IRS Tax Tips – Free Tax Preparation

Ten (10) IRS Tips about Free Tax Preparation

Each year, millions of people have their taxes prepared for free. The IRS’s Volunteer Income Tax Assistance or and Tax Counseling for the Elderly programs have helped people for more than 40 years. Many people know these programs by their initials. Here are 10 tips from the IRS about VITA and TCE:

  1. Trained and Certified.  The IRS works with local community groups to train and certify VITA and TCE volunteers.
  2. VITA Program.  VITA generally offers free tax return preparation to people who earn $53,000 or less.
  3. TCE Program.  TCE is mainly for people age 60 or older. The program specializes in tax issues unique to seniors. AARP participates in the TCE program and helps people with low to moderate incomes.
  4. Free E-file.  VITA and TCE provide free electronic filing. E-filing is the safest, most accurate way to file your tax return. Combining e-file with direct deposit is the fastest way to get your refund.
  5. Tax Benefits.  Using VITA and TCE can help you get all the tax benefits for which you are eligible. For example, you may qualify for the Earned Income Tax Credit or the Credit for the Elderly. You can also get help with the new Health Care Law tax provisions.
  6. Bilingual Help.  Some VITA and TCE sites provide bilingual help for people who speak limited English.
  7. Help for Military.  VITA offers free tax assistance to members of the military and their families. Volunteers help with many military tax issues. These may include the special rules and tax benefits that apply to those serving in combat zones.
  8. “Self-Prep” Option.  At some VITA sites, you can prepare your own federal and state tax returns using free web-based software. This is an option if you don’t have a home computer or need much help. Volunteers are on site to guide you if you need help. In most cases, this option offers free tax return preparation software and e-filing to people who earn $60,000 or less.
  9. Local Sites.  The IRS partners with community organizations to offer free tax services at thousands of sites around the nation. Sites start to open in late January and early February.
  10. Visit IRS.gov.  You can visit IRS.gov to find a VITA site near you. Search the word “VITA” and click on “Free Tax Return Preparation for You by Volunteers.” Site information is also available by calling the IRS at 800-906-9887. To locate the nearest AARP Tax-Aide site, visit aarp.org, or call 888-227-7669.

 

IRS Free File Program

IRS Free File Program

Should I use “Free File Software” or “Free File Fillable Forms”?  Use “Free File Software” if your income is $60,000 or less and “Free File Fillable Forms” if your income is greater than $60,000.

IRS Free File is a partnership between the IRS and the Free File Alliance, a group of industry-leading private-sector tax preparation companies that have agreed to provide free commercial online tax preparation and electronic filing.

The IRS does not endorse any individual Free File Alliance company or retain any taxpayer information entered on the Free File site.

Are these programs safe? Your information is protected from any unauthorized access while it is sent to the IRS. The companies may not disclose or use tax return information for purposes other than tax return preparation without your informed and voluntary consent. These companies are also subject to the Federal Trade Commission Privacy and Safeguards Rules and IRS e-file regulations.

What information will the IRS collect or retain about me using Free File? IRS policy prohibits the use of permanent Internet cookies. IRS sometimes use “temporary” or “session” cookies to make sure you are the correct recipient of information you requested. These are deleted when your Internet visit ends.

What can I do if I am not able to get into a Free File company from the IRS.gov website? This problem may be due to your Internet service provider, your Internet security software and/or your IT department blocking expected information in the web request from your browser. This information is necessary to protect both you and IRS.gov systems from improper use such as phishing and other security threats. Unfortunately, due to the many differences between Internet browsers and individual computer configurations, IRS is unable to suggest Internet settings or configurations for you. Try selecting another company; use another computer or another browser.

Free File Software” provides free federal tax prep and e-file for taxpayers. Select a brand name software program, create an account and then the software guides you through return preparation.

  • Use free brand-name software to prepare and print.
  • Software guides you through return preparation.
  • Need Help with an error or the software? Contact the company for free customer service.
  • State return preparation and e-file is available for free but fees may apply.
  • Available if your Adjusted Gross Income (AGI) was $60,000 or less in 2014.
  • Offers the most commonly used forms.

