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As tax time rolls around yet again, filers are left with that annual question — where do I go for help preparing my tax return?

This question is especially important if you have bad credit. Your refund could provide a windfall of cash to cover unpaid debts that are still eating up your monthly finances, so you’ll want to get as much as you can here.

One thing is for sure — tax filers have never had more options and more help in filing a tax return than they do today. Whether it’s a step-by-step online program, computer-based tax software or the convenient tax filing centers that seem to pop up in the strip malls starting every January, choice is the name of the game.

But how can you be certain which service or tax filing software is the right option for your tax situation and budget?

Here are five things to consider when choosing between the options available for filing your taxes:

1. The price

The difference in fees from one tax service or software program to the next can be significant. Where most software programs typically charge a flat rate of around $50 – and some even offer free filing – a tax preparation service can charge $200 or more.

Of course, the advantage with a service is someone else is doing the paperwork for you. Many tax services also offer to interact with the IRS if there are any questions regarding your return.

One word of caution is to avoid a tax preparer that bases their fees on a percentage of your return.

2. Their qualifications

There is a difference between a tax accountant and an income tax preparer. Most tax preparation services, such as H&R Block, Jackson Hewitt, Liberty Tax and others, have qualified tax preparers, but they are not usually certified tax accountants.

All of them, however, should have passed a competency exam by the IRS and should have a Preparer Tax Identification Number (PTIN). Don’t be afraid to ask for it.

3. Their area of expertise

If you have a highly complex tax return, seeking help from a tax preparer might save you time and money. If you are a small business owner, have multiple sources of income or have an unusual situation like an inheritance, look for a specialist in those types of returns.

4. Extra fees

When you’re considering a tax preparer, be sure to ask what their entire fee is. Ask whether they charge extra for electronic filing, audit protection or fees for additional or non-standard tax forms.

Also ask if their fee includes the cost of representing you with the IRS if you’re selected for an audit.

5. Additional services

Some tax preparation services, and even some software packages, may attempt to offer what’s called a Refund Anticipation Loan (RAL) or other quick access to your anticipated tax refund. While this may sound good on the surface, these loans often charge exorbitant interest rates and may quickly eat up much of your refund.

Consider wisely and read all of the fine print. A personal loan may be a good alternative in lieu of a RAL.

With all of the options available, your choices for preparing your tax return have never been greater. Be sure to consider the pros and cons of each, and choose the one that best fits your personal financial situation.

Photo credit: The Redoubt Reporter/Jenny Neyman

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About The Author

Mike Randall is most knowledgeable in the areas of credit scores and credit cards, having written on those topics and others for the past eight years. He graduated from California State University with a degree in English literature, and he has an extensive background in personal finance studies. When he's not keeping BadCredit.org readers informed of changes in the subprime market, Mike’s hobbies include sailing and gourmet cooking.

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