H&R Block

The Easy Way to Do Your Taxes (Without Paying Someone Else)

Damian Davila — Wed, 22 Feb 2017 10:00:20 +0000

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.

Bring:

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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This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Teaching Kids About Money: An Interview with Dr. Brad Klontz

Sarah Winfrey — Thu, 24 Mar 2011 10:00:08 +0000

It’s commonly accepted that many high school graduates do not have enough education in the area of personal finance. In fact, personal finance classes are not even required for graduation by most high schools. So is it a surprise that when they get out into the world, they are susceptible to getting into credit card debt, neglecting retirement savings, and struggling financially? (See also: Getting Kids Started With the Stock Market)

It seems clear that kids need more education in these areas. But schools balk at offering it, especially in this era of financial cutbacks. They simply don’t have the space in their buildings or curriculum, and they don’t have money to pay teachers to teach these new classes. Many schools admit that personal finance education is a great idea, but they say that someone is going to have to step up and fund it if it’s going to happen.

H&R Block’s Dollars & Sense program is doing just that — offering a curriculum and scholarships for schools committed to teaching teens practical lessons about money before they’re out on their own. The company has provided more than $2 million worth of curriculum and scholarships to high schools and their students worldwide since 2009.

Recently, I had the chance to interview Dr. Brad Klontz, a financial psychologist who helped develop the program, about what it offers and what kids need to know about money. Even if your kids don’t get to participate in a program like H&R Block’s, he has some practical tips for teaching them about personal finance.

Sarah Winfrey: What will students learn in the H&R Block Dollars & Sense curriculum?

Dr. Brad Klontz: H&R Block Dollars & Sense uses Virtual Business® — Personal Finance, a curriculum developed by Knowledge Matters. Students are assigned an avatar and get to make real-world decisions in a simulation environment without the real-world consequences. The skills students learn include: budgeting and saving, choosing and balancing a checking account, getting a credit card and understanding credit, online banking, paying taxes, investing for retirement, time management, finding a job and housing, buying a car, making smart purchases, understanding insurance, and much more.

It sounds like the program focuses on “hands on” learning scenarios. How do these help students learn about money, as opposed to memorizing information on types of investments, etc.?

The simulation software is very hands on, allowing students to learn and practice key personal finance skills in an engaging, interactive environment. The curriculum combines rich visuals and animations to put these important skills into practice — they learn that if they don’t purchase food, they’ll starve; or if they spend all their money on a big-screen TV, they can’t pay rent. They can’t “undo” those choices within the lessons.

Sounds quite practical. Of all the financial lessons out there, what do you think is the number one thing that graduating high school seniors need to know about personal finance or finance in general?

It is critical for teenagers to understand the ins and outs of credit and credit cards. We require students to pass Driver’s Education before issuing them a license to drive a car; however, they can wield a credit card with no training or instruction whatsoever. Shortly after they leave home, teenagers will be offered credit cards. Without an awareness of how credit and credit cards work, they will be set up for failure.

What sort of tactics do you recommend for helping students understand using credit cards or taking on debt?

Nothing works better than direct experience. In addition to talking to teens about how to use credit wisely, parents should give their teenagers the experience of paying interest.

For example, consider advancing their allowance if they ask, but charge them interest. Currently, the average credit card interest rate for someone with bad credit approximates 25%. Since teenagers don’t have a credit history, they would be considered a higher credit risk, so 25% interest is about right. You could advance them their $20 allowance on Friday, and then take $5 out of next week’s allowance. If they take you up on your offer, the instructional moment will arrive the following week when you give them $15 instead of $20. Talk to them about how this experience is similar to carrying a balance on credit cards, where you sacrifice having more money in the future for being unable to delay immediate gratification.

Have you found any personal finance topics appeal to teenagers the most? How does the program incorporate these into what it offers?

Teenagers get very excited about the idea of compound interest. When they see how saving just $100 per month invested at 12% interest would give them over $3 million dollars by the time they are 60, it blows their minds. If all teenagers learned and practiced this very simple lesson, we would have a nation of millionaires within a generation. The simulation experiences H&R Block Dollars & Sense provides gives students the opportunity to experience compound interest versus just hearing about it.

What advice would you have for parents looking to supplement the financial education their child receives (or doesn’t receive) in school?

Because money management is often a difficult discussion for parents and teens to have, here are a few tactics parents can implement when helping their teens become smarter about money management:

Hold off on giving them advice and just listen. Or ask questions to help start the conversation, such as:
- How do you think people get wealthy?
- What are your financial goals?
- What do you worry about regarding money?
Allow your kids to experiment, make mistakes and learn from them. For example, give them an allowance, but don’t bail them out if they run out of money. This lesson provides an opportunity to examine financial missteps objectively and come up with strategies to do it differently next time.
Encourage them to think before making a purchase and to wait a day or a week before buying it. If they still want it, it’s a good opportunity to talk about a spending plan.
Model healthy financial behaviors your teen can follow. Kids learn more by what they see their parents do than what they say. For example, it’s a good idea to decide on something you want to purchase as a family. Then involve them in the budgeting and saving for it.

[End of Interview]

As Dr. Klontz suggested, there’s so much that parents can do to help their kids learn about personal finance, and these ideas are just the beginning. If you’re interested in getting personal finance curriculum into your child’s school, talk to some administrators and see if they’re willing to apply for some of H&R Block’s scholarships.

Right now, some schools have already submitted their applications to be part of this program. Until April 15, you can go online at H&R Block’s Dollars & Sense website to view these applications and vote for the school or schools that you think most deserve the chance to teach this curriculum. The winners will receive their grants by the end of the current school year. It doesn’t take long to vote, and your time goes towards helping high schoolers learn valuable financial skills.

This article is from Sarah Winfrey of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: