Formed in 2003, IRS Free File is the product of a partnership between the Internal Revenue Service and a group of twelve online tax software suppliers that form the Free File Alliance – including such familiar names as TaxSlayer and H&R Block. Free File was intended to increase electronic filing by making the process easier for a greater number of Americans. Both the tax preparation and the e-filing process are free. "You don't have to be an expert on taxes," says IRS Commissioner John A. Koskinen. "Free File software can help walk you through the steps and help you get it right."
Over 50 million tax returns have been filed through the Free File system to date. You can use the Free File software if your Adjusted Gross Income (AGI) was $66,000 or less for the 2017 tax year. An estimated 70% of American taxpayers fall within this criteria. Taxpayers with an AGI of above $66,000 don't have access to the software, but may use the electronic Free File Fillable forms available on the IRS website.
You will need to gather up a few things before starting the Free File process, just as you would with any filing format.
- Personal Information– You will need a copy of your tax return for the previous year and valid Social Security numbers for you, your spouse, and your children.
- Income and Records – Gather all receipts and summary forms pertaining to your income. These include W-2s, all varieties of Form 1099, and the newer forms brought in by the Affordable Care Act (ACA). Depending on your status, you may need Form 1095A (Health Insurance Marketplace Statement), Form 8962 (Premium Tax Credit) or Form 8965 (Health Coverage Exemption). The penalty for failing to purchase healthcare insurance is still in effect for tax years 2017 and 2018, but will be gone from 2019 onwards, thanks to the Tax Cuts and Jobs Act.
Don't forget to include any other income such as unemployment compensation, rental incomes, partnerships, trusts, S corporations, or Social Security benefits. You will also need the corresponding records for these income sources.
You can estimate your AGI from last year's form to see if you qualify, or there are several AGI calculators available online to help you with the process. Assuming you qualify and wish to use Free File, follow these simple steps:
- Go to the IRS Website – Start at www.IRS.gov/freefile, where you can click the designated button to start the Free File process or choose a link that helps you find the best Free File software for you by asking you a series of questions.
If you bypass the IRS website and go directly to the software vendor sites, the process may not be free. The software vendor may apply fees in that case.
- Choose Your Vendor – If you did not select the link to help you find the best software, you will be given a menu of links to all the vendors with a summary of their benefits and limitations. Some (but not all) vendors offer free state tax filing services as well, in case you happen to live in a state that collects state income tax. Note: 22 states have their own version of Free File, as well as the District of Columbia.
- Find Tax Deductions and Credits – The software will lead you through a series of questions and answers to help you identify tax deductions and credits relevant to your situation. Based on your tax breaks, the Free File software will then select the appropriate tax forms and automatically do the calculations.
- Complete Forms and E-File – Once you have completed your forms, simply submit your form electronically and supply a valid e-mail address to receive the confirmation of your submission. You can track the submission using the "Where's My Refund" function on the IRS website.
- If you owe money, you have several options – Fees may be incurred depending on the company that you choose. You can set up an electronic funds withdrawal from your bank account, register for the Electronic Federal Tax Payment System (EFTPS) operated by the Treasury Department, or use a credit card.
If you need further help, check to see if Free File is available at your nearest Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) locations.
For those who qualify, Free File offers a simple, secure, and rapid means of filing your tax forms and receiving your refund as soon as possible. All the members of the Free File Alliance actively participate in the Security Summit Initiative, which provides safeguards against tax identity theft and raises awareness of current ID theft schemes. If you would like to prevent identity theft, check out our credit monitoring service.
Remember to keep a copy of your tax return for your own records. If this is the first year you are using a tax software product, you may need the AGI amount from last year's tax return as a security precaution to verify your identity.
IRS Free File is available to use now for filing your 2017 taxes. Check the vendor options to see if any of them work for you. Why pay to file your taxes if you don't have to?
Get your Refund Fast and File your Taxes for Free.
Originally Posted at: https://www.moneytips.com/irs-free-file-101