Walmart has been steadily growing the scope of its financial services, offering unbanked Americans a place to do things like cash checks and pay bills cheaply — located in stores where customers will hopefully turn around and spend some of those dollars. This year, the retailer is making a big push into tax preparation with more than 3,000 Jackson Hewitt or H&R Block kiosks in stores around the country offering free tax prep for filers who use the 1040EZ form. It’s also advertising $3 and $6 flat fees to cash refund checks for customers without a checking account. Walmart says the average tax refund is a little over $2,900, so it’s smart from a business perspective to get these refund recipients into Walmart stores. But is it a good deal for consumers?
According to Walmart’s website, customers can get a free 1040EZ filing at H&R Block kiosks through the end of February, or through the end of tax season at Jackson Hewitt. This sounds like a deal, but the 1040EZ isn’t for everyone, including people who claim dependents or those who itemize deductions. The fine print also warns that people may still have to pay for state or local tax preparation, or for preparation of taxes using forms other than the 1040EZ.
Chi Chi Wu, staff attorney at the National Consumer Law Center, says some of the tax offerings could be a good alternative to places like check-cashing storefronts for unbanked consumers. But Wu also warns consumers to beware of a couple potential pitfalls.
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First of all, Jackson Hewitt still offers refund anticipation loans (H&R Block has already discontinued offering these high-cost products in advance of an FDIC crackdown that takes effect next year). These pricey products let people get their refund on the spot, for which they’ll pay about a little over $60 for a refund of $1,500 or less, according to the NCLC. But since the wait time to get a refund deposited into an account electronically is only a week or two, that $60 adds up to an annualized APR of 149%.
Refund anticipation checks, which both Walmart tax partners are offering this year, work a little differently. Customers still have to wait one to two weeks to get their refund direct-deposited, but it lets them put off paying for their tax prep services until their money arrives. H&R Block is offering free refund anticipation checks through Feb. 4 for customers who get their refunds deposited onto H&R Block’s own branded prepaid debit card, the Emerald Prepaid MasterCard. (This is for all H&R Block customers, not just the ones using the company’s Walmart kiosks.)
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Wu says that while this free offer is a good deal, consumers should think twice about paying for a refund anticipation check. While the cost isn’t high — around $30 — that’s a lot of money to do nothing besides defer a tax prep payment of maybe a couple hundred bucks for just a week or two.
