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New program helps taxpayers

Posted: January 23, 2009 8:44 p.m.
Updated: January 24, 2009 4:55 a.m.
 
Editor's note: Second in a series on electronic filing.

Most taxpayers and tax preparers this year will use IRS e-file to file their tax returns or get extensions of time to file. During this process, they will not have to send a single scrap of paper to the Internal Revenue Service.


The IRS expects the total number of individual tax returns, both electronic and paper, to reach about 140 million in 2009. And it expects e-file returns to exceed last year's record of nearly 90 million taxpayers.

Free File
The IRS Free File program is a free federal online tax preparation and electronic filing program for eligible taxpayers developed through a partnership between the IRS and the Free File Alliance LLC, a group of private-sector tax preparation companies.

The program enables eligible taxpayers to use commercial tax software for free. And for the first time in 2009, it will also offer Free File Fillable Tax Forms, similar to their paper counterparts, that any taxpayer, regardless of income level, can fill out and file electronically on IRS.gov. Nearly all taxpayers are eligible to use Free File Fillable Tax Forms, regardless of income.

Since the inception of Free File, more than 24 million taxpayers have taken advantage of this free program. Nearly five million taxpayers used Free File in 2008.

This was a 24 percent increase over the prior year. The program is accessible only through IRS.gov. Both new and returning taxpayers must access Free File through IRS.gov. Otherwise, the e-file provider may charge them a fee.

For the 2009 filing season, 98 million individual taxpayers (70 percent of all taxpayers) will be eligible to use Free File. Taxpayers must have an adjusted gross income of $56,000 or less to be eligible for the program. Free File is available in both English and Spanish on IRS.gov.

While some companies offer free state income tax preparation and e-filing services, others may charge a fee for state tax return preparation and e-filing. Look for details on eligibility requirements on IRS.gov beginning in mid-January 2009.

Low-cost filing
The IRS partners with many private sector tax preparation businesses that prepare and e-file federal, and in most cases, state income tax returns, at a nominal charge to the taxpayer. Some of the companies offer Spanish versions of online and downloadable software.

There is no income limitation. Taxpayers not eligible for Free File should see the listing of these companies beginning in mid-January 2009.

Personal computer
Taxpayers can easily prepare and e-file their own tax returns. A computer with Internet access and IRS-approved tax preparation software are necessary. This software is available on the Internet for online use or download and in retail stores for offline use.

Some companies offer their software content in Spanish as well, and this year some off-the-shelf software will permit taxpayers to file their federal returns for free.

In addition to error checks built into the tax preparation software, additional checks are done during the transmission process. So it is important to e-file the return once you have completed it to get all the benefits e-file offers. E-filing a return reduces the chances of an error or receiving a notice from IRS.

If a problem is found during the preparation or transmission process, the taxpayer can correct it and resend.

Taxpayers also receive acknowledgement that their returns were received by the IRS.

In 2008, 26.9 million taxpayers e-filed their returns from home, 19.4 percent more than the year before.

This information was provided to The Signal by the IRS.


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