By Marilyn Lewis
April 15 isn't as far off as it sounds. If you'll need help preparing state and federal tax forms, start now so you won't be fighting crowds in late March. Americans will pay $273, on average, this year to get help preparing and filing an itemized Form 1040 with Schedule A and a 2014 state tax return, according to a survey of members of the National Society of Accountants. Taxpayers filing with no deductions will pay an average of $159, the society told me.
That's no doubt a worthwhile expense for many. But free is better. Don't discount your ability to prepare your taxes on your own. Lifehacker advises doing your own taxes if your return is simple and straightforward. Do get help, however, if you:
- Dread tax forms.
- Own real estate.
- Are a landlord.
- Are self-employed.
- Worry you'll make mistakes.
- Own investments that generate capital gains and dividends.
An IRS-sponsored program called Volunteer Income Tax Assistance uses trained volunteers to help taxpayers complete basic state and federal tax returns. According to Free File Alliance, a nonprofit coalition of tax preparation software companies: "VITA sites are staffed by IRS-certified volunteers, who help taxpayers complete their annual tax return and provide information about tax credits, such as the Earned Income Tax Credit, Child Tax Credit and Credit for the Elderly or the Disabled."
Who's eligible: Taxpayers earning $53,000 a year or less, the elderly, those with disabilities, and people with limited English-speaking abilities."
Resources: Use VITA's online locator tool to learn when and where to find free tax prep help and whether you'll need an appointment or can walk in. Or call 800-906-9887. "Self-prep" is an alternative. You prepare and file your own basic state and federal tax forms using Web-based tax software and with help from an IRS-certified volunteer. Check online or by phone for locations offering self-prep. Bring all the needed material with you.
2. Tax Counseling for the Elderly
The IRS certifies volunteers who provide free tax preparation aimed especially at older taxpayers through Tax Counseling for the Elderly. Many TCE volunteers work with the AARP Foundation's Tax-Aide program. Tax-Aide deploys about 35,000 volunteers who help 2.6 million taxpayers each year at some 5,000 locations nationally, typically community centers, schools, libraries and shopping centers, according to AARP.
Who's eligible: The service is free to anyone. It's meant particularly for people 60 and older. Preparers can help with questions about retirement-related issues and pensions.
Resources: Use AARP's online locator to find out when and where to find an AARP Tax Aide near you. Or call 888-227-7669. Want to be an AARP volunteer tax preparer? Learn more and sign up. AARP has additional resources and information on federal taxes.
3. IRS Free File
Free File is a partnership between the IRS and 14 makers of commercial tax preparation software. Taxpayers can use, free of charge, secure, brand-name tax preparation software. Self-assist computer kiosks are available in some locations. There's no charge for help with federal tax forms.
Who's eligible: You qualify if your adjusted gross income in 2014 was $60,000 or less (last year's cutoff was $52,000). About 70 percent of Americans qualify, according to Free File Alliance. Cheapism says, however, that "each company also has its own income, age and residency requirements within the IRS limit, some stricter than others." It adds: "These companies also hawk free editions without any income or age requirements, but they come with value-added offers for paid software and features. The more complicated the tax situation, the more likely a required upgrade."
Resources: A state Free File program offers free help with some, but not all, state income tax forms, through a partnership between Free File Alliance member companies and a limited number of states. Free File goes live Jan. 16, with links to state programs following. A chart shows how Free File works. Free File Alliance's FAQ answers many questions.
4. IRS Free File Fillable Forms
There is no income limit for getting help from another free IRS program: Free File Fillable Forms. Fillable Forms gives you access to electronic versions of IRS paper tax forms. You complete and file them online; the forms do your math for you. Benefits include tracking your return and getting refunds more quickly. Fillable Forms is a good choice if you have previously completed your own tax forms, the IRS says.
Who's eligible: Anyone.
Resources: This chart shows the differences between the IRS' Free File and Free File Fillable Forms programs so you can see which, if either, is right for you. Fillable Forms go live Jan. 16.
5. Tax Preparation Companies' Free Services
Several commercial tax-preparation companies offer free, basic online versions of their software. For instance, H&R Block's (HRB) Free Edition software consists of various forms of free help for filling out the simplest 1040 forms using IRS E-file. Its free assistance includes online FAQ resources, unlimited live online chat and unlimited phone discussions with a professional tax adviser. The software includes a review of your E-file form for apparent problems and an estimate of the risk that your completed form will be audited by the IRS.
The major benefit for you with these services is in the savings. They have limitations, which vary by product. In general:
- Few offer free help with state returns.
- Free products are for simple tax situations. If yours is more complex, the software you use may advise you to use its paid upgrades to properly complete your form.
- Products differ. Before starting to use a free product, check its website to compare the free product with costs and features of the company's paid products. TurboTax, for example, has a chart (scroll down to view it) showing features, limits and prices for each of its tax-prep products.
- You could run into hidden fees. Guard against surprises by reading the fine print on a company's website. With H&R Block's free product, for example, you will be automatically charged a convenience fee if you pay your tax bill using a credit card. The fees can be hefty, depending on the card you use - from $18.70 to $22.90 for every $1,000 you pay the IRS.
- Cheapism recommends three free commercial software companies' products for use with federal forms: TaxACT, FreeTaxUSA and ESmart Tax.
- CreditCards.com describes several free services, including TurboTax, TaxHawk and TaxSlayer.
- Money Crashers reviews several free versions of commercial products.
MyFreeTaxes.com, from Walmart (WMT) and its partners, Goodwill, the National Disability Institute and United Way, offers free tax help using H&R Block software. Help is free for state tax forms as well as federal.
Who's eligible: Individuals or families with a combined household income of $60,000 or less.
Resources: Go to MyFreeTaxes.com or call 855-698-9435.
7. More Free IRS Resources
You can get other free help from the IRS:
- Visit a local office (use this locator to find one near you).
- Call 800-829-1040.
- Search IRS.gov for tax forms and publications or find answers using Frequently Asked Questions.
- See IRS information on preparing and filing tax returns.
- Find details on IRS electronic filing, or E-file.
- Here's guidance on choosing a tax professional.