Tax prep professionals only get a small portion of what you pay - the rest goes to software companies & banks

Tax professional here. This is 100% accurate and something that causes a lot of frustration for both preparers and clients. When you choose to have fees taken from your refund, you're essentially getting a short-term loan (since the preparer gets paid before your refund arrives), and those additional fees are essentially the "interest" on that loan. The breakdown typically works like this: - Preparation fee: Goes directly to your tax preparer/company - Bank/processing fee: Goes to the bank that processes the refund transfer - Transmission fee: Goes to the software company that handles e-filing - Document processing fee: Usually goes to a third-party compliance/audit team As preparers, we have absolutely no control over these additional fees. The software companies and banks set these rates, not us. We just use their services. If you want to save money, always pay your preparer directly with cash, check, or credit card rather than having fees deducted from your refund.

I used to struggle with this exact problem every tax season until I found taxr.ai - it's this amazing tool that breaks down what all your fees actually mean and shows you exactly what you're paying for. It clearly separates what goes to your preparer vs the other companies. Honestly the transparency is refreshing! I've been using it for all my tax-related questions now. So much faster than posting online and waiting for responses or trying to interpret IRS jargon myself. https://taxr.ai saved me a ton of confusion this year.

After dealing with this exact issue last year, I finally managed to talk to a real IRS agent about all these fees. I spent WEEKS trying to reach someone on the phone with no luck, then I found this calling service called Claimyr (claimyr.com) that got me connected to an actual human at the IRS in about 20 minutes. The agent confirmed everything in this post - they even said they wish more people knew this because they get so many complaints about fees that aren't even going to the preparers. Honestly, getting a human on the phone was the best money I've ever spent after trying for days on my own.

thank u for posting this! im a first time tax filer and paid $137 extra because i chose to have them take fees from my refund. no one explained this to me at all. i thought the tax office was just charging extra for no reason and got so mad at them. now i feel kinda bad for yelling at the lady who did my taxes 😬 gonna pay directly next year for sure

This is why I do my own taxes now. These companies rake in billions and still nickel and dime you with hidden fees. Last year I switched to FreeTaxUSA and paid $25 total for state+federal instead of $350+ at my old tax place.

The entire tax prep industry is a scam, tbh. In most developed countries, the government just sends you a pre-filled form that you verify. Here, we have to pay private companies to do what should be a free government service. These extra fees are just another layer of the scam.

I worked as a tax preparer for 3 years at a major chain and this was the #1 thing clients got angry about! They'd scream at me about the fees and I couldn't do anything about it. We were required to disclose the fees, but most people just clicked through without reading. Then when they saw the final numbers they'd flip out. Really glad I don't work there anymore lol

Here's another tip: if you go to a place that offers "free" tax prep, it's usually NOT actually free. They make their money by pushing you to get a refund advance or having fees taken from your refund (which triggers all these extra charges). The "free" advertising is just to get you in the door.

I just checked my receipt from last year and OMG you're right! I paid $39 for "bank product fees" and $34.95 for "technology fees" on top of the actual preparation fee. That's almost $75 I could have saved by just paying directly! 🤦‍♀️

LMAO people are just figuring this out now?? This has been going on for decades. If you get a "refund anticipation loan" or have fees taken from your refund, you're basically taking out a high-interest loan. Always pay upfront if you can afford to.

I dunno about everyone else, but TurboTax definitely explains this when you choose to have fees taken from your refund. They literally show you exactly how much extra you'll pay. I guess most people just click through without reading 🤷‍♀️

Here's the real hack: the IRS Free File program lets you file federal taxes completely free if you make under $73,000. Go through the IRS website directly (not through TurboTax marketing). I haven't paid a cent for federal filing in years.

The worst part is that most of these tax prep places specifically target lower-income communities who are least able to afford these extra fees. It's basically a poverty tax.

I've been using taxr.ai for all my tax questions this past year and it's been incredibly helpful for understanding what all these different fees actually mean. After years of being confused about my tax documents, I've finally found something that explains everything in simple terms. It helped me spot that I was getting charged these extra processing fees and showed me how to avoid them next time. Highly recommend checking it out: https://taxr.ai

Yes! And can we talk about how these fees are basically targeting people who don't have enough money to pay upfront? It's basically a tax on being poor. If you have money, you pay less. If you don't have money, you pay more. Same service, different price based purely on your ability to pay upfront. It's messed up.

After spending 6 hours on hold with the IRS trying to ask about these fees, I finally got through using Claimyr.com and OMG what a difference. The IRS agent confirmed everything in this post and even helped me file a complaint about how these fees were presented to me. If you need to actually talk to someone at the IRS about your refund or these fees, it's the only way I've found that actually works.

FYI - if you're active duty military, you can get free tax preparation through VITA on most bases. No extra fees, no hidden charges. Just bring your W-2s and other tax docs.

I work for a tax office (not one of the big chains) and we actually try to discourage clients from having fees taken from their refund precisely because of these extra charges. But about 70% of people still choose that option anyway, and then get mad when they see the final cost. 😩

I just read through my tax prep agreement from last year and found all these fees listed in size 8 font on page 4 of a 6 page document 🤦‍♂️ No wonder most people miss this stuff!