Mediaboss Marketing

How about getting them done for free or, for do-it-yourselfers, finding free tax-preparation software. There are many freebies around, but relatively few people take advantage of them, generally because its easier to pay someone to do it. If your taxes are complex, thats money well spent. But if they are fairly simple, here are some free options.

IRS Free File: If your adjusted gross income is $64,000 or less, you can get free software to prepare and electronically file your federal return from at least one software company, but depending on your age and income, it might be one youve never heard of. To get these free offers, start at http://www.irs.gov/freefile and choose an offer from one of the 12 tax-software companies participating in the Free File Alliance.

The alliance agreed to provide free software to low- and moderate-income people in exchange for a pledge from the IRS not to enter the tax preparation software and e-filing services marketplace.

Stanford Law School Professor Joseph Bankman says the IRS could pretty easily provide all taxpayers with a free tax return with most of the information filled in. It already gets that information from employers, financial institutions and other sources and lets you know if youve entered it incorrectly. But the industry, led by Mountain Views Intuit, the maker of TurboTax, has lobbied heavily against this, saying that its a conflict of interest to have the government collect taxes and prepare returns.

Under the current agreement with the IRS, each company must make software available to between 10 and 50 percent of U.S. taxpayers. As a group, the alliance must make free software available to taxpayers with an adjusted gross income equal to or less than 70 percent of all U.S. taxpayers. For tax year 2016, thats anyone with income of $64,000 or less.

Youd think people would be clamoring to use Free File, but last year only 2.6 million tax returns, or 1.7 percent of all those filed, came through it. Many taxpayers dont know about Free File, or find it confusing because each company has different eligibility requirements to satisfy the IRS agreement.

TurboTax offers Free File to people making up to $33,000 (or $64,000 for active-duty military or people eligible for the earned income credit). H&R Block goes up $64,000, but only if you are between ages 17 and 50. Some offers exclude certain states and some charge for a state tax return.

If you qualify for Free File, you will be able to prepare and electronically file almost any federal form or schedule, but you wont be able to import information from last years tax return or your W-2 or 1099 forms; you will have to enter this information yourself.

Company websites: If you dont qualify for Free File and your taxes are simple, you can find free offers by going directly to companies websites. TurboTax offers Absolute Zero, which lets anyone file federal Form 1040A or 1040EZ, along with a state return, for free. H&R Block More Zero lets you file Forms 1040EZ, 1040A and 1040 with Schedule A (itemized deductions) and a state return for free.

Free for (almost) all: New to the game this year is Credit Karma, best known for its credit scores and reports. It recently acquired software maker AFJC Corp. and is now offering free online preparation (federal and most states) for about 90 percent of Americans, said Ken Lin, CEO of the San Francisco company.

Its free offer covers all Form 1040 versions and most schedules, but it cant handle a few things such as foreign earned income, multiple-state filings and married couples filing separately in community property states (including California). Unlike some competitors, it does not let you import information from last years tax return or your W-2 or 1099 forms.

The catch: You will get offers for products based on information in your tax return unless you opt out. Credit Karma does not sell or share your tax information with third parties, but we are using it for marketing purposes, Lin said.

In-person help: Several government and nonprofit groups offer free, in-person tax preparation by trained volunteers, primarily for middle- and lower-income people (including undocumented immigrants). In the Bay Area, you can find these centers by dialing 211 or going to http://www.earnitkeepitsaveit.org. This program, sponsored by United Way Bay Area, can refer you to a variety of programs including Volunteer Income Tax Assistance (an IRS program known as VITA), AARP Tax-Aide and Tax Aid, a local group not affiliated with AARP.

VITA is officially for people earning up to $54,000, but exceptions might apply for those who make more, said the United Ways Vanessa Muiz. VITA volunteers can handle most individual tax returns, but cannot serve people who are married filing separately, or have a business with employees, more than $25,000 in expenses or are deducting business use of a home.

The AARP Tax-Aide centers have no income or age limits but are designed primarily for lower- and middle-income people and specialize in tax issues affecting older people. They cant handle certain situations, such as depreciation or rental income, but some centers can do more than others, so its best to call before visiting a center. Some take appointments. Be sure to bring your ID and all tax documents.

Priya Vashist, an international student and teaching assistant at San Francisco State, got her taxes done at a VITA center at the university last week. She said it took four people and about two hours but it all went OK in the end.

Free fillable forms: For do-it-yourselfers who dont qualify for Free File, the IRS offers free fillable forms. These are just electronic versions of paper returns that let you enter information with a keyboard instead of a pen. The programs will do some math computations but not others. Oddly, the system wont calculate your tax, something youd think the IRS would want you to get right. You can e-file these forms.

CalFile: Most California taxpayers can file their state tax return online for free using CalFile, sponsored by the Franchise Tax Board, but last year only about 1 percent did.

With a Basic CalFile account, you dont need a PIN, but must enter everything manually. With a Deluxe Account, you will have to wait for a PIN in the mail, but you will be able to view and import data from last years tax return, California wage and withholding information, estimated payments and other data the state has on you. (If you get a PIN, dont wait too long to activate your account.)

The income limits to use CalFile are high $182,459 for single and $364,923 for joint returns. But some things will exclude you, such as capital gains or losses, business income, rental income, distributions from a retirement account before age 59 and Roth IRA conversions.

Kathleen Pender is a San Francisco Chronicle columnist. Email: kpender@sfchronicle.com Twitter: @kathpender

Where to get free tax-filing software and preparation

IRS Free File: Start at http://www.irs.gov/freefile and click through to a companys site to get free software for filing your federal (and in some cases state) return.

Free in-person tax prep: Go to http://www.earnitkeepitsaveit.org to find centers staffed by VITA, AARP Tax-Aide and other trained volunteers in the Bay Area. (For Sonoma County, go to http://bit.ly/2lhSgrZ). Or dial 211.

For AARP Tax-Aide centers only: Go to aarp.org/taxaide or call (888) 227-7669.

What to bring to your appointment: https://www.irs.gov/individuals/checklist-for-free-tax-return-preparation

Free fillable IRS tax forms: http://bit.ly/2nkeRW3

To file your California state tax return online for free: https://www.ftb.ca.gov/online/calfile. For help with account registration or PINs, call (800) 353-9032.

See the original post here:
How to get your taxes done, or do them yourself, for free - San Francisco Chronicle