Are you in the military and getting ready to do your taxes? Make sure you know how to file for free

Tax season can be an anxious time of year, but it doesn’t have to be if you know where to turn for help. It is also a great opportunity for servicemembers to build up their savings using a portion of their refunds. Servicemembers should know that there are resources available to them for free tax preparation services. Take advantage of these free services and kick-start your emergency savings with our guide.

Free tax preparation services for servicemembers

There are several options for servicemembers to file their taxes for free, including free tax preparation software you can use to prepare your own taxes and file online as well as free tax preparation assistance on base.

Defense Department’s Military OneSource MilTax program

MilTax is a free online tax prep and e-filing program that addresses unique situations specific to military life, like deployments, combat and training pay, multistate filings, living overseas and more. The program walks you through a series of questions to help you complete and electronically file your federal and state returns. MilTax also has personalized tax consultants who are available to answer your questions. Contact Military OneSource by phone or live chat to schedule a consultation with a military tax consultant. MilTax is available to all active-duty servicemembers, regardless of activation status, and even those who leave the military for one year after your separation or retirement date.

Volunteer Income Tax Assistance (VITA)

Servicemembers, including retirees, are also eligible to receive free tax consultation and preparation through the Volunteer Income Tax Assistance (VITA) program. There are VITA locations on some military installations where you can sit down with a trained tax professional to complete your return. If you don’t have a VITA site on your local base, use the VITA program locator to find a nearby location.

What to consider when using a fee-based tax preparer

If you choose to pay someone to prepare your taxes or take advantage of special promotions for members of the military, here are a few things to first consider.

Read the fine print when taking advantage of special military promotions

Tax preparers who charge for their services may appear to offer special promotions for servicemembers, promising to help them for free or at a discount. However, we’ve received complaints from servicemembers who were unexpectedly charged fees. Make sure to read the fine print, as some preparers may do your taxes for free, but then charge a fee to e-file or for other services. If you have questions about a contract, you can always review it with your installation legal assistance office.

Understand refund anticipation checks and refund advance loans

It’s important to think carefully if a fee-based tax preparer offers you a tax refund product, like a refund anticipation check or refund advance loan.

Refund Anticipation Check

A RAC allows you to delay the cost of the tax preparation services and pay it out of your refund. You typically pay a fee to delay paying the cost of the tax preparation services. A RAC doesn’t deliver your refund more quickly.

The tax preparation cost and the fee for the RAC itself are deducted from your refund before you receive the money.

RAC fees typically range from $30 to $50. That may not seem like a lot, but if you pay $40 to defer a tax preparation fee of $300 for three weeks, that is equivalent to paying an annual percentage rate of 232 percent.

Refund Advance Loan

A RAL is a short-term loan, usually for less than one month or until the IRS sends your full refund to the tax preparer. The amount of the loan is typically based on a portion of the full amount of your estimated tax refund, minus tax preparation service charges and other fees.

All tax preparation firms are different. Some firms offer refund advance loans with no fees or interest, but others may charge fees and interest.

Keep in mind that when you file electronically, the IRS typically issues most refunds in less than 21 days. If you take out a RAL, you are therefore only borrowing for a few weeks, but the provider may take fees and interest out of your tax return.

As with any financial product or service, carefully consider all fees and charges, as well as timing, to help you make an informed decision that’s best for your situation.

Mr. Andy Cohen is the director for the Office of Financial Readiness in the Office of the Deputy Assistant Secretary of Defense for Force Education and Training.

Mr. Jim Rice is the assistance director for the Office of Servicemember Affairs at the CFPB.