Right off the bat, let me say that I believe that there is real value in finding a competent, reliable tax professional. Like many taxpayers, I use an accountant to prepare my taxes, not because I enjoy paying for it but because I want to stay married… Let’s face it. Taxes can be stressful for some taxpayers and anything that you can do to make it easier on yourself, the better.
That said, some folks may not have the means to pay a preparer. Or you just might be a masochist and want to do your own taxes for fun (it happens). Free (or low cost) tax preparation services and software are available, you just have to find them. Follows are some resources to help you:
- IRS Free File. The IRS offers Free File, which is a free, federal income tax prep and electronic filing program for eligible taxpayers, on its site. With Free File, taxpayers can file federal income tax returns using commercial or retail software provided by the Free File Alliance companies. Income restrictions do apply: the service is open only to taxpayers with a 2010 Adjusted Gross Income (AGI) of $58,000 or less. Other limits may also apply; you can use the Free File online tool to find a company that’s best suited to you.
- IRS Free File Fillable Forms. The IRS also offers a non-income dependent option, which is to use the Free File Fillable Forms (how’s that for alliteration?). Free File Fillable Forms is a simple electronic equivalent of paper forms. The software performs some basic math and field error checking. However, it doesn’t walk you through the tax form in an “interview” like many retail software packages; you have to have a certain level of comfort with the forms. On the plus side, e-filing the fillable forms is free.
- IRS VITA. The IRS offers free tax preparation through the Volunteer Income Tax Assistance Program (VITA) if you qualify. This is in-person tax preparation at centers around the country; the returns are prepared by trained volunteers (I volunteered for years at one of these programs). VITA is generally available for low- to moderate-income taxpayers, meaning those at about $49,000 or less. To locate a VITA site, call 1.800.906.9887 or find a site online (and don’t ask why but the phone service has a more exhaustive list than the online service).
- IRS TCE. The IRS offers free preparation for those ages 60 and above through its Tax Counseling for the Elderly (TCE). Like the VITA program, TCE centers are staffed with volunteers. As part of the program, the AARP offers Tax-Aide counseling program at more than 7,000 sites nationwide during the filing season. For more information on TCE, call 1.800.829.1040; that’s the IRS’ general number. If you’re just looking for a Tax-Aide site, call 1.888.227.7669 or visit AARP’s website.
- AFTC Help for Military personnel and their families. Military personnel and their families can receive free tax assistance through the Armed Forces Tax Council (AFTC). Airmen, soldiers, sailors (Go Navy!), marines, guardsmen, and their families can benefit from free tax advice, tax preparation, and assistance. These centers have special emphasis on combat zone tax benefits and the effect of the new Earned Income Tax Credit (EITC) guidelines. Call 1.800.829.1040 to find a center near you. There’s also an IRS podcast for military families about tax assistance – click here to download the podcast.
- Commercial/retail software packages. Most of the popular software packages, like TurboTax, CompleteTax, H&R Block, Tax Slayer and Jackson-Hewitt, offer a free bare bones tax preparation option. In most cases, this means a basic return (like a 1040-EZ) or a limited form 1040. In some cases, free prep is offered for folks with extenuating circumstances: for example, CompleteTax offers free tax prep software if you received unemployment compensation last year. As with anything, read the fine print for any company you elect to use to make sure you know what you’re getting.
- Churches, law firms, fire departments and generally good guys. Not all free tax prep sites are IRS-sponsored. Sometimes, the private sector offers free tax prep services for certain individuals or groups of individuals (firefighters and police officers tend to be popular). Check your local newspapers, radio and TV to see if there are any free tax prep services offered near you.
Free can be good. But free isn’t always free and free isn’t always better.
Be sure to check out any service that you’re planning on using to find out whether there are any hidden fees (e-filing, for example). Be wary of add-ons, or other extras that can jack up the cost from free to well, not free.
Make sure you have a level of comfort with both the level of competence and trustworthiness of the preparer: if something doesn’t feel right, trust your gut. You’re not obligated to use anyone’s services and it’s completely okay to get up and leave. However, please remember that most of these folks are volunteers and they’re trying to do a nice thing, so mind your manners.
Finally, don’t respond to solicitations for free tax prep services online: it could be a scam. Don’t reply to emails or click on links from random companies. Don’t give out personal or financial information via email purporting to be from IRS (they won’t ask via email) or a company with which you didn’t initiate contact.
So lots of options and a little bit of caution. With a little common sense and some help from the good guys, you ought to be able to navigate through tax season just fine.
My mom uses AARP. http://www.aarp.org/money/taxaide/taxpreparation/. I’m pretty sure you just need to be a senior and not a member of AARP. They did a great job and even caught a mistake from another company (they told her to go back to the other company and she got an additional few hundred dollars). Most of them seem to be retired accountants and such. They probably know more than the ones you pay for with their experience!
I have been a volunteer for VITA for many years. I passed the CPA exam in 1996. Despite being currenly unemployed, I am still volunteering my time to VITA as a preparer. My skills stay sharp, and I am doing something I really enjoy. The volunteers must pass a test every year so we remain up to date. I hope that other professionals will consider volunteering, the “thank you’s” make it worthwhile.