We were warned that tax season, at least as far as the IRS is concerned, would be delayed so that the new forms could be readied and the changes, courtesy of the fiscal cliff, could be instituted. As of Wednesday, you can now delve into it and hope for a refund or at a minimum, break even.
Historically, the first of the year is the semi-official kick off, but because Congress couldn’t agree on how the fiscal cliff would play out in terms of taxes, it all came to a halt until the new laws could be put into place and the systems could be updated.
The best part of the changes is that those who typically take the more straight forward approach and bypassing itemizing and complicated investments, will find the process even easier than in years past. Not only that but every year, more of us are filing electronically, according to the IRS. There shouldn’t be any delays in the turnaround time we’ve grown accustomed to.
The traditional April 15 deadline remains in place in order to avoid late fees and penalties.
Also on Wednesday, the IRS Free File was opened up to taxpayers, as well. Some tax preparers are inviting taxpayers to do so through their website, but one can go through the IRS site to bypass the sales gimmicks on third party sites. Note, too, that some third party preparers might offer to file your state returns at no cost, which might make the sales attempts by the third parties worth it. In order to use the Free File option, your gross income can not exceed $57,000. Your filing status doesn’t play a role, but business filings are ineligible for Free File with one exception. If you are a sole proprietor and you file a Schedule C along with IRS Form 1040, you can use Free File.
Another fine reason for filing with the user friendly Free File is that you don’t have to download anything and the software was built with the most advanced security mechanisms to protect taxpayer privacy. If you do choose the IRS site, you’ll find the icon on the home page and the system provides assistance every step of the way.
Don’t Open Links
Ah…but of course, there are those who are already doing their best to steer you to their website where trojans are in place and ready to pounce on your identity as soon as you input the information, such as your social security number. Never click a link in an email promising to take you to the appropriate site; instead, either go directly to the tax preparer’s website or the IRS site. Because Free File has become so popular, there are more than a dozen software companies that have partnered with the government agency to ensure the filing process is smooth and glitch-free. Here’s the interesting part that many taxpayers are unaware of – Free File has been available for a decade though it’s only been in the past few years that it’s become the first choice for many Americans. It was created because many simply can’t afford to team with a tax preparer during tax season. The Free File system is designed to prevent errors and to ensure taxpayers are getting the maximum refunds.
As mentioned above, the biggest requirement is the $57,000 adjusted income rule. If, however, a taxpayer uses a third party’s website, such H&R Block, there may be other guidelines the taxpayer must agree to.
It’s believed up to 70% of all taxpayers will be able to take advantage of Free File and the other 30% who do not qualify can use the “fillable” return options found on the IRS site. These are a collection of the most commonly used IRS forms that can be downloaded, filled out and then e-filed. The IRS cautions that these forms can only provide the simpler calculations and if your return is more complicated, this likely won’t be a viable option. Unlike the Free File option, you’ll have manually key your deductions, income and other figures.
Here’s another interesting fact: it’s believed up to 81% of tax returns will be filed this year via Free File. This, according to the IRS Oversight Board, is one reason efforts were being made to get the new system updated with the revised information that comes with the fiscal cliff changes. Further, the Board also says it’s satisfied with the consistent progress and popularity of the Free File system. The Oversight Board was created in 1998 and is officially known as the IRS Restructuring and Reform Act of 1998. There was a substantial increase in the number of taxpayers filing through these methods between 2010 and 2012, too. Free File Alliance notes that three million taxpayers used this specific system last year, but that’s woefully short of the total 119 million who used other online programs.
What if you need more specific help but can’t afford a professional tax preparer? the Volunteer Income Tax Assistance program, also known as VITA, is back at it again this year. There are clinics set up around the country and can be found in community centers, schools and libraries. You can contact your local library or Department of Education for more on what your community offers. This year, there are kiosks popping up as well. The one stipulation is that you must earn no more than $51,000.
You can do your return there or partially do your return and, if you need help, ask a VITA volunteer,
says a spokesperson for VITA. Not only that, but the IRS website also offers a search option for those looking to locate a local VITA site or taxpayers can also call (800) 906-9887 for more information on where their VITA locations are.
So did you take advantage of the first day of readiness? Are you expecting a refund or will you be the one making payments? Also – do you use any of the free services offered by the IRS? Let us know your thoughts.
- FTC Warns of Prepaid Card Scams
- What Are Parent PLUS Loans?
- Unemployment Filings Up by 2,000
- In an Election Year, CARD Act Crucial
- Dimon Will Testify in Senate on Massive Loss
- FDIC Investigating Banks Offering Payday Loans
- AMEX to Begin Issuing Secure Chip Cards