumers who qualify to submit a Form 1040EZ can do so free of charge.
Form 1040EZ is generally used by single or married taxpayers who claim no dependents and who do not itemize deductions. Customers can file a free 1040EZ at Walmart stores with Jackson Hewitt kiosks throughout tax season, but stores with H&R Block kiosks will only offer it until the end of February.
"We believe Americans shouldn’t have to pay exorbitant prices on their everyday financial needs," said Daniel Eckert, vice president of Walmart Financial Services. "It’s their money and we want to make sure they can cash checks, pay bills and transfer money at a low price."
Each of the 2,800 Jackson-Hewitt and 250 H&R Block kiosks will offer a full range of tax preparation services to customers at all income levels through April 15. Consumers will have the option of filing their return and having it deposited to their checking account or directly onto a WalMart MoneyCard, which is a prepaid Visa or Mastercard debit card that can be used wherever it's accepted.
For lower-income consumers who don’t have a checking account, the debit card option could be a good choice because it may be less expensive than other options. And if customers prefer a traditional paper check, Walmart said it will cash income tax refund checks of up to $1,000 for a fee of $3, and checks of up to $7,500 for $6.
That's big savings for those who don't have a bank account. And there are plenty of people in this situation. The Federal Deposit Insurance Corp. estimates that about 60 million Americans don't have access to traditional bank accounts or credit cards. That means they can find themselves using costly cash checking services.
Assuming the average tax refund of $2,902 (based on figures from the Internal Revenue Service), Americans who use cash-checking services could wind up paying as much as $90 to cash their refund if they are charged between one and three percent of their check's value, which can be typical.
According to research Wal-Mart has conducted, over the next two weeks these underserved Americans will file their taxes and start cashing about $31 billion in tax refund checks.
And while some may save these refunds or put the money toward bills, a good chunk will use these dollars to make purchases of items they want or need, which can be good news for Wal-Mart's business — a point I'm sure it hasn't missed.