NWA-PCUG Newsletter Article, March 2007
IRS Again Offers Free Online Tax Filing
By Ira Wilsker, APCUG Director;
Columnist, The Examiner, Beaumont, TX; Radio & TV Show Host

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Now that tax season is in full swing with that dreaded day (April 17 this year) fast approaching, millions of us still have not prepared our taxes. Procrastination is alive and well especially at this time of year. In another well intentioned attempt to ease our burdens and reduce the tensions involved in preparing our federal tax forms, the IRS in conjunction with the “Free File Alliance” is again offering its “Free File – Take the FreeWay” service. This program, according to the IRS, can be used by about 70% or 95 million tax payers to prepare their federal taxes and “e-file” online at no charge. Since its inception four years ago, over 15 million taxpayers have taken advantage of this free service. The free service is available to most taxpayers with an adjusted gross income (AGI) of $52,000 or less.

The 19 members of the Free File Alliance include some of the same nationally recognized tax preparation companies that we are familiar with. The only way to qualify for the free service, instead of their commercial services, is through the links on the IRS website. Users who go directly to the participating partners’ websites, rather than through the IRS website, will incur commercial charges. It should be noted that the IRS has very stringent privacy and security requirements that members of the Free File Alliance must comply with.

It should be noted that different “Free File” partners have different qualifying criteria, and the user should be alert to the individual eligibility requirements of each provider. Some providers will prepare the federal taxes free for anyone with an AGI of $52,000 or less while others have a variety of eligibility qualifications. Tax$imple.com for example will prepare the taxes at no charge for any one within the income limitations who are residents in about half of the states (not including Texas). Other providers with similar geographic restrictions, but including different mixes of states, are EZ Tax Return, FreeTax USA, EfileTaxReturns, 123 Easy Tax Filing, FileYourTaxes.com and Average 1040.com. CitizenTax.com is a state specific provider that includes Texas, but has an age limit of 50 years. Most of the other state specific providers do not include Texas residents.

The well known H&R Block is offering its popular TaxCut Free File service to anyone who meets the income requirements, but is age 50 or under. ExelTax 1040Now has the same requirements as H&R Block, as do several other providers including Online Taxes@OLT.com. Another company, Free1040TaxReturn increases the maximum age by a year, to 51, while Liberty Taxes Online and TaxAct raise the age limit to 57.

Other participants have lower income ceilings for free online preparation, including TaxEngine.com which will prepare the return and e-file free for anyone earning $30,000 or less. CompleteTax will do the same for those with incomes up to $29,000. The well known TurboTax offers its free Freedom Edition to anyone with an AGI less than $28,500, or active duty military with an AGI up to $52,000. TaxSlayer also has a military eligibility component and will also prepare taxes for those under the age of 25 or over 65. One partner in the Free File Alliance, Online Tax Pros, has no age or geographic qualifications, with only the $52,000 AGI limitation. This company also provides the service in Spanish.

While not explicitly listed, the IRS does state that several of the partners will also prepare state tax returns in some of the states that have a state income tax; some will do state taxes for free, while others may charge a fee.

For those who have no inclination to read the eligibility requirements for each of the Free File partners, the IRS offers a button that leads to “Guide Me To A Company”, which based on a series of questions, will direct the eligible user directly to those providers who will prepare their taxes. The simple fill in the blank or pull down menu questions are simple, such as age, age of spouse (if any), adjusted gross income, state of residency, eligibility for the “Earned Income Credit”, and military status. Once these questions are answered the IRS website displays only those Free File partners who will service the applicant.

Let’s face it; the annual drudgery of preparing our federal (and possibly state) income taxes is a chore that most of us would prefer to do without. With the IRS and the Free File Alliance offering to prepare the tax returns for free for many of us, some of the drudgery can be reduced. Sure we still need to have our documentation and enter the figures, but for millions of taxpayers this service may be a boon. The e-file component frees us from the task of compiling and mailing paperwork to the IRS, and can speed up any refunds, especially if the direct deposit option is selected. If you are eligible, at least consider the Free File program from the IRS and its partners at http://www.irs.gov.

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