Probably the only word in the English dictionary that I like more than on sale is the word free. I love free stuff; however, I am always leery any time I get an offer stating something is free. My general view is that there are no free rides. That being said, there is something many of you should take advantage of that is free, can save you money and has no gimmicks. I am referring to the IRS free-file program.
The IRS free-file program has been around for nearly 20 years and over 50 million Americans have taken advantage of it. The free file program is a way for taxpayers to use software from private tax preparation companies for free. Most of the major tax software companies participate in this program and basically the only requirement to qualify is that your adjusted gross income must be less than $69,000.
I know many of you are thinking that if this is a tax preparation program connected with the IRS, there must be some catch – there is not. The software you would be using is the same software these companies sell on the open market. Therefore, you don’t have to worry that the software is geared to be favorable to the IRS or anything of that nature; that is not the case. It is also important to remember that the software programs use a question and answer format to make sure you’re taking all the deductions you’re entitled to. Thus, you don’t have to worry if you’re not a tax expert. These software programs assume that you are not. For the great majority of people who qualify for the free-tax program, they should have no difficulty in completing their returns accurately.
I’ve seen numerous ads over the years from companies offering free-tax software or things of that nature. Some of these offers are legit; however, a good portion of them are not. In many cases they are scams seeking to obtain your sensitive information. Therefore, you must be very cautious in using any so called free software. When you use the free-tax file program through the IRS you can be assured you’re dealing with reputable companies. That being said, the key to the IRS free file program is that you must link to the software directly through the IRS website.
The question many of you may be asking is who should take advantage of this program. I believe if you have a relatively straightforward tax situation where you have wages, some interest and dividends along with normal deductions such as mortgage interest, property tax and charitable contributions, this program will work for you. In addition, for those of you who are now taking the standard deduction, the IRS free-tax file program may be perfect for you. For those with more complex tax issues you may want to look for a different alternative.
For as long as I’ve been in the financial world my philosophy has always been that money looks better in your pocket than it does anywhere else. Therefore, if you can save yourself hundreds of dollars in tax preparation fees by doing your tax return yourself, why not. Therefore, I encourage many of you to look into this program and take advantage of it. After all, won’t it feel great to get something from the IRS that actually saves you money?
One last note, for those of you who are getting a tax refund, the sooner you do your return, the faster you’ll get your refund.
Rick is a fee-only financial advisor. If you would like Rick to respond to your questions, please email Rick at email@example.com.