Free Tax Filing at IRS.GOV

[oldiesman]

Electronic Tax Filing Now Free

For All at IRS Web Site

By SANDRA BLOCK

January 18, 2005

For the first time, anyone who logs on to the IRS Web site will be able to prepare and file their taxes electronically for free.

In the past, participants in the Free File program, a partnership between the IRS and private tax preparers, had to meet criteria related to age, income or state of residence.

This year, however, tax software giant Intuit, maker of the popular TurboTax software, is one of three firms that has scrapped all restrictions. For now, anyone who goes to www.irs.gov clicks on "Free File" and links to TurboTax can prepare and file their taxes at no charge.

Preparers eSmartTax and TaxACT are also offering their services to all taxpayers free.

The Free File program is designed to encourage more taxpayers to file electronic returns, which are cheaper for the IRS to process. Filing electronically also offers advantages to taxpayers by catching common errors and speeding refunds.

The IRS expects half of the returns filed this year to arrive electronically, including those sent through the free filing program.

Free File lets taxpayers avoid the cost of buying sophisticated tax preparation software and fees charged for electronic tax filing.

Taxpayers who opt to go online and use the free electronic filing program can browse 15 or more options, all tested for security and accuracy by the IRS. The IRS, however, does not endorse any of the tax products or other services offered for sale by participating companies.

To take advantage of the free offers, taxpayers must go through the IRS site. Taxpayers who go directly to a preparer's Web site may be charged a fee. At TurboTax.com, for example, the cost of a basic federal tax return is $19.95.

Last year, Intuit limited free tax preparation and filing to taxpayers under age 21 or over 62, filers eligible for the earned income tax credit, and members of the military.

Intuit changed its policy because the Free File program has strayed from its original mission of helping low-income taxpayers, says spokeswoman Julie Miller. Some tax preparers were using the program "as a customer acquisition opportunity," and applied much broader criteria, she says.

The free offer does create "some financial risk" for Intuit, but the company hopes many filers will pay for additional services, such as a state tax return, Miller says.

Intuit has the option of changing its mind. The program allows participants to revise their criteria during the tax season.

H&R Block, Intuit's main competitor, has limited its free offer to taxpayers with adjusted gross income of $34,000 or less. Tim Gokey, president of Block's U.S. tax division, says the unrestricted offers "aren't in the original spirit" of the program. Gokey says Block is "committed to competitively serving this market and will act accordingly."

The agreement between the IRS and private tax preparers requires the participating companies, as a whole, to provide free online tax preparation and filing to at least 60% of taxpayers. It doesn't mandate the criteria participants use as long as that goal is met, says Bert DuMars, director of Electronic Tax Administration at the IRS.

Nonetheless, about 80% of the 3.5 million taxpayers who filed free last year had income of less than $35,000, DuMars says.

The free offers are limited to federal tax returns. Taxpayers who want to file a state return usually have to pay extra.

This marks the last year, however, that taxpayers can use the telephone as a paperless filing method. The IRS plans to end the TeleFile program, available to taxpayers with simpler returns, because of shrinking demand and a tightening budget.

"The number of people using it continues to go down between 7% and 10% a year," says DuMars. "It's become the most expensive tax return process we have at this point."

The IRS expects 62% of taxpayers who file by telephone to turn to other electronic filing methods when the program ends at the end of the year. The remaining 37% are expected to complete their IRS forms by hand.

The National Taxpayer Advocate, an office dedicated to helping taxpayers navigate the tax bureaucracy, opposed the decision to cancel the TeleFile program. Taxpayer Advocate Nina Olson said more people filed by telephone (3.7 million) last year than used the free electronic filing program (3.5 million).

The IRS said it expects to see that trend reverse this year.

------------------------------------------------

I have done my taxes for the past 3 years or so using Turbotax for the Web...it works great is real easy and now it's free for Federal!

[RottieGrrrl]

You know, Illinois really ....ed me off this year. They sent me a notice saying they are trying to cut down on people filing over the phone and to do it over the internet this year.

Excuse me? What makes them so damn sure I have internet access?

They usually send me a telephone thingie. You know, so I can do it over the phone. 123 it's done and I get my money. Now they tell me I'm obsolete.

I'm going to chew them out...after I get my return.

PS. That's only state not Federal that sent me that notice

[RottieGrrrl]

double post sorry

[oldiesman]

Just finished my tax returns online.

Federal was FREE

New York state was $19.95

Oh Glo-ray

I'm surprised this thread got so little hits. You really do get something free here. :)-->

[Steve!]

We did ours over the weekend - pretty nice!

Thanks for this info, Phil.

[oldiesman]

You're welcome Steve! :)-->

[Galen]

We are done with ours.

The 'Child Tax Credit' gave us $2441. Cool.

We dont get any refund from taxes that we over-paid [we dont pay any during the year], but we do get these extras from either EIC or in this case the 'Child Tax Credit'.

So for us, the Federal Income tax means that each year the government pays us.

Which is kind of cool.

[oldiesman]

Can I get a child tax credit for my cats?

Wow, that giveaway program definitely works against single folks with no kids.

It takes a village.

[Galen]

Yeah, that is right. Married folks do have a big advantage when it comes to finances.

Two or more can living as a household can live cheaper than as individuals. And our government does things to encourage couples to marry and stay together [Married joint being the best filign status].

Our tax-system also encourages home-ownership, tithing, and having dependant family-members.

:-)

[oldiesman]

Well since the tax system encourages more and more children, I think I'll pick up a few for tax reduction purposes.

ha!

[oldiesman]

Received my IRS tax refund on Feb. 18.

Took them 11 days to get it into my checking acct.

Oh Glow-ray :)-->

[oldiesman]

The IRS just said that more than 3 million returns have been processed so far this year using the new Free File programs available on its Web site, www.irs.gov.

"Those who file paper returns are now in the minority", IRS Commissioner Mark Everson told an audience at the National Press Club in Washington.

Hurry and get those returns in, filing deadline April 15.

[Stayed Too Long]

quote:

Excuse me? What makes them so damn sure I have internet access?

Maybe just a hunch on their part or they post on Greasespot.