From heading to Walmart to going online, filing your federal income tax return for free has never been easier.
For starters, all Utah taxpayers can prepare and file their tax returns online directly with the Internal Revenue Service through its Free File program. The services provides electronic filing — and in many cases free tax preparation, too.
Read the fine print
If you are considering having your tax return filed for free, make sure to ask:
How much does it cost for a state return? » It may cost you nothing to have a federal income tax refund prepared, but you’ll still have to pay to get your state tax return completed and filed.
Know your refund options » Many providers are offering taxpayers free services with the option of receiving a prepaid credit card instead of a refund check. But anytime you get your refund “immediately,” you’ll pay more than if you had just waited to receive your money from the federal government.
IRS tax-time resources
Where’s my refund? » Once you file, you can check the status of your refund online by going to http://irs.gov and clicking on “Where’s my Refund” on the right-hand side of the page. You’ll need to enter your Social Security Number, filing status and anticipated refund amount to use this tool.
Do you qualify? » Many workers earning less than $49,078 miss out on the Earned Income Tax Credit, which could be worth thousands of dollars per year to a family. Go to http://irs.gov and click on “EITC 2012.” For information about other tax credits and benefits, go to http://1.usa.gov/yjWaWA.
Can’t get help? » Taxpayers who have unresolved issues with the IRS may contact the Taxpayer Advocate Service. Go to http://1.usa.gov/ySlWI0 for more information about Utah’s office.
Free File comes in two formats: traditional Free File and Fillable Forms. "Everyone in Utah can use one of the two forms of Free File," said IRS spokesman Bill Brunson.
Traditional Free File guides users through the process of preparing and filing a return. The option is provided through a public-private partnership between the IRS and a consortium of nearly two dozen tax software providers who make versions of their free-file products available exclusively at www.irs.gov/freefile.
A taxpayer must meet certain criteria to use Free File, such as having an adjusted gross income of $57,000 or less.
Anyone can use Fillable Forms, because there is no income limitation. Unlike the Traditional Free File, though, taxpayers aren’t guided through their returns by software. They must fill out the forms online.
One word of caution about Fillable Forms. Because you won’t have a software program guiding you through the tax-preparation process, there’s no guide to help you take advantage of important tax credits or deductions. One of those commonly missed deductions is the Earned Income Tax Credit, which can be worth hundreds, even thousands, of dollars to a low-income family.
Aside from filing directly with the IRS, taxpayers also can have their returns prepared for free through a host of private-sector programs:
H&R Block Free Edition • This is for taxpayers with simple returns. For more information, go to bit.ly/rPfIVN.
Turbo Tax Free Edition • Tax-prep software company Intuit offers this option. Go to Turbotax.intuit.com for details.
In-store at Walmart • Select locations nationwide are offering free preparation of simple tax forms through a partnership with H&R Block and Jackson-Hewitt Tax Service, good only on 1040EZ forms. For more information, go to bit.ly/wHIdN4.
The downside to these free private-sector programs is that they focus only on simple tax return preparation. If you have a more complicated return or itemize your deductions, you probably aren’t going to qualify for the free help. Plus, the free options don’t include state tax preparation
Companies often use free-filing programs as an opportunity to market other services, such as state return preparation and filing, which cost money. Always compare prices among a handful of providers for the cost of all the services you’ll need this season.
In fact, many tax-preparation companies offer an array of fee-based services that aren’t always a great idea. For example, you can elect to get a refund-anticipation loan at a high interest rate based on your anticipated refund. If you can wait a couple of weeks, you can get your money without giving anyone else part of it.
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