Preparing tax returns is a hassle at best for most people, and for many, the burden of getting their returns done imposes a real cost. Getting help from a tax preparer or from a tax software package can be expensive, and for those who are already struggling to make ends meet, paying for tax advice isn't high only the list of priorities for spending their money.
To help taxpayers with their tax return preparation, the Internal Revenue Service is once again offering free filing to many Americans in the coming tax season. With fairly generous income limits, millions of taxpayers will be able to get the help they need with their returns without having to pay a dime. Moreover, some improvements to the program hope to avoid some of the controversy that surrounded free filing last year.
How free filing works in 2020
The IRS has worked with a company called Free File for several years to support the Free File program. Late last year, the two parties agreed to eighth straight memorandum of understanding that set out the ways that the IRS and Free File would work together in order to run the program.
Under the terms of the agreement, Free File will be available to any taxpayers who earn $69,000 or less in the 2019 tax year. For those who qualify, Free File's tax preparation software partners will offer one or more free commercial tax prep platforms to help taxpayers get their returns done at no cost. You'll also be able to use the program to file your taxes electronically at no additional cost. Some of the software even includes free state income tax filing along with the capability to handle federal tax returns.
Those who earn more than $69,000 won't be able to use the full functionality of the Free File program, but they will have access to some of its features. With fillable forms, you can prepare your tax return in an electronic format that will be easier to use that pen and paper. The forms also check your math, preventing potential mistakes that can cause unnecessary but lengthy delays in processing your return.
Making sure free means free
In late December, the IRS also clarified a key point of its arrangement with Free File to remedy a problem that arose last year. Specifically, the two parties agreed that none of the tax preparation software providers that Free File works with are allowed to do anything that would cause the provider's Free File landing page not to show up on a regular internet search. Instead, each provider will have to use standard practices to name its Free File offer and allow those searching for the service to find the appropriate landing page. Providers also have to ensure that those who qualify for the program pay absolutely no fees for federal return preparation and electronic filing.
The new provision follows criticism last year that some tax preparation software providers made it difficult for those qualifying for Free File to find the appropriate free service. Instead, some users got pushed into competing products and were charged fees, leaving them upset and feeling that the providers had taken advantage of them.
Get the deal you deserve
If you qualify for the Free File program, there are some things you can do to make sure you have a legitimate offer. Any offer should be called "IRS Free File Program Delivered By" followed by the name of the tax software provider or its software platform.
Also, there are other resources available to certain taxpayers to get help on returns. For instance, the Volunteer Income Tax Assistance program lets you visit local community centers, libraries, and other public sites and talk with trained volunteers who will help you prepare returns.
Paying for tax preparation can be expensive, so free filing is a big deal for many Americans. By clarifying how the program works and avoiding some of the controversy that free filing went through last year, the IRS hopes that it will better serve the millions of taxpayers who take advantage of the program annually.