Many People can file their taxes without cost. Learn how to do it
Tax filing season is approaching and many Americans may be able to file their tax returns for free.
About 70% of people filing taxes in the US, which equates to roughly 100 million Americans, are eligible for a free program through the IRS, according to the agency. Even more may be able to submit through other programs that offer tax preparation services at no or low cost.
An inexpensive tax return could be especially important this year for Americans who have suffered from the coronavirus pandemic. Filing with an accountant or even through some online programs can be costly in a year that has lost millions of jobs and incomes.
And those who were eligible for economic impact payments and received either no or the wrong amount will need to claim them as a refundable credit for their taxes this year – even if they don’t normally claim.
According to Tania Brown, a certified financial planner and financial advisor at SaverLife, a nonprofit focused on financial security, there are underutilized services that can help people this tax season.
“There are free options, you don’t have to pay to get your taxes done,” she said.
Here’s what you need to know about free submission.
IRS Free File Program
Many Americans are eligible to file their taxes for free through the IRS Free File Program, a public-private partnership between the agency and the Free File Alliance, a group of tax preparation companies with online software like TurboTax, TaxAct, FreeTaxUSA, and more.
In 2020, according to the IRS, 4.2 million Americans used the Free File program for their taxes in 2019. While this was an increase of nearly 50% over the previous year, even more were able to use the program.
If your 2020 gross annual income was less than $ 72,000, you can file federal taxes for free using one of the Free File software programs on offer. Additionally, some products allow you to file your state taxes for free. The software generally includes step-by-step instructions and help for filers.
“This year it is especially important that people know about the Free File program as it is a great tool for anyone who did not receive their first or second economic impact payment or did not receive the correct amount,” said Christopher Miller, a spokesman for the IRS.
To take advantage of the program, you need to go through the IRS website – not directly to a tax advisor, Miller said.
The free file opened on January 15th, which means people can now enter and submit their tax information. When the tax return opens on February 12th, your forms will be automatically filed with the IRS.
There are also free basic tax preparation services available through the IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly (VITA and TCE, respectively) programs.
VITA and TCE are aimed at low-income filers, generally earning $ 57,000 or less, people with disabilities, limited English proficiency, and those over the age of 60. Tax professionals volunteer their time to help eligible individuals prepare and file tax returns.
These options were generally held in person before the pandemic, but many will work differently this year. Some sites have been closed due to the crisis, some will run the program online, and others may be in person. Use the IRS locator tool to find a VITA or TCE center.
What to do if you’ve made more than $ 72,000
If your gross annual income was more than $ 72,000 in 2020, there is another free program that you can access through the IRS. However, you need to prepare your taxes yourself.
The free fillable forms program provides online tax forms that individuals can use to enter their information and then either submit it electronically to the IRS or print it out and send it to the agency.
Unlike other programs, Free Fillable Forms doesn’t give you a guide or step-by-step guide – it just does basic calculations of the numbers you’ve entered into the forms. It’s also only available for federal taxes – although people in certain states can access local programs to file their state tax returns.
However, if you have the time and want to prepare your own taxes, the Free Fillable Forms program is a good option. However, you won’t be able to prepare in advance – the program opens on February 12th.
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Some private companies also offer free services
There are also some private companies that offer free tax filing services, such as TurboTax, which is owned by Intuit, H&R Block, TaxAct, and Credit Karma.
These companies all have free sign up options depending on their annual income, ease of return, where they live, military status, eligibility for certain loans, and more.
Before using online software outside of the IRS Free File program, check with the company to see if you are eligible for free filing and make sure you are using the correct product rather than one that bills you.
Gabriel Menendez-Frances, 20, a student at the University of Alabama in Huntsville, first used Credit Karma to file his taxes last year. He previously paid his taxes by hand – printing out forms from the IRS website and mailing them in – because it had a very easy return, he said.
But last year he started making money as a freelance software developer with a side gig and wanted help filing his return. He used Credit Karma to improve his credit score, so decided to try the tax tool.
“It’s a lot easier online,” said Menedez-Frances, adding that Credit Karma’s tool was of great help in filing his more complicated tax return last year. He said he didn’t pay anything to file his federal or state declaration.
Credit Karma is free for all applicants regardless of income and includes federal and state returns, according to the company. Customers also have access to support staff who can answer their questions, Credit Karma said.
There are free options, you don’t have to pay to get your taxes done
CFP, Finance Coach, SaverLife