File Fillable Forms” is a FREE forms-based tool enabling you to select your income tax forms, enter your tax information, print and e-file your federal tax return. If you’re not comfortable completing a paper return by hand, without software to guide you, you should consider another method of filing your tax return.

  • The program performs only basic calculations.
  • The program doesn’t have extensive error checking.
  • Are you a first time user? Check out the User Guide before you begin.
  • Make sure to check your work before you e-file.
  • You are responsible for all the information on the return.
  • State tax return preparation is not part of the program.
  • You can only file your current year tax return.
  • Once your return is accepted, you can’t make changes with this program.
  • Need Help?  If your return was rejected, you may use the IRS Help page to fix the problem.
  • If you can’t fix your problem, use another e-file program.
  • Important:  If you have an older browser, make sure to update your version to get a better experience. Outdated browsers are known to cause display and printing errors.

Taxpayer Bill of Rights #6 – The Right to Finality

Taxpayer Bill of Rights #6 – The Right to Finality

  • The IRS generally has Three (3) Years from the date your return was filed to assess the tax. There are some limited exceptions to the 3-Year Rule, however, including not filing a return or filing a fraudulent return.
  • The IRS generally has Ten (10) Years from the Assessment date to collect unpaid taxes from you. This Ten-Year period cannot be extended unless you are entering into an Installment Payment Agreement or unless the IRS reduces the Lien to a judgment.
  • If you believe you have overpaid your taxes, you can file a Refund Claim asking for the money back. Generally, you must file a Refund Claim within 3 Years from the date you filed your original return or 2 Years from the date you paid the tax, whichever is later.

Taxpayer Bill of Rights #5 – The Right to Appeal an IRS Decision in an Independent Forum

Taxpayer Bill of Rights #5 – The Right to Appeal an IRS Decision in an Independent Forum

  • The Commissioner must ensure an independent IRS Office of Appeals that is separate from the IRS Office that initially reviewed your case. Generally, Appeals will not discuss a case with the IRS to the extent that those communications appear to compromise the independence of Appeals.
  • If the IRS has sent you a notice proposing additional tax (i.e., a Statutory Notice of Deficiency), you may dispute the proposed adjustment in the United States Tax Court before you have to pay the tax.
  • Generally, if you have fully paid the tax and your tax refund claim is denied or if no action is taken on the claim within six months, then you may file a refund suit in a United States District Court or the United States Court of Federal Claims.

Taxpayer Bill of Rights #4 – The Right to Challenge the IRS’ Position

Taxpayer Bill of Rights #4 – The Right to Challenge the IRS’s Position and Be Heard

  • If you are notified by the IRS that your return has a mathematical or clerical error, you have 60 days to tell the IRS that you disagree. If the IRS is not persuaded, it will issue you a Notice proposing a tax adjustment. The Notice provides you with a right to challenge the proposed adjustment in Tax Court by filing a petition within 90 days of the date of the notice.
  • Before the IRS takes enforcement action to collect a tax debt by Levying, for example, your bank account, or immediately after the IRS files a Notice of Federal Tax Lien in the local county property records, the IRS must generally provide you with an opportunity for a hearing before an independent IRS Appeals officer, and if you disagree with Appeals’ determination, you can go to Tax Court.

Taxpayer Bill of Rights #3 – The Right to Pay No More Than the Correct Amount of Tax.

Taxpayer Bill of Rights #3 – The Right to Pay No More than the Correct Amount of Tax

 

  • If you believe you have overpaid your taxes, you can file a refund claim asking for the money back.
  • You can submit an Offer In Compromise (OIC) of your tax debt asking the IRS to accept less than the full amount if you believe you do not owe all or part of the tax debt – Offer In Compromise (Doubt As To Liability).

 

 

Taxpayer Bill of Rights #2 – The Right to Quality Service

Taxpayer Bill of Rights #2 – The Right to Quality Service

  • IRS Mission Statement: Provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.
  • When collecting tax, the IRS should treat you with courtesy. Generally, the IRS should only contact you between 8 a.m. and 9 p.m. The IRS should not contact you at your place of employment if the IRS knows or has reason to know that your employer does not allow such contacts.
  • Generally, you can speak to an employee’s supervisor if you have a problem.

