Free Tax Prep Software
U. S. citizens are rapidly approaching their annual time to “render unto Caesar” – tax season. It’s too soon to panic, but not too early to think about tax preparation software. The good news is that most people can use free tax software that makes all that form filling easier. Here are some you can try…
Uncle Sam Wants You (to file your 1040)
Did you know there are free tax software packages in addition to the well-known brands that cost $20 for simple tax returns and up to $80 for business and investment tax preparation? Some of the freebies will handle only the simplest tax situations, but at least one will do everything you could want.
Liberty Tax Service’s eSmartTax.com starts you off with a free basic tax program and, if that proves insufficient for your situation, sells you more expensive modules as needed. Its online question-answer format is ideal for delivering just the capabilities you need and no more. You also have access to live chat with trained Liberty tax preparers starting with the $19.95 Deluxe package.
Intuit Corp., maker of genre-leading Turbo Tax, also offers a free basic online tax program. It’s for people who have just W-2 income, not business profits, interest earnings, capital gains, etc. Unlike Liberty, Intuit gives you live chat with experts in its free edition. I didn’t try it, but I wager those live “tax preparation advisors” are there to maximize Intuit’s revenue as much as they are out to save you money.
Then there’s TaxACT Free, and HR Block TaxCut Free, and several other free tax software programs. What’s up with that? Well, the government has pushed software makers to provide free basic Federal tax software for years. Over a dozen tax software companies offer a free tax prep service, and each has its own eligibility criteria, based on your income, age, state residency, and other factors. Typically, these freebies will handle filers with incomes of up to $58,000, but they won't do anything more complicated than a basic 1040A form.
You can fill out a simple form at the IRS FreeFile website to learn about free tax software options for which you qualify. The form will ask only for your age, income, state of residence, whether you received military pay, and if you are eligible for the earned income tax credit. After submitting the form, you'll see links to several free tax filing options.
Free State Tax Returns and DIY Options
Some even offer free state tax returns, but others charge a fee (usually less than $20) for state returns. If you live in one of these states (Arizona, Arkansas, Delaware, District of Columbia, Georgia, Idaho, Indiana, Iowa, Kentucky, Michigan, Minnesota, Mississippi, Missouri, North Carolina, North Dakota, Oklahoma, Oregon, Rhode Island, South Carolina, Virgina, Vermont, or West Virginia) there's a good chance you can file a free state tax return. Residents of Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not require state returns for W-2 wage earners. New Hampshire and Tennessee require a state return only for those who have interest and dividend income.
If your income exceeds $58,000 or you have more than just wage income, you can still get free tax software in the form of FreeFile Fillable Forms. These online versions of every IRS form won’t give you advice or hold your hand; you need to know what forms you need. On the other hand, if you know your tax situation well then you don’t need to waste time on all the hand-holding that novice-oriented tax programs provide.
These forms are “intelligent” in that they can perform basic math, e. g., totaling all of the lines of data you enter in a form, multiplying dependents by exemption amount, etc. But they don’t offer advice and explanations as the pricey programs do. This seems like a good option if your job and financial situation hasn't changed since last year. Just look at last year's tax return, see which forms you filed, and you should be good to go.
There are still many taxpayers who haul shoeboxes full of receipts to a tax preparer’s office, and there may be a handful who still struggle with paper and pencil five minutes before the April 15 tax return filing deadline. But the majority of Americans now do their own taxes using software, and for the savvy ones there is no need to pay for tax software.
How will you get your taxes done this year? Post your comment or question below...
This article was posted by Bob Rankin on 11 Feb 2014
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Article information: AskBobRankin -- Free Tax Prep Software (Posted: 11 Feb 2014)
Copyright © 2005 - Bob Rankin - All Rights Reserved