Many people shell out hundreds of dollars to have a tax professional prepare their return, or they purchase expensive software that allows them to prepare their return themselves on their computer. However, millions of taxpayers don't need to spend this money. Their tax returns are simple (or relatively simple) and can easily be completed for free by using one of the following tools provided by the IRS.
IRS Free File
The IRS has teamed up with 15 private tax preparation companies to create online versions of their commercial software that may be used by lower-income taxpayers for free. The Free File program is open only to taxpayers with a 2012 Adjusted Gross Income (AGI) of $57,000 or less.
You don't have to download any software to use Free File. You complete your return online by answering a series of questions and the online program uses your answers to create your return. Your information is protected from snoopers by encryption software. You then file your return for free electronically and print out copies.
One drawback is that most of the Free File companies will not prepare a state income tax return for free. Some of the companies charge a fee for this service.
Each participating free file company sets its own eligibility requirements and not all taxpayers will qualify for all companies. To find a free file company, use the IRS online "Help Me Find a Free File Company" tool. Additional information about Free FIle is available from the IRS at www.freefile.irs.gov.
IRS Free File Fillable Forms
If your income is too high to use the online Free File option, you can still prepare your taxes for free on your computer by using the IRS's Free File Fillable Forms. These are online versions of the paper tax forms. The forms perform some basic calculations, but don't provide the type of help you can obtain from commercial tax preparation software. Thus, they work best for people who are comfortable preparing their return themselves. Drawbacks: Fillable Forms does not support state income tax preparation, nor can it be used if you file certain tax forms.
Free Tax Return Preparation by Volunteers
Not everybody is able to, or desires to, prepare their tax return on a computer by themselves. Fortunately, the IRS offers free in-person tax help for lower-income and elderly taxpayers through its Volunteers Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. In addition to traditional face-to-face tax preparation, the IRS is offering a self-assistance service at many VITA and TCE locations. These programs operate between January and April 15 each year.
Volunteer Income Tax Assistance (VITA)
The VITA Program offers free tax help from IRS-certified volunteers. These are not IRS employees, but they do receive training from the IRS on how to prepare basic income tax returns. The VITA volunteers can also provide information about special tax credits, such as Earned Income Tax Credit, Child Tax Credit, and Credit for the Elderly or the Disabled.
There are thousands of VITA sites located at community and neighborhood centers, libraries, schools, shopping malls, and other locations. To find a site, use the online VITA Locator Tool or call 800-906-9887.
Tax Counseling for the Elderly (TCE) Program
The TCE Program offers help primarily to people age 60 and over (although they will help younger folks too). IRS-certified TCE volunteers specialize in answering questions about pensions and retirement issues unique to seniors. A majority of the TCE sites are operated by the AARP Foundation’s Tax Aide Program. To locate the nearest TCE site or AARP Tax-Aide site between January and April use the AARP Site Locator Tool or call 888-227-7669