Tax filing season is swiftly approaching, and many Americans may be able to file their returns for free.
About 70% of people filing taxes in the U.S., equal to roughly 100 million Americans, are eligible for a free program through the IRS, according to the agency. Even more may be able to file through other programs that offer tax preparation services at no or little cost.
Low-cost tax filing may be extra important this year for Americans who have suffered due to the coronavirus pandemic. Filing with an accountant or even through some online programs can be costly during a year where millions have lost jobs and income.
And, those who were eligible for economic impact payments and either didn't get one or got the wrong amount will have to claim them as a refundable credit on their taxes this year – even if they usually do not file.
There are underused services that can help people this tax season, said Tania Brown, a certified financial planner and financial coach at SaverLife, a nonprofit focused on financial security.
"There are free options, they do not necessarily have to pay to get their taxes done," she said.
Here's what you need to know about filing for free.
IRS Free File program
Many Americans are eligible to file their taxes for free through the IRS Free File program, which is a public-private partnership between the agency and the Free File Alliance, a group of tax preparation companies with online software such as TurboTax, TaxAct, FreeTaxUSA and more.
In 2020, 4.2 million Americans used the Free File program for their 2019 taxes, according to the IRS. While that was a nearly 50% increase from the previous year, more could still use the program.
If your annual gross income in 2020 was less than $72,000, you can use one of the Free File software programs offered to submit federal taxes free of cost. In addition, some products will also let you file your state taxes for free. The software generally includes step-by-step instructions and help for filers.
"This year it is especially important that people know about the Free File program because it's a great tool for anyone that didn't get their first or second economic impact payment or didn't get the right amount," said Christopher Miller, a spokesperson for the IRS.
To use the program, you must go through the IRS site – not directly to a tax preparer, Miller said.
Free File opened on Jan. 15, meaning that people can now input and submit their tax information. When tax filing opens on Feb. 12, their forms will be automatically filed with the IRS.
There are also free basic tax preparation services offered through the IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs, called VITA and TCE respectively.
VITA and TCE cater to low-income filers who generally make $57,000 or less, people with disabilities, limited English speakers and those over 60 years old. Tax experts volunteer their time to help eligible people prepare and file tax returns.
These options were generally held in-person pre-pandemic, but many will operate differently this year. Some sites have been closed due to the crisis, some will do the program online and others may be in person. To find a VITA or TCE center, use the IRS locator tool.
What to do if you made more than $72,000
If your gross annual income was more than $72,000 in 2020, there is another free program that you can access through the IRS, but it requires you to prepare your taxes yourself.
The Free Fillable Forms program offers online tax forms that people can use to input their information and then either electronically file with the IRS or print out and mail to the agency.
Unlike other programs, Free Fillable Forms doesn't give you any guidance or step-by-step instruction – it only does basic calculations of the numbers you put into the forms. It's also only available for federal taxes – though people in certain states can access local programs to file their state returns.
Still, if you have the time and are comfortable preparing your own taxes, the Free Fillable Forms program is a good option. You won't be able to do much preparation in advance, however – the program opens on Feb. 12.
More from Invest in You:
Biden expected to extend the national ban on evictions through March 2021
How to fight Trump rule denying permanent residence to struggling immigrants
What your FICO credit score means
Some private firms also offer free services
There are also some private companies that offer tax filing services at no cost, such as TurboTax, owned by Intuit, H&R Block, TaxAct and Credit Karma.
These companies all have free filing options available to some, depending on their annual income, the simplicity of the return, where they live, military status, eligibility for certain credits and more.
Before using online software outside the IRS Free File program, check with the company to see if you're eligible to file for free and make sure you're using the correct product, instead of one that will charge you.
Gabriel Menendez- Frances, 20, a student at the University of Alabama in Huntsville, used Credit Karma for the first time to file his taxes last year. He previously did his taxes by hand – printing out forms from the IRS website and mailing them in – because he had a very simple return, he said.
But last year, he started making money through a side gig as a freelance software developer and wanted help filing his return. He used Credit Karma to help build his credit score, so decided to try their tax tool.
"It's much more simple online," Menedez-Frances said, adding that Credit Karma's tool was a big help in filing his more complicated tax return last year. He didn't pay anything to file his federal or state return, he said.
Credit Karma is free for all filers regardless of income and includes federal and state returns, according to the company. Customers also have access to support staff able to answer any questions they have, Credit Karma said.
There are free options, they do not necessarily have to pay to get their taxes doneTania BrownCFP, financial coach, SaverLife
Paid tax preparation help
To be sure, some people may still want to pay for help in filing their taxes because they don't qualify for a free program or don't want to spend the time to do their own taxes. There are many online software programs that help people file for a fee, and have products serving a wide range of tax scenarios at different price points.
If you have a more complicated return, such as you itemize deductions, are a sole proprietor with income or run a small business, you may want to get help via a software program or hire an accountant or other tax expert to help you file.
SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox.
CHECK OUT: A year after I started my side hustle, it was bringing in $10,000 a month: Here's what I've learned via Grow with Acorns+CNBC.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.
"can" - Google News
January 26, 2021 at 12:41AM
https://ift.tt/3cncfDR
Many Americans can file their taxes for free. Here’s what you need to do - CNBC
"can" - Google News
https://ift.tt/2NE2i6G
https://ift.tt/3d3vX4n
Bagikan Berita Ini
0 Response to "Many Americans can file their taxes for free. Here’s what you need to do - CNBC"
Post a Comment