Online tax filing was never easier
The April 17 tax filing deadline is right around the corner and, admit it, you’re eager to take the dive and file your taxes online.
Last year 73 million people — out of a total 136 million — paid taxes online; most of them were filed by tax professionals. But the fastest-growing category of filers is people using home computers to complete their taxes, according to IRS spokeswoman Nancy Mathis.
She noted that roughly 70 percent of U.S. taxpayers qualify for “free file” — filing an online tax return with one of 19 qualified providers, and paying nothing for the service.
To find the IRS “approved” list of online preparers, go to http://tinyurl.com/2o86dr where you can decide if you qualify for free filing. Those who don’t qualify are those with an adjusted gross income above $52,000 or those who don’t have a spouse in active duty military.
But the costs involved in using an online filing service are fairly minimal. They start as low as $10 and range up to about $40, depending on whether you want to add other options.
The most frequently used sites are TaxAct.com, TaxCut.com, Turbotaxonline.com and Filetaxes.com.
More importantly, you can prepare your online return and complete it without paying a cent. You would only pay if you ask the online firm to submit the return for you to the IRS. And some companies let you file free if you buy some product, like Quicken Books.
Tax preparation specialists agree a major advantage of filing online is the ability to carry forward information from year to year. Next year at this time, you just log onto the same site and import your personal information, saving yourself from that chore in the future.
Experts also say most people with uncomplicated returns come out way ahead by avoiding any upgrade options an online preparer will try to sell you during the process.
“You don’t need to upgrade at all if you have a fairly basic return. It shouldn’t be necessary for most people,” said James Coleman, who works in Houston and prepares online taxes through his site www.exirsman.com. He uses the name ExIRSman because Coleman worked as an IRS collections agent before starting his online tax preparation business.
If you prefer, the simplest, cost-free option is simply to prepare your tax return online, then print out the forms and mail them to the IRS. TaxAct or TaxCut prepares your return and charges between $15 and $39 to process the filing electronically. Filing the return online, instead of mailing it in, is usually much faster. But the problem is there are at least 50 established sites that prepare taxes for you online.
Coleman said many of those look and behave the same, but he prefers TaxAct.com, which is operated by an Iowa company called Second Story Software. “It’s straightforward and intuitive. It moves you through the screens very easily,” he said. Another site he recommends is 1040.com, which is operated by Drake, a company that provides advanced tax-preparation tools for professionals.
Many companies that aren’t on the IRS “approved” free file list might file a return that qualifies under IRS standards as a free filing, Coleman said. But many also push you toward adding extra features, like “advanced audits” or investment suggestions. He recommends always skipping those payment-required upgrades.
Whichever site you choose, try to find one that allows you — without additional cost — to keep your personal information and W2 records stored. That option allows you to save time and import that material into next year’s return. Coleman doesn’t think people should worry about losing personal information through such online sites. “The IRS is totally focused on protecting personal privacy,” said Coleman.
Tax preparation experts also have special advice for people serving in the military. Rule one: Take your time and read the directions. Married couples are allowed to subtract portions of their total income if the enlisted spouse does not live in the state where he or she is stationed.
If your income is under a certain amount and you or a spouse served in Iraq or a designated “combat zone,” that will also affect the amount of income you need to report. A detailed explanation of military benefits is at the IRS at http://www.irs.gov/ pub/irs-pdf/p3.pdf.