It’s that time of year again for all of us to start thinking about filing our 2015 tax returns.  By now, most of you have gotten the majority of your tax information; the question is, now what?  There are a number of ways of completing and filing your tax return.  For example, you can buy a software package and do it on your own, you could do it by hand (something I don’t recommend for most people), or you can hire a professional.  However, there is another way that you can file your return and the great benefit of this way is that it’s free.  Yes, there is a way for most of you to complete and file your return electronically without cost.  No, there are no gimmicks, it is legitimate.

For more than a dozen years the Internal Revenue Service has partnered with tax software companies to allow you access to their software for free.  Many of the major tax software companies such as TurboTax, H&R Block and Tax slayer are all participants in this program.  In order to qualify for the free software, your adjusted gross income must be less than $62,000.  If your income is less than $62,000 you can take advantage of this program.

Some people may think that because this is a program sponsored by the IRS there must be some gimmick or some catch.  Those people would be absolutely wrong.  The software you would be using is basically the same software these companies sell on the open market.  Therefore, you don’t have to worry that the software is somehow designed to favor the IRS; it is not.  In addition, the question and answer format of the tax software is designed to make sure you are taking all the deductions you are entitled to. Thus, you do not have to be a tax expert to take advantage of the free software.

This year you have 13 software packages to choose from.  The key is that you can’t go directly to these companies’ websites to use their software.  Rather, you must go through the IRS’ website.  If you go to www.irs.gov/freefile you can begin the process.  I should also add that although this program does not include State of Michigan tax returns, some of the software companies will also provide you with free State of Michigan tax preparation services.

We all know that taxes have become more complex and it is more expensive than ever to have your return professionally prepared.  According to the IRS, about 70 percent of Americans are eligible to use the free tax software service.  Particularly for people who have straightforward tax situations such as income from wages, bank accounts and normal deductions such as mortgage interest, property tax and charitable contributions, they should look to take advantage of this program.  Those who have complex tax situations may wish to consult a professional.  However, for a substantial number of people, you can save significant monies by taking advantage of the IRS’ program.  My philosophy has always been that money looks better in your pocket than it does anywhere else.  Therefore, I encourage more and more of you to take advantage of the IRS’ program.  After all, just think how good you will feel knowing that as opposed to paying the IRS, you actually received something worthwhile for free.

Good luck!

Rick is a fee-only financial advisor.  His website is www.bloomassetmanagement.com.  If you would like Rick to respond to your questions, please email Rick at rick@bloomassetmanagement.com.