Volunteers, IRS Offer Free Help to Tax Filers

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Posted: Feb 22, 2011 12:01 AM
Volunteers, IRS Offer Free Help to Tax Filers

Looking to save a few bucks this year? How about filing your income taxes for free?

Although filing a tax return doesn't have to cost money, it usually does. Roughly two-thirds of Americans hire professional tax preparers and millions more buy tax preparation software.

Those numbers have been climbing steadily since the early 1990s as Congress has made the U.S. tax system increasingly Byzantine.

But the government knows that it's not smart to make it difficult to comply with the income tax system, so the Internal Revenue Service has been trying to make filing simpler. In recent years, an array of free electronic options have been introduced.

Here's a look at the free services:

VITA

If you're a senior citizen or earn less than $49,000 a year, you can get free in-person tax help through the Volunteer Income Tax Assistance program.

Every tax season VITA offers hundreds of clinics during which trained volunteers walk participants through filing their returns, step by step. These clinics, which are typically held at schools, churches or senior centers, were so popular that they had to turn away some taxpayers last year.

To help handle the volume this year, the program will host tax kiosks that will work sort of like self-serve aisles at supermarkets -- you mostly do your return yourself, but you can ask for help if you hit a snag.

To find a local VITA clinic call the IRS at (800) 906-9887 or the AARP Tax Aide program at (888) 227-7669.

Free File

If you're tech savvy and your adjusted gross income is under $58,000, you can access free software similar to what's available for upward of $40 elsewhere. The program is offered through the IRS' Free File Alliance.

Adjusted gross income, by the way, is likely to be less than what you earn. AGI is wages, salary, tips and other gains, minus so-called "above the line" deductions for things like 401(k) and IRA contributions, dependent care accounts, deductible student loan interest expenses and some out-of-pocket costs for teachers.

In fact, roughly 70 percent of the nation's taxpayers meet the income qualifications to use the program, said Tim Hugo, president of the Free File Alliance, the consortium of tax software companies that offer the service through the IRS. Free File handled about 30 million returns last year, Hugo said.

To use it, go to http://www.irs.gov and find the "free file" link near the top of the right-hand column. The system gives you the ability to choose a software company out of a long list of providers, or fill out a questionnaire that will direct you to a software firm that best meets your needs.

The Free File Alliance provides free help only with federal returns. But many states offer free filing on their own tax authorities' websites.

Fillable Forms

If you earn too much to meet the federal Free File requirements, there is a new digital option, although it's not as simple to use. Basically, it's an electronic version of some IRS forms.

Unlike the tax software, these Fillable Forms, as the agency calls them, don't prompt you with questions or automatically place your data on the right lines. But the system will do the math for you and allow you to submit your return without using a stamp.

Note to last-minute filers who annually hop into their cars at 11:57 p.m. to get the all-important pre-midnight stamp on the last filing day: This could make beating the deadline lots easier.

Find information through the same Free File link as above.

The downside of Fillable Forms is that they are practical only for people who either have fairly simple returns or who are highly tax savvy. People with itemized deductions, self-employment or partnership income, investing expenses or significant capital gains should probably either buy an appropriate software program or hire a tax professional.

"The Free File option isn't all that free if it causes you to miss deductions," says Mark Luscombe, principal tax analyst with CCH Inc., a Riverwoods, Ill.-based publisher of tax information. "There aren't a huge number of changes this year, so it's not that much more difficult to file than last year.

"But the tax code is at a pretty high level of complexity. The fact that it didn't get a lot more complex doesn't make it simple."

(Kathy M. Kristof, author of "Taming the Tuition Tiger" and "Investing 101," welcomes your comments and suggestions but regrets that she cannot respond individually to letters or phone calls. E-mail her at kathykristof24@gmail.com.)

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