The US Internal Revenue Service (IRS) and its private-sector partners have announced that the Free File program aimed at cutting the cost of filing a tax return is now available to almost all taxpayers.
The Free File program provides free federal income tax preparation and electronic filing for eligible taxpayers through a partnership between the IRS and the Free File Alliance LLC, a group of approximately 20 private sector tax software companies.
David R. Williams, director, IRS Electronic Tax Administration and Refundable Credits, commented: “Free File is a great choice for either the novice taxpayers who need some assistance or the experienced taxpayers who prefer to do the work themselves. It’s fast; it’s safe; it’s free.”
Free File comes in two formats: Traditional Free File, which is available to taxpayers who meet specific criteria, and Free File Fillable Forms, which is available to almost all taxpayers.
Approximately 70% of the nation’s taxpayers, some 98 million people who meet the USD57,000 income limit, are eligible for Traditional Free File.
Traditional Free File can help taxpayers identify new tax credits or deductions under the American Recovery and Reinvestment Act for which they may be eligible. This year there are many new and expanded benefits for energy conservation, new car purchases, college tuition, and first-time homebuyers.
Each company involved in the Fee File Alliance 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 with income of USD57,000 will find tax preparation software they can use.
The Free File Fillable Forms service is aimed at taxpayers who are comfortable preparing their own tax returns. Almost everyone is eligible for this service. There are no income limits and almost all tax forms are available. However, Free File Fillable Forms does not support state forms or state electronic filing.
The IRS also points out that the free e-file option cuts down substantially on error rates and taxpayers get their refunds much faster. The error rate for an e-filed return is 1%, compared to 20% for a paper return. Unlike paper filers, e-filing taxpayers also will receive an acknowledgement that the IRS has received and accepted or rejected their returns.
The IRS debuted e-file nationally in 1990, delivering 4.2 million tax returns. Last year, 66% of all tax returns were filed electronically in the US, representing 95 million returns.
However, taxpayers who are eligible for the USD8,000 or the USD6,500 first-time homebuyer credit will not be able to e-file because they must attach proof of purchase to their tax return, although these taxpayers still can use Free File to prepare their tax forms and then print and mail the returns to the IRS.
Free File is available through April 15. For taxpayers who request an extension to file their federal returns, Free File will be available through October 15.
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