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As a financial coach, your mission is to guide your clients toward financial success and empower them to make informed decisions about their money. One impactful way to assist your clients is by referring them to free tax preparation services. In this blog post, we’ll explore why you should consider recommending free tax filing options, the variations in free options, and how to ensure your clients receive reliable assistance.

Why Refer Clients to Free Tax Preparation

  • Cost Savings:
    • Your clients can get their taxes prepared for free, saving them hundreds of dollars. Unlike commercial preparers who may offer refund anticipation loans with high interest rates, free tax preparation sites ensure that your clients pay absolutely $0.
  • IRS-Certified Preparers:
    • All tax preparers at free sites are IRS-certified. This certification guarantees the competency of the preparers, providing your clients with reliable and accurate tax assistance. The minor inconveniences, such as waiting in line or adjusting schedules, are a small price to pay for the minimum savings of $50.
  • Asset-Building Opportunities:
    • Free tax preparation sites offer more than just filing services. Clients can inquire about various asset-building products, including cash incentives to save, savings bonds, and on-site account openings. This allows your clients to make the most out of their refund without losing a significant portion to tax preparation companies.
  • Access to Additional Financial Services:
    • Unlike commercial preparers, many of these sites provide year-round services operated by local community organizations. Your clients can explore an array of financial services that may be useful and enhance their financial security.

Are All Free Options Created Equal?

The short answer is no. While free tax filing options may all market themselves as free, it’s essential to be aware of the variations among them, as many have hidden fees and lack data privacy protections. Here are a few free options:

  1. Certified by the IRS
  2. Are actually free
  3. Take data privacy seriously, including: 
  • Volunteer Income Tax Assistance (VITA):
    • This program offers free tax preparation by IRS-certified preparers at various locations and virtually nationwide. Clients can save money and connect with valuable community services. To find the nearest location, visit the IRS’s website, https://www.irs.gov/individuals/find-a-location-for-free-tax-prep, or call their toll-free number 1-800-906-9887.
  • Online options that have been vetted with Change Machine’s Seal of Inclusivity (SOI) 
    • Platforms like United Way’s MyFreeTaxes.com cater to low-income filers, providing an inclusive fintech product with strong data privacy protection and customer support. Importantly, MyFreeTaxes is available in English and Spanish and also includes options to file on your own or with assistance from an IRS-certified preparer.

Additionally, the new IRS Direct File pilot is a limited-scope program available in specific states for the year 2024. Clients in Arizona, California, Florida, Massachusetts, New Hampshire, New York, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming can explore this new option. Check out the IRS Direct File website for more information. 

Ensuring Reputability and Confidence

To ensure your clients receive the help they need,

  • Verify IRS Certification:
    • Before referring clients, confirm that the chosen free tax preparation site is IRS-certified by referring to VITA. This certification ensures the legitimacy and expertise of the preparers.
  • Research Online Platforms:
    • If recommending online options, ensure the platform is inclusive, reliable, and secure by checking out our Recommendation Engine to see if it meets our Seal of Inclusivity (SOI)  if you’re a Premium user or doing your own research. 
  • Stay Informed:
    • Stay updated on the latest developments, such as the IRS Direct File pilot. Provide your clients with accurate and current information to make informed decisions by checking out SHARE for updates. 

Conclusion

Referring your clients to free tax preparation is a powerful way to contribute to their financial security. By highlighting the cost savings, knowledge of the certified preparers, asset-building opportunities, and access to additional services, you empower your clients to make smart financial choices. 

To find out more about opportunities to support you and your clients during tax time and year-round tax planning, check out: 

  • SHARE to connect with fellow coaches, attend events, and ask timely tax-related questions,  
  • LEARN to dive deeper into using taxes to build clients’ financial security, and
  • COACH to capture, track, and report on your client’s financial outcomes

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