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Mailboxes are filling up with W-2 and 1099 forms, heralding the arrival of another tax season.
Last
year's stimulus package unleashed a variety of new and expanded
deductions and credits, for everything from car and home purchases to
energy-efficient upgrades to college tuition. This may the year that
Americans are worried about making mistakes on their taxes. To minimize that, here are some of the best places to find free or cost-effective assistance.
If You Earn $57,000 or Less
Households
earning $57,000 or less -- that's 70 percent of the nation's taxpayers
-- can use the Free File program online, a partnership of the Internal
Revenue Service and 20 tax software companies. Go to www.irs.gov/freefile,
choose a software provider and you'll find step-by-step form that asks
simple questions and then fills in the answers on the tax form for you.
You can file the return electronically, and if you qualify for a
refund, receive it in as little as 10 days. If you owe money, you have
until April 15 to send in payment. Paying with a credit card will incur
fees.
Many states also allow you to do your state taxes and
electronically file them through Free File. (Use the tool called "Help
Me Find A Free File Company" to find a firm that may offer Free File
for your state.) Finally, people who took advantage of the first-time
homebuyer tax credit last year can use Free File, but have to print
their returns, attach proof of their home purchase, and mail everything
in.
If you earn less than $50,000 and want help from a real
person, call the Volunteer Income Tax Assistance Program at
1-800-TAX-1040, which has chapters in many communities. The AARP offers
free assistance to the elderly at 7,000 sites nationwide -- you can
find one at aarp.org or 888-227-7669.
Purchasing Tax Software
Using
tax software is fast and relatively easy, and it will boost the chances
of an accurate return, as well as the odds of getting all the
deductions and credits for which you qualify. The biggest names are
TurboTax from Intuit and Tax Cut by H&R Block, but others include
TaxBrain, Complete Tax and TaxActOnline.com. The price will depend on
your needs, but most people will pay $50 to $100 for the cost of
federal and state preparation, and federal and state e-filing. (Many
people don't realize there is a separate charge for the filing.)
Dan
Green, a married father of three and a public relations executive in
suburban Chicago, has used TaxActOnline.com for the last five years. He
says it takes him about an hour to fill out his 1040 form. He pays
about $15 for electronic filing for his federal taxes and $12 to file
state taxes.
"I was a little skeptical at first because I
thought there would be charges for everything," Green says. "But it was
so simple for me, and I have no accounting background. It takes you
through the process step by step, so it's almost impossible to make a
mistake. After you're done you do a review process, and it tells you if
there are any red flags so you can go back and check."
Check the
software company Web site to see if you qualify for a free version.
Some provide freebies to taxpayers with very simple returns. Also look
for discounted software through your bank, credit union or brokerage.
Fidelity.com, for example, offers a 25 percent discount on TurboTax to
clients. Sites such as couponcabin.com also include discounts for
software.
Look for guarantees that the software provider will
pay penalties and interest if their product doesn't produce an accurate
return. Some providers also offer audit support from a professional.
This
year Green got a $1,500 credit for installing new energy-efficient
windows in his home. "I didn't have to worry about being sure I
received the credit, because I knew TaxActOnline.com would have it
included in this year's program," he says. Which brings up an obvious,
but important point: Make sure the package you purchase is for 2009,
not an older version piled up in a store's bargain bin.
Store-Front Preparers
A
store-front firm is an option for someone with no computer-savvy who
feels utterly helpless in the face of paper tax forms. The biggest
players include H&R Block, with about 13,000 U.S. locations, and
Jackson Hewitt, with 6,000 offices. In this case, the preparer is
basically filling in the software program for you. The cost varies
depending on the complexity of the return, but for most people will run
from $100 to $500. (The companies offer cost estimators, and sometimes
coupons for discounted service, on their Web sites.)
In a tough
economy, many people need their refund checks right away. But just say
no to offers for "refund anticipation loans" -- where you can get your
refund immediately for a fee. The National Consumer Law Center estimates
that 8.4 million refund loans were made in 2008, and taxpayers --
mostly moderate and low-income -- lost $800 million from their refunds
to these short-term loans.
In December, the IRS said it is
scrutinizing refund anticipation loans, and bank regulators are
cracking down as well. Recently, the Office of Comptroller of the
Currency blocked Pacific Capital Bank from making the loans during this
tax season.
Finally, be aware of privacy issues. Tax preparers
just need your signature to sell your confidential tax return
information to marketers, so read all the forms carefully before
signing.
More: http://www.hsengine.com/s?w=online+1099+filing
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