(Ok, they can, but they tear their hair out trying, and then come to me.)

The biggest benefit for the working poor is the Earned Income Tax Credit. This is money back above and beyond any payroll deductions, often thousands of dollars. And it’s a pain to calculate.

I don’t know why the forms are set up the way they are, but calculating the EITC by hand is *hard*. I’ve worked two days thus far in the tax season, and had four people tell me, “When I tried to do the numbers, it said I owed,” and my calculations had them getting back a minimum of $1000.

We charge by the form, and there are a lot of forms and worksheets for the EITC. That means they’d pay a substantial (for the poor) amount for me to file for them. Using the RAL means we just deduct the fees from their refund.

There is a RAC that is *not* a loan, but that also deducts the fees. I encourage clients to take that instead, but they almost always want their money fast. (Hell, I encourage my clients to use the free file when their returns are simple. I’ve gone to the point of printing out the 1040EZ, handing it to them, and shooing them out of the booth.)

My clients frequently have sub-optimal money management skills, and their refund is the largest amount of money they’ll see all year. And no matter how much I try to discourage them from a RAL, they want their money. Now.

Anyway, my point was that you’re conflating two premiums being paid:

–The premium for having someone who knows what they’re doing prepare your return. (I could rewire my house, but have chosen not to spend time learning about wiring & just pay an electrician.)

–The premium for getting your money back fast.

Tax prep firms automatically do the first, and do the second as a service. It may not be a useful service to the readers of this blog, but I certainly can’t talk my clients out of it.

Just to clarify, a RAL is a loan on the refund, after file the return. An IMAL (Instant Money (um, somethingsomething) Loan) is based on paystubs. And it’s not something that the big green company did until this year. The other companies have been doing it for years and they were eating our lunch because of it.

IMALs are icky. No doubt about it. But there’s no way to compete unless we offer them. My analogy is a gas station who doesn’t want to sell cigarettes. The two products should be unrelated, and the second has an arguable moral cost. But people will go somewhere else to buy gas if they can also get cigarettes.

My company also tells me that our IMAL fees are decidedly lower than our competitors, so it’s not as icky as it could be. I have no basis for comparison, though, so they could just be blowing smoke.