Jackson Hewitt charging $25 for DIY tax prep

Jackson Hewitt Tax Services has introduced a $25 flat fee for online tax filing for all do-it-yourself filers as it looks to compete in the online tax preparation space against H&R Block and Intuit.

The Jersey City, New Jersey-based tax prep chain said the offer through its Jackson Hewitt Online service would apply regardless of a tax return's complexity or the number of returns, including federal and state returns. The company is also offering a $25 “price lock guarantee” for the next three years to all customers who file their 2021 tax return. The service is billed as a “no-frills” tax prep experience, but it’s supposed to include step-by-step guidance, “on-the-go” refund calculation, live chat customer support, and auto importation of W-2 information from eligible employers, along with a fully guided option.

“People of all tax situations should be able to pay a low and transparent price to access accurate tax prep software and get their maximum refund, guaranteed,” said Zachary Cohen, Jackson Hewitt’s head of digital products, in a statement Wednesday. “That's why Jackson Hewitt Online is taking a stand and offering one flat $25 price for all tax returns, no matter what.”

Mario Villafuerte/Bloomberg

The offer comes as the consumer tax prep industry is going through a number of changes. Last year, the two leaders, Intuit and H&R Block, announced they were dropping out of the Internal Revenue Service’s Free File program, which is supposed to offer free federal tax preparation software to any taxpayer whose adjusted gross income falls below a certain level ($73,000 this year).

However, after the investigative news site ProPublica ran a series of articles exposing how Intuit and Block were steering customers away from the free versions of their software through search engine optimization, lawmakers and the IRS stepped in and demanded changes to the program, leading to a renegotiated Free File vendor agreement in 2018 that aims to prevent tax prep vendors from steering customers to paid products when they search for free software (see story). The IRS said this week that the Free File program will open on Jan. 14, although tax prep vendors won’t be submitting returns to the IRS until tax season officially opens on Jan. 24 (see story).

Despite exiting the Free File program last July, Intuit announced last week a “$0 Any Way” offer for TurboTax Live Basic to bring free tax prep filing to approximately 60 million taxpayers with a simple tax return. H&R Block’s website also shows a free version of its program is still available.

Last December, Intuit announced that the Credit Karma service it acquired in 2020 will be embedding TurboTax within its app (see story). Credit Karma, a credit-monitoring service, used to offer its own free tax prep service, Credit Karma Tax, but Intuit was forced to sell off Credit Karma’s tax business to the financial services provider Square as part of an antitrust agreement with the Justice Department in 2020 to win approval of the Credit Karma acquisition. Square continued to offer the free tax prep service last year under the name Credit Karma Tax, but this year it has been rebranded as Cash App Taxes. Users will now need to download the Cash app, a peer-to-peer payment service for transactions between individuals, to use the tax software.