Beware the asterisk (on financial apps)

Have you ever noticed how sometimes the best examples to share in your business come from your own personal experience? I had such an experience recently when my daughter (with my blessing), used an online tax program to complete her taxes. In this example, she used Tax Act, but this warning is for any kind of financial application, especially one that you might be using to complete your taxes. 

It should have been simple; she qualified for a free federal tax filing and had to pay $39.95 for the Arkansas return. That part seemed normal and acceptable, and it was disclosed. What happened next is what made me want to warn others to avoid the same pitfall. 

Tax Act gave her the option of having the $39.95 deducted from her federal refund. She was a little low on cash at the moment so she clicked yes. Well, unbeknownst to her, in order to pay the $39.95 from her refund, the bank that Tax Act used to process the refund charged her a $54 “bank fee”! Her total refund was reduced by $94 between that surprise fee and the nearly $40 to pay for filing state taxes. 

Needless to say, we are furious. The customer support representative assured my daughter that she "agreed" to it, but it's not obvious and was a huge shock to both of us!

This isn’t about being angry at Tax Act. It’s a lesson of “buyer beware” and always make sure you look for asterisks that are pointing you toward what could likely be a costly decision you made out of fear or convenience. When I shared about this scenario on Facebook, I was saddened to hear there were other similar scenarios. 

Conditions apply

Asterisks are always key! Always look for an asterisk and when you see one, make sure you read the conditions. I heard several stories where people thought they were getting free returns but there were so many conditions that “free” didn’t really exist. Most of the "free" returns are for extremely simple ones only. Even something like a single 1099 makes the tax return no longer “simple” for these purposes. 

This is also the reason I took my taxes to a colleague last year for the first time ever. With our tax situation, the price to do it myself using Tax Act was nearly as much as it would be to have a local, experienced professional do it (and then I wouldn't have to!). It was totally worth it to me to take it to someone local and get back that time for other things. Plus, I would know they were done right.

Avoid extras (especially by accident)

I heard several stories (including from my daughter) that throughout the process, she was repeatedly offered extra services such as “audit defense.” Thankfully, she turned that down each time. The audit defense services are designed to make you worried you will be audited if you don’t have one of their professionals check your work. If your return is really that simple, you shouldn’t need someone to double check it for you. The main reason we are upset is that this additional "bank fee" was not disclosed anywhere. Even now, when she logs in to Tax Act, there is no explanation of the fee. She had to contact customer service in order to find out what it was for.

Even though my daughter was careful with the clearly offered extra services, she still ended up having extra fees they charged her. If she had just paid the state filing fee with her debit card, she would have avoided this exorbitant bank fee. Had she not agreed to have the fee taken out of her refund, she would’ve received 100% of her federal tax refund and would’ve only paid $39.95 for the Arkansas return. 

Deciding whether or not to do your own taxes is fairly straightforward, but there are always potential pitfalls. If you decide you don’t want to do your own taxes, I am happy to refer you to a qualified tax professional.