Economic Recovery Tax Breaks that Could Be Overlooked

[Luke_Wilbur]

The Internal Revenue Service and its private-sector partners aremaking Free File available starting today. Most taxpayers can have freeuse of helpful tax preparation software and free electronic filing ofthe federal tax returns.

There are many new tax breaks this filing season and FreeFile software can make it easier for people to find all the credits anddeductions they are due. Taxpayers must go through www.IRS.gov homepage or www.IRS.gov/freefile to access the free options. “Ifcost is a barrier or if you’re wondering about free options, check outIRS.gov for Free File options. There’s something there for almosteverybody,” said David R. Williams, director, Electronic TaxAdministration and Refundable Credits. “Free File is a great choice foreither the novice taxpayers who need some assistance or the experiencedtaxpayers who prefer to do the work themselves. It’s fast; it’s safe;it’s free.”

 

The Free File program provides free federalincome tax preparation and electronic filing for eligible taxpayersthrough a partnership between the Internal Revenue Service (IRS) andthe Free File Alliance LLC, a group of approximately 20 private sectortax software companies.

 

Free File comes in two formats: TraditionalFree File, which is available to taxpayers who meet specific criteriaand Free File Fillable Forms, which is available to almost alltaxpayers.

 

Approximately 70 percent of the nation’staxpayers, some 98 million people who meet the $57,000 income limit,are eligible for the user-friendly Traditional Free File. TraditionalFree File provides step-by-step software help that asks simplequestions and puts the answers on the correct tax forms.

 

Traditional Free File can help taxpayersidentify new tax credits or deductions under the American Recovery andReinvestment Act for which they may be eligible. There are many new andexpanded benefits for energy conservation, new car purchases, collegetuition and first-time homebuyers.

 

Taxpayers must go through IRS.gov to accessFree File. Each company sets its own eligibility criteria. For example,generally, eligibility criteria are based on state residency, age,income or military service. However, an individual or family withincome of $57,000 will find tax preparation software they can use.

 

Taxpayers either can read over the companyoffers by clicking “I Will Choose a Company” or get a little help inmaking the selection by clicking “Help Me Find a Company.” With alittle information, the tool will display those company offers forwhich taxpayers may be eligible.

 

Several companies offer their software inSpanish. Several also offer state tax preparation, although fees mayapply. Taxpayers are under no obligation to make any purchases from thesoftware companies.

 

For taxpayers who are comfortable preparingtheir own tax returns, there’s Free File Fillable Forms. Almosteveryone is eligible for this service. There are no income limits andalmost all tax forms are available.

 

This service provides electronic versions ofIRS paper forms. Taxpayers can complete the tax forms online and fileelectronically. The fillable forms perform simple math functions, butdo not use the question-and-answer software format. Free File FillableForms does not support state forms or state electronic filing.

 

Both Free File versions are highly popularamong users. According to a recent survey, 98 percent of TraditionalFree File users and 96 percent of Free File Fillable Forms users polledsaid they would recommend the Free File products to family and friends.

 

Taxpayers who use Traditional Free File or Free File Fillable Forms can enjoy all the benefits of IRS e-file – also for free.

 

Byusing the free e-file option, taxpayers also get the benefits of a fastrefund, reduced error rate and a quick acknowledgement. By using e-fileand direct deposit, taxpayers can get a refund in as few as 10 days. Ifpeople owe taxes, they also can control their payments and set a datesuch as April 15 for electronic payment. The error rate for an e-filedreturn is 1 percent, compared to 20 percent for a paper return. Unlikepaper filers, e-filing taxpayers also will receive an acknowledgementthat the IRS has received and accepted or rejected their returns.

 

Taxpayers who are eligible for the $8,000 orthe $6,500 first-time homebuyer credit will not be able to e-filebecause they must attach proof of purchase to their tax return.However, these taxpayers still can use Free File to prepare their taxforms and then print and mail the returns to the IRS.

 

Free File is available 24-hours a day throughApril 15. For taxpayers who request an extension to file their federalreturns, Free File will be available through October 15.

 

People who are interested in reviewing more information about Free File can visit www.freefile.IRS.gov. Videos on these topics also are available at www.youtube.com/irsvideos.

 

 

[Luke_Wilbur]

The Free File Alliance is a coalition of 19 private sector tax softwarepreparation companies that, with the IRS, have established a landmarkpublic-private partnership to provide free service to millions ofAmerican taxpayers – especially those who are economicallydisadvantaged.

 

The Free File Alliance initiative was formalized between industry and government onOctober 30, 2002 and went into operation only a few months later, onJanuary 16, 2003.

 

TheAlliance's inaugural season was a tremendous success, allowing 2.8 million taxpayers,most with low and moderate incomes, to file free tax returns in 2003.This success has only increased in the past few years allowing morethan 24 million American taxpayers to safely prepare and file their taxes for free online.The benefits of filing an electronic tax returnare immense. It allows for a simple and more time-efficient filingprocess, faster tax refunds, information on exemptions, and increasedaccuracy and security.

 

 

The Free File Alliance mailing address is:

 

Free File Alliance

6367 Rolling Mill Place, Suite 102

Springfield, VA 22152

 

Tel: 703.569.1201

Edited January 15, 2010 by Luke_Wilbur