Filing Taxes without Breaking the Bank
As you may have noticed this tax season, there’s no shortage of options for filing your taxes. For those who need it, IRS has several options to file taxes (or receive tax preparation assistance) for free.
Today’s WatchBlog looks at these and other tax-filing options, from our recent report on tax refund-related products. Read on and listen to our podcast with Michael Clements, a director in our Financial Markets and Community Investment team, to learn more.
IRS’s free filing options
IRS offers several options for taxpayers—primarily those who are lower-income, elderly, have limited English proficiency, or who have disabilities—to file their taxes for free or to get some free assistance:
- Fillable forms. IRS offers forms that can be completed online and electronically submitted to IRS. The forms are available without age, income, or residency restrictions.
- Free file software. IRS, in partnership with the Free File Alliance (members of the tax software industry), provides free online filing options to eligible taxpayers. Twelve leading tax software providers make a version of their products available exclusively at IRS.gov for taxpayers with an adjusted gross income up to $66,000 (in 2018).
- Volunteer Income Tax Assistance. This program provides free basic income tax preparation with electronic filing by IRS-certified volunteers to qualified individuals, including to persons who earned $55,000 or less in 2018, have disabilities, or have limited proficiency in English.
- Tax Counseling for the Elderly. This program provides free tax preparation by IRS-certified volunteers to all taxpayers, particularly those 60 or older. Program volunteers specialize in pension- and retirement-related issues unique to seniors.
Products to defer tax preparation fees
If you’re looking to pay for a tax preparer or software to help you file taxes, products known as refund transfers can help you defer paying these costs. A refund transfer is a bank product offered by many tax preparation companies that allows taxpayers to pay for preparation services after they get their refund. In 2018, more than 21 million taxpayers used a refund transfer.
However, refund transfers are not free. We found that the cost for refund transfers generally increased in 2018, and ranged from about $12-$40 for online software, and from about $40-$65 for tax preparers.
We also found that tax preparers may not post or otherwise disclose fees associated with refund transfers until you have already given them your tax information, which might not be helpful if you want to comparison shop for these products. Our report discusses these disclosure practices in greater detail.
And if you just don’t think you can get your taxes done in time for today’s deadline, you can always file for an extension.
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