Filing taxes can be a stressful process, no matter how much you earn. But the IRS recently announced some good news for low- and moderate--income filers: Beginning in 2020, it will be easier for more people to file their taxes for free.
The agency recently struck a deal with a number of tax preparation firms nationwide that makes these companies' free filing services easier for users to find. Previously, filers would often have difficulty finding the free version of these companies' software programs, as many intentionally excluded their no-cost versions from coming up in online searches.
Of course, that's somewhat understandable. Tax prep companies don't make money from filers who can submit their returns for free. But now, those entitled to a no-cost return will likely have an easier time finding resources for it.
IMAGE SOURCE: GETTY IMAGES.
Who's eligible to file a return for free?
Taxpayers with incomes below $69,000 are eligible to file their returns for free. The IRS estimates that about 70% of the U.S. population is eligible for a no-cost filing.
How to file your taxes for free
The process of filing a tax return for free is similar to that of the paid process. You need certain information and documents to get that return submitted. These include:
- An email address.
- A copy of last year's tax return.
- Your Social Security number.
- Important tax documents that summarize your income for the year, such as W-2s and 1099 forms.
Though most filers claim the standard deduction on their taxes, the option to itemize is still on the table when you file your return for free. In fact, the software you use can actually help you determine whether doing so is the right move.
For itemizing to make sense, your deductions must exceed the standard deduction -- $12,200 for single tax filers or married couples filing separately, $18,350 for heads of household, and $24,400 for married couples filing jointly. (Note that these thresholds have all increased for the 2020 tax year, but since your next return will cover 2019, these are the numbers you should keep in mind).
If you're itemizing on your tax return, you'll need even more documentation -- the amount of mortgage interest you paid last year, a list of 2019 charitable contributions, and medical expenses you incurred (you can deduct those exceeding 10% of your adjusted gross income).
Filing electronically has its benefits
Not only can you file your taxes for free if you earned less than $69,000 last year, but the fact that you get to do so online offers a few key advantages. First, it reduces your likelihood of making an error. Secondly, if you file electronically, you'll get your refund faster -- most are issued within 21 days for electronic returns, and you can check the status of your refund within 24 hours after your return is submitted online. With a paper return, your refund could easily take twice as long to process.
Simplifying the tax-filing process is always a good thing. And while the IRS isn't accepting returns for the previous tax year just yet, it's never too early to start gathering your paperwork so you're prepared once you do sit down to tackle your taxes.
