NWA-PCUG Newsletter Article, March 2004
IRS Again Offers Free Online Filing Services
by Ira Wilsker, APCUG
ira-wilsker@apcug.org
(click to email author)


We should have received all of our W-2’s, 1099’s, and other tax forms by now. Many of us struggle filling out tax forms manually, trying to decipher forms that have so many links and connections you feel that you have to be a genius octopus to connect all of the parts. Some of us use one of the popular tax software packages such as Tax Cut or TurboTax, and others use accountants or commercial services to prepare our most dreaded of forms. For those looking for an alternative, the IRS is again coordinating a variety of free online filing services.

The logical starting place is the IRS website at http://www.irs.gov. At the top of the page is a link “Free File – Start Here for Free Online Filing”. Clicking on the link opens a new page with pre-filing tips, step-by-step instructions, and a “help center” with frequently asked questions. While the free filing services are coordinated and regulated by the IRS, the services themselves are provided by a number of individual profit seeking companies or non-profit organizations. Any company listed is prohibited from mandating the purchase of any additional services, and the listed services must be absolutely free to those qualified to use the services. The IRS site also states, “IRS Free File does not endorse Refund Anticipation Loans (RALs) or any other advance refund banking products”. The site also states that your privacy and financial information will be protected by the providers listed, and that these providers must meet commercial privacy and security standards, and be certified as such by a recognized issuer of privacy and security certifications. The process of getting started is a rather simple three step process. First is the “Start Now” button on the “Free Online Filing” web page; second is a determination of eligibility, as different providers have different requirements; finally the third step is linking to the private provider’s website, separate from the IRS site. If you find that you are ineligible for a particular company’s free offerings, simply return to the IRS site and repeat the process by selecting another likely service. It should be noted that while millions of us are eligible for these free services, many of us will find that we are ineligible for any of many reasons. Once a satisfactory service has been selected, then the tax return information is completed online, with the completed documents being “e-Filed”, or electronically filed with the IRS.

Fifteen online providers of free filing services are listed. Each has its own requirements that may be based on residence, income, age, military status, and other factors. While some services are clearly for lower income individuals, some of the free services are available for individuals who have an adjusted gross income (AGI) of up to $100,000. Some are available to residents of specific states, regardless of income level. None of the listed services offered free filing to Texas residents without regard to income level, though an even dozen of the services are available at no charge to Texas residents who meet other requirements. One of the services, FreeTaxUSA, is listed as available to all Louisiana residents at no charge. Several of the companies listed provide free service to all active duty military personnel, regardless of residence or income. Some services provide unrestricted service based on age, either younger than early 20’s, or older than 62 years of age.

For those unsure about which service to consider, a button on the IRS page “Guide me To A Service!” uses a simple form to direct the user to appropriate services based on a short series of personal questions. These questions are age, estimated adjusted gross income, state of residence, number of W-2 forms, possibility of using a form 1040EZ, probable eligibility for the “Earned Income Credit”, and military service. Once completed, a list of likely service providers is presented, allowing for the user to easily choose a provider.

All of the providers in what the IRS refers to as the “Free File Alliance” provide for electronic filing of tax returns. E-Filing, as the IRS calls it is relatively safe and secure, and, according to the IRS website, can generate refunds in as little as 10 days, with faster refund service available to those who select having their refunds direct deposited to their bank or credit union accounts.

While these services are freely available online at no charge to many, they may not necessarily be the best alternative. Even if eligible to utilize one of these free services, the onus of decision making is solely on the individual, as most provide no comprehensive tax advice, meaning that it is quite possible for the user to miss deductions or credits that he may be eligible for, thus overpaying. It is also the responsibility of the user to accurately and completely enter data, as there is no one to verify the accuracy of the data entered. To use an early cyber cliché, “GIGO”, which means “Garbage in – Garbage Out”, the final return can only be as accurate as the information entered.

Clearly, the free filing alternatives may be attractive to many individuals, but for many others the more traditional tax preparations resources may be a superior alternative. The choice is yours; choose wisely.

Ira Wilsker is the Advisor for Region 8, APCUG Representative & Bylaws Chair for the Golden Triangle PC Club, a columnist for The Examiner in Beaumont, Texas, and has two radio shows. He also graciously shares his articles with the APCUG editors.

There is no restriction against any non-profit group using this article as long as it is kept in context with proper credit given the author. The Editorial Committee of the Association of Personal Computer User Groups (APCUG), an international organization of which this group is a member, brings this article to you.

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