Finance Globe

U.S. financial and economic topics from several finance writers.
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IRS Free File

Many taxpayers can easily do their own tax returns, and tax software can help make preparing your tax return go even more smoothly.

Have you heard of Free-File?
Free-File is available for low and moderate-income taxpayers through cooperation with the Internal Revenue Service and a large number of tax software providers. Free-File programs are available for taxpayers with an adjusted gross income that is less than $58,000.

Each tax company has its own taxpayer qualifications to use their Free-File program, and may depend on the taxpayer’s age, state, eligibility for the Earned Income Tax Credit, or military status. Each company offers their own tax software that walks taxpayers through the steps of completing their tax return in an easy-to-follow interview style. Upon completions, taxpayers can e-file or print and paper file their tax return.

Most taxpayers can e-file, but a small percentage of taxpayers will be required to paper file due to a documentation requirement for certain credits they may claim.

After finishing their federal return, taxpayers have the option of completing and e-filing or paper filing their state return. Taxpayers who paper file their federal return must also paper file their state return. Tax returns for a handful of states are also free, but most state returns cost $14.95 this year, whether it is e-file or paper file.

The tax software will transfer all taxpayer information from the federal return to the state return, and may only need a few additional pieces of information to complete the state return - making the state return a super-fast process.

Either way, to get both federal and state tax returns completed and e-filed is a great deal for that price. Taxpayers who don’t want to pay at all may consider doing their federal return through Free-File and do the state return on paper - only you can decide how much your time is worth.

To use the Free-File program, you must first go to the IRS website at www.irs.gov and click on the Free-File link. From there, you have the option of choosing the tax preparation program you wish to use, or you can opt to let the IRS help you choose.

Many of the tax preparation programs are offered by well-known tax companies, some have different requirements, and some are only available in certain states. Choose one that works for you. The tax software is a very user-friendly program, and is a great way for taxpayers to be familiar with their own tax situation while saving money on tax preparation fees.

One thing to remember - each year you must begin the Free-File process at the IRS website.
I made the mistake of using Free-File one year, and then going directly to the tax preparation site the next year, thinking the company would automatically give me Free-File. Upon completion of my return, I realized it was going to cost me about twenty bucks to get my federal return filed, and I didn’t want to start all over again.

So, just start at the Free-File link at the IRS website each year, choose a tax preparation company that you qualify with (you can stay with the same company each year or change companies if you don’t like or no longer qualify with the one you used last time), and enjoy the benefits of using tax software and e-file without paying a cent.


Source:
Internal Revenue Service
Pending Home Sales Slip for January 2011
Better to Give than Receive at Tax Time
 

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Monday, 19 August 2019

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