The Easy Way to Do Your Taxes (Without Paying Someone Else)
Like clockwork, Tax Day comes every year. In 2017, it falls on Tuesday, April 18 (Wednesday, April 19 for residents of Maine and Massachusetts). If just the mention of taxes makes you nervous, or even stressed, you're not alone. Since 2007, the American Psychological Association (APA) has been tracking the top causes of stress for Americans and has found that money, including tax preparation, is consistently at the very top of the APA's list.
While it may feel tempting to relieve this stress by paying somebody else to file your return, or buying expensive tax prep software, there is a long list of options to have your taxes prepared for free. Let's review what organizations offer free tax preparation services and what you can do to make the whole task… less taxing.
1. Free File Software From the IRS
Individuals who earned less than $64,000 in 2016 — 70% of Americans, according to the IRS — can file their federal taxes for free with Free File Software from the IRS, a partnership of the IRS with eight software providers, including TaxSlayer, H&R Block, and ezTaxReturn.com.
In addition to free federal tax filing, most Free File Software partners offer free state tax filing for residents of states with income tax requirements. Some providers may charge a fee for filing state tax returns.
2. IRS Tax Volunteers
Looking to help the community by preparing taxes free of charge, many Americans receive training by the IRS and then volunteer at approved locations in their communities. IRS-certified tax volunteers participate in two main programs.
Volunteer Income Tax Assistance (VITA)
Individuals who make $54,000 or less, have disabilities, or have limited English proficiency have access to free basic income tax return preparation with IRS-certified volunteers through VITA. Qualifying taxpayers have their returns filed electronically.
Tax Counseling for the Elderly (TCE)
IRS-certified volunteers for the TCE program focus on taxpayers who are 60 years of age and older, and specialize in questions about pensions and retirement unique to seniors.
Located at neighborhood centers, libraries, schools, shopping malls, and other convenient locations throughout the country, VITA and TCE sites can be found online through the VITA/TCE Locator Tool or by calling 1-800-906-9887. Since many TCE sites are operated by the AARP's Foundation Tax Aide program between January and April, you can also use the AARP Site Locator Tool or call 1-888-227-7669.
3. Free Tax Services at Universities and Colleges
Around the country, many student-run service organizations offer free tax assistance for low- to moderate-income individuals. Generally, these organizations offer free e-file for federal and state tax returns under the supervision of the IRS and CPA certified accounting faculty. Here are some examples:
- VITA site from the Accounting Department at Dixie State University in Utah;
- VITA site from York College in New York;
- VITA site from St. Mary's University in Texas;
- VITA site from the University of the West in California;
- VITA site from the University of Minnesota Duluth; and
- VITA site from the Levin College of Law at the University of Florida.
The majority of student-run organizations offering free tax assistance are also IRS-certified VITA sites. Keep in mind that free tax preparation programs at universities and colleges can only provide tax preparation to individuals making $54,000 or less. Student volunteers will most likely turn away small business owners and self-employed individuals because volunteers are limited to returns with certain types of income, including Wages and Salaries (Form W-2), Interest Income (Form 1099-INT), Dividends Received (Form 1099-DIV), Unemployment Compensation (Form 1099-G), IRA Distributions (Form 1099-R), Pension Income (Form 1099-R, Form RRB-1099), and Social Security Benefits (Form SSA-1099).
Student-run tax prep organizations can generally help nonresidents on a student visa (F, J, M, or Q), or a teacher or trainee visa (J or Q), but may turn away those with dual citizenship because these types of individuals require much more complex tax prep.
4. Free Offers From Tax Preparation Companies
Commercial tax preparers and software providers also offer free software access to taxpayers filing certain types of returns. Here are two samples from well-known companies:
- H&R Block: Free tax prep for forms 1040EZ, 1040, 1040 with Schedule A, and some state tax forms.
- TurboTax Federal Free Edition: Free prep of forms 1040EZ and 1040A and some state tax forms.
Since no humans are involved when using free tax prep software, you're responsible for figuring out the answer to your questions and responding to audits from the IRS. Also, getting help from a company rep over the phone or via online chat may cost you additional fees.
There are many offers available from online and brick-and-mortar providers. Since most of these free tax prep offers involve e-filing, it's a best practice to verify that they're authorized e-file providers by the IRS. Screen offers near you using the IRS e-file Provider Locator.
5. Free Tax Help From State Governments and Non-Profits
In an effort to help individuals and families with low-to-moderate income levels, many state governments provide free income tax preparation and electronic preparation through the Earned Income Tax Credit (EITC). Here are some examples:
- The Illinois Department of Human Services offers free tax help to individuals and families making up to $30,000 and $55,000 respectively per year.
- The Honolulu Community Action Program is offering free tax preparation to Hawaii residents with $55,000 and under in annual income and with a relatively simple return.
Contact your state government for a list of public and private organizations offering free tax preparation services.
Getting Ready for Free Tax Preparation
As you can imagine, any organization offering free tax preparation gets an avalanche of requests from taxpayers. Let's review some strategies to minimize the chances of being turned away or having to spend more time than necessary.
1. Know the Limitations of the Volunteers or Software
Free help is generally limited to more basic returns. For instance, if you're a small-business owner with questions on your Schedule C about how to take a tax deduction for your commercial refrigerator purchase, you're better off hiring a certified tax professional who can handle such complex tax scenarios. (See also: 4 Times You Should Splurge and Hire a Pro)
Verify that you're eligible for free tax prep under the guidelines of the organization that you're trying to visit. If you have a tax form that you've never seen before, check with the organization whether or not the volunteers can handle it. Many of the organizations on this list post on their websites the forms that they can process.
2. Schedule an Appointment (If Applicable)
Many organizations offering in-person tax consultation and preparation require you to book an appointment in advance. Whenever this is possible, book one so you can have a guaranteed time slot.
3. Show Up Early and Don't Procrastinate
If you can't make an appointment, do your best to show up early. If an organization has a schedule of 2 p.m. to 7:30 p.m., you'll probably have a better chance of being helped by showing up at 3 p.m. than at 7:20 p.m. Since most of the tax prep options on this list are only open between January and April, try to visit way before Tax Day when volunteers are less likely to be busy.
4. Prepare for Appointment
Make sure you have all the documents you'll need listed below before you attend your appointment. If you do not have all necessary documents, you may be asked to make another appointment, if available.
- At least one form of government-issued ID;
- Your Social Security card to verify your Social Security Number, as well as the Social Security cards for any children you're claiming as dependents;
- All W-2 forms;
- All eligible 1099 forms, such as 1099-MISC, 1099-INT, SSA-1099, and 1099-DIV;
- Affordable Care Act Documents, such as 1095-A, 1095-B, and 1095-C;
- Form 1098, if you own real estate;
- Form 1098-T, Tuition Statement, if you're a college student;
- A copy of your last year's return (not always mandatory, but it helps volunteers a lot);
- Documentation proving marriage status when filing jointly (check for more potential requirements because a spouse may or not need to be present, depending on your unique tax situation);
- A voided check showing the routing and account numbers for the account that you want to use for direct deposit of your refund, if applicable;
- Receipts and supporting documents of any deductions that you plan to take; and
- Any additional forms that apply to your tax situation.
This is a general list, but you may need additional documents or forms. Contact the tax preparation organization in advance or read the fine print of the software that you're planning to use to cross your T's and dot your I's. Best of luck in this tax season, you got this!
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