TAX ALERT – The “Individual Shared Responsibility” Provision for Individuals & Families – Affordable Care Act (ACA)

TAX ALERT – The “Individual Shared Responsibility” Provision for Individuals and Families – Affordable Care Act (ACA)

 

Almost everyone will need to do something new when they file their tax return this year.

The “Individual Shared Responsibility” provision, which is an important part of the Affordable Care Act, calls for taxpayers to have qualifying health care coverage, qualify for a health coverage exemption or make a payment.

Reporting Health Care Coverage

 

Qualifying coverage” — also called “minimum essential coverage” — includes most

employer-sponsored coverage, coverage through most government-sponsored programs like Medicare, Medicaid and CHIP, and coverage purchased through the Health Insurance Marketplace.

If you and everyone else on your tax return had “qualifying health care coverage”, you will simply check a box to report that coverage when filing your return in 2015. For each

month in 2014 that anyone on your return does not have qualifying health care coverage or qualify for a health coverage exemption, you will need to make an “individual shared responsibility payment”.

Everyone on your return needs to maintain their qualifying health care coverage in 2015.

Claiming a Health Coverage Exemption

You may qualify for a health coverage exemption if you meet one (1) of the following:

  • You did not have access to coverage that is considered affordable because the minimum amount you must pay for the annual premiums is more than eight percent (8%) of your household income,

  • You had a gap without coverage of less than three (3) months, or

  • You qualify for one of several other exemptions including having a hardship that prevented you from obtaining coverage or you were a member of a group explicitly exempt from the health coverage requirement.

How you obtain a health coverage exemption depends upon the type of exemption. You must apply for some exemptions through the Marketplace in the area where you live. Other exemptions are claimed only when filing an income tax return. Finally, some exemptions may be granted by the Marketplace or claimed when filing a tax return. Unless you must obtain your health coverage exemption through the Marketplace, you can claim the exemption on your 2014 income tax return filed in 2015. You will use IRS Form 8965, “Health Coverage Exemptions”, to report a coverage exemption granted by the Marketplace or to claim a coverage exemption on your tax return.

 

Making an “Individual Shared Responsibility” Payment

If anyone on your tax return does not have qualifying health care coverage for each month of the year and does not qualify for an exemption, you must make an individual shared responsibility payment when filing your federal income tax return in 2015.

In general, the annual payment amount is the greater of:

  • One (1%) percent of your household income above the filing threshold for your filing status (e.g., unmarried, married filing jointly, etc.), or

  • $95 per person without coverage or an exemption ($47.50 per individual under age 18), but limited to a family maximum of $285.

You will owe 1/12 of the annual payment for each month you or another person on your

tax return doesn’t have either qualifying health care coverage or a coverage exemption.

Your individual shared responsibility payment cannot exceed the national average premium for a bronze-level health plan available through the Marketplace, which, for 2014, is $204 per month per person.

The instructions for IRS Form 8965 provide the information you will use to calculate the

payment that will be reported on your federal income tax return.

You can electronically file IRS Form 8965. Filing electronically may be the best way to file a complete and accurate return. By electronically filing your tax return, many common errors may be avoided or corrected by the computer software. Depending on your income, you may even qualify to “e-file” for free by using “Free File” tax software.

 

“IRS-gov” has up-to-date information that can help you right away. This includes easy-to-use tools to help answer tax questions, such as, the “Interactive Tax Assistant” or the IRS “Tax Map”, each designed to help find answers to tax questions quickly and easily.

More information about the Individual Shared Responsibility provision can be found in IRS Publication 5187, “The Health Care Law: What’s New for Individuals & Families” or at “IRS.gov/aca”.

Taxpayer’s Bill of Rights #1 – Right To Be Informed

Taxpayer Bill of Rights #1 – The Right to Be Informed

  • Certain notices must include the amount (if any) of the tax, interest, and certain penalties you owe and must explain why you owe these amounts.
  • All notices fully or partially disallowing your refund claim must explain the specific reasons why the claim is being disallowed.
  • If the IRS proposes to assess tax against you, it must provide you in its initial letter, which allows for review by an Appeals officer, an explanation of the entire process from examination (audit) through collection and explain that the Taxpayer Advocate Service may be able to assist you.