Tax Filing For Free
The good news is: about 70% of U. S. taxpayers can get free online tax preparation and e-filing this year. The bad news is: you have to pick your online tax service very carefully. Here's what you need to know...
Options for Free Tax Return Preparation
Dozens of firms now offer free online tax preparation and e-filing. It’s not just for simple, wage-only taxpayers anymore; full 1040 returns with all schedules and worksheets can be prepared and filed online for free.
In general, anyone with Adjusted Gross Income of less than $60,000 can get free online tax preparation software and e-filing. However, the multitude of offers has more rules, exceptions, and confusions than cellular phone service contracts.
For example, here are qualifications for TurboTax’s offer of a free Federal tax return:
- Adjusted Gross Income: $31,000 or less, or
- $60,000 or less for Active military, or
- Eligible for the Earned Income Tax Credit, and
- Live in any State
Other services have wildly different qualifications. For FreeTaxUSA®, it's:
- Adjusted Gross Income: $60,000 or less, and
- Age: between 17 and 75, and
- Live in any state, except: AK, FL, NV, NH, SD, TN, TX, WA and WY
For H&R Block's Free File:
- Adjusted Gross Income: $53,000 or less, and
- Age: 53 or younger as of 12/31/2014
- Free STATE tax filing if you live in AR, AZ, GA, IA, ID, IN, KY, MI, MN,
MO, MS, ND, NC, OK, OR, PA, RI, SC, VA, VT, WV, or DC.
As you can see, State tax returns add another level of complexity. Some services throw in free State tax returns; others charge a fee even if you get a free Federal return. Some services offer a limited range of State returns.
Choosing a Free Online Tax Service: The IRS Wants to Help!
The IRS devoutly prays that you will file electronically (much easier to audit your return that way) , so it makes a pretty good effort to help taxpayers find a compatible online tax preparation and filing service. Just hop over to the agency’s Help Me Find Free File Software page and answer six simple questions.
Beyond finding a service that will do the Federal and State returns you need for as little money as possible (ideally, free), it’s impossible to say whether one online tax service will save you more money than another. Each has a unique approach to “interviewing” filers, asking different questions in different ways to elicit data about deductions, credits, and so on. A taxpayer’s answers may differ depending on how a qualifying question is asked. So you may get different results from TurboTax than you will get from H&R Block.
Thanks to the power of “free,” you could try multiple online tax services and actually e-file with the one that yields the most favorable answer. But that would be like having multiple teeth drilled for free and filling the one that hurts the most. If your tax situation isn’t very complicated, then any variance between online services should be negligible. Look for one that offers free Federal and State returns and e-filing.
The Do-It-Yourself Option
If your income or age disqualifies you from using one of the free online tax prep services, 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 5 Feb 2015
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Article information: AskBobRankin -- Tax Filing For Free (Posted: 5 Feb 2015)
Copyright © 2005 - Bob Rankin - All Rights Reserved