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Do You Qualify for Free Tax Preparation?

Find out if you’re eligible for free tax preparation assistance and keep more of your hard-earned money.

It may not be possible, as the old saying goes, to escape death or taxes, but you can escape the fees charged by tax preparers and still get assistance.

This is particularly important for low- and moderate-income taxpayers, who can ill afford pricey advice, but may need help navigating complex IRS rules.

Some filers may owe little to no tax or be entitled to a healthy refund. In addition, they may qualify for the Earned Income Tax Credit (EITC). This is a so-called “refundable tax credit,” which means the government will actually pay you cash for any amount of the credit that exceeds your tax liability. Learn more about tax credits you may be eligible for.

This is an important benefit—it can top $6,000 for those with three children—so don’t miss out simply because you don’t want to pay a tax preparer, or lose part of it because of the fees charged for filing assistance.

Here are ways to file your taxes for free and keep more of your hard-earned money.

The Volunteer Income Tax Assistance (VITA) Program

The Volunteer Income Tax Assistance program is available to those who make $54,000 or less in income. Volunteers who are trained and certified by the IRS are available at community centers, libraries, schools and other sites to help prepare federal tax returns.

These volunteer preparers can assist you with most types of income reporting: wages and salaries, interest and dividend income, pension and Social Security benefits, simple capital gains and state tax refunds.

You can also get help with the Affordable Care Act reporting requirements, which came into effect in 2014. In particular, the volunteers can help with the paperwork for the tax credit on subsidized health insurance through the health exchanges.

Other issues for which they provide assistance include some, but not all, cases for sale of a home, self-employed income, health savings accounts and itemized deductions.

They cannot provide assistance for Schedule C (sole proprietorship business) with losses or complicated capital gains and losses.

VITA services are also available to those with disabilities, the elderly and taxpayers with limited English. Use the VITA Locator Tool or call 800-906-9887.

Tax Counseling for the Elderly (TCE)

If you are 60 or older, you can take advantage of Tax Counseling for the Elderly (TCE), mainly operated in collaboration with AARP, which can provide free tax assistance with a special focus on pension and retirement issues.

For AARP TCE programs, use the Site Locator Tool on the AARP website or call 888-227-7669.

Free File

Another option for filers with incomes below $64,000 is the Free File program through the IRS, which makes brand-name tax preparation software available as well as free e-filing. Taxpayers can choose among several participating firms for the software that best fits their needs.

The Free File Alliance says that 70 percent of American taxpayers – 100 million people – are eligible to use Free File. Some 46 million people have availed themselves of the service. Software for many state returns is also available.

For those who aren’t sure if they can figure out the online directions, Free File is available at select VITA/TCE locations, where volunteers can assist in going through the software program.

A big advantage to Free File is using the e-filing option and signing up for direct deposit so that you can get your tax refund in a matter of days instead of waiting weeks for a check in the mail.

Those with incomes above $64,000 can use Fillable Forms through the Free File service. This allows you to e-file your federal return and get a quick refund but it doesn’t provide any assistance beyond the directions on the tax forms themselves.

Gather Your Documentation

Documents required are a photo ID; Social Security cards for everyone included on the return; the various wage and earnings statements (W-2, 1099-Misc., and so on); the 1099 forms for dividend and interest income; a copy of last year’s federal and state returns, if available; a blank check if you want direct deposit; and the new ACA forms (1095-A, B, or C).

Both spouses must be present to sign forms for e-filing. If you paid for daycare, you should have the total paid for the daycare provider and their tax ID number.

While many of the in-person services don’t require appointments, the IRS cautions that you may not be served right away if you don’t call ahead.

Additional Resources

The Consumer Financial Protection Bureau, a new agency created as part of the Dodd-Frank reform act in the wake of the financial crisis, and generally will post updated links each tax season with tools to help taxpayers.

For those with incomes above $64,000 or who don’t otherwise qualify for free services, the cheapest option of course is to fill out the forms yourself. For individuals whose only income is the wages or salary reported on a W-2, it is actually not that difficult.

Those with more complicated returns may want to seek the assistance of paid tax preparers. However, there are various online programs that are not prohibitively expensive and which lead you through the process rather painlessly.

 

 

* NOTE: All of the information in this article is accurate as of December 15, 2016.

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