Hello fellow Tax Payers! It will not be long until Tax Time is upon us. In today's blog post, my goal is to help you by-pass the horribly expensive route of filing your Taxes at a tax Firm...Paying $300.00 - $?00.00 in Bank and Preparation Fees.
I worked for a major Preparation Firm for 6 years seasonally. Each year, at the November Holiday, they begin sending out mailings and spend millions in advertising to get tax payers into their greedy hands. This begins the process of attaching high interest loans to your Anticipated tax refund. Please do not take this to mean that many, many people do not need a Tax Professional to assist and prepare taxes for them, but the lower income Individuals and Families often Do Not. It is the Low Income, and Earned Income Credit folks that are the Cream and Butter of Tax Prep Firms.
During the first part of Tax Season, the lower income people pour in, getting Loans that are usually 95% interest, all the way up to 300%+. This is so the Poor families can Get Their Money ASAP! It is a trend that many "loyal tax customers" have been locked into for 8 years. If you do not get anything else I write, get this: You can File your own taxes on-line, Free. If you have it Directly Deposited into a bank or even mailed, you will have your money (if your information is correct, your return is not rejected for errors, and no other weird delays occur) in less than 2 Weeks. Usually 8 - 10 days.
In our State and many surrounding States the average Tax Payer does Not "net" (bring home) more than $300.00 per week. On average in the Southern U.S., tax payers who make $50,000.00 per year do not "net" more than $700.00 per week. Having Federal, State (unless your State does not collect Income Tax), Social Security/Medicare (FICA), Insurance, Union Fees, HSA and any other deductions taken from your check or direct deposit before you get it does not leave much available income.
If your tax return is simply Earned Income, you can probably file your own taxes without paying an extra dime. If it is too hard for you to understand how to fill out a US Tax Return without assistance, You can use Tax Software through the IRS website for a low upfront price, and sometimes Free.
I want to help you navigate the Free File Website Provided by the IRS. I want to help you keep more money for your precious family and home. Earlier, the Fees I mentioned were only the Bank Fees on each Tax Return, this was not even what you are charged for Preparation Fees, and the Insurance that is quickly added to your return, as a practice, and only brought to your attention at "signing" time, where the Preparer is sticking form after form in your face, telling you to "sign here". They will say something like, "and we have included _________ guarantee, or _________ assurance / insurance, that if there are any errors on your return, it will pay any extra taxes .... " Preparers are strongly trained to include the guarantee on every return, they are often given extra bonuses for including it on every return. They are scolded and terminated if there are a big lack of Insurance Fees included.
The extra guarantee is around $29.00. Here again, Please get what I am saying - This is Important information. If your return is "simple", meaning Only, that your return is W-2 income only, any errors on that type of return would be on the Tax Firm. They still would not be responsible to pay the possible extra tax liability, if you owed any extra taxes. On a simple return, the possibility of a greater tax liability is rare. It does not pay for fraud, or omission (not including all information), of income by the tax payer. The Tax Payer is always responsible for their taxes and tax return. That also goes for withholding on your payroll checks. The employee is responsible to make sure enough taxes are being withheld from their return. It is the tax payer who is responsible.
Most W-2 only returns, do not need the extra insurance, guarantee, or assurance. BUT - if your tax return is complicated, it will be the best $29.00 you ever paid. There were many returns I prepared, that I refused to complete without the Guarantee, because mistakes on that level usually take the IRS a year or two to find, and on the complicated returns, chances are there will be extra Tax Liability. One more note, many tax payers who approached me would attempt to get pricing on their return, I would ask, How complicated is it?, the person would answer; not too complicated...9 times out of 10, it was complicated enough it would take them 4 - 14 hours or more to prepare it themselves.
I am going to attempt to navigate you through the Free File page at the IRS Website (link at top of page), and help you find the best product for you. Once you have made the decision to Free File, I would advise you to ALWAYS enter your product through the IRS Website. This will prevent some of the scandalous practices of Tax Software providers. (TaxSlayer used to be a company I recommended highly, but No More. I first filed, using their software through the IRS Website, and it was Free, then the next year it was more expensive, because I used their Links emailed to me, instead of the IRS website. This year, when I filed using their software, their software did not catch an error on my State Return...it should not have let me file any of my return. An error message should have stopped the process. It did not. My Federal went through. They charged me the highest price ever. They charged me for State filing, a product I did not receive.
Over the course of several years, I had referred several customers to them. I contacted them, which was not easy. And, I was never able to speak to a live person. I will not use, or recommend TaxSlayer again.
I am a tax professional, I could have done it on paper and mailed it in, but I know the importance of having a record of tax filings, and being low-income that first year, it was Free. If I would have used the IRS links to their website this year (2009 taxes), it would have been Free. If this can happen to a person who has prepared Taxes for over 30 years. I feel for the uninformed tax software customer.
- Go to http://www.irs.gov/ - there is a link at the top of this page, but only use this for information...when you are ready to really file, go to the IRS website directly.
- This page is in two halves. The top of the page: is the "traditional free file - I want tax software with step-by-step help. There are two "push buttons" a). "I will choose a Free File Company", and b). "Help Me Find a Free File Company"
- On this top of the page, there are many companies with different products. By letting the IRS help you choose, you will get the best product for your income level. Keep in mind, until your return is actually "filed", you can change software companies.
- If you choose the "I will choose..." push-button on the top half of this page, will issue you a warning, "You are about to leave the IRS website, do you want to continue?" Say Yes.
- If you let the IRS help you choose, you will come to another IRS page, (link) Information about what to look for and steps to take income limits, and possible charges to watch for.
- There are 6 Questions to answer so the IRS software finder can best assist you. You will need to know your filing status. Your approximate adjusted gross income, your State, if you are possibly eligible for Earned Income Credit, and if you and/or your spouse is Military.
- On each question (except State), there is a link you can click on for further definition. The links will help you find the answer or approximate answer to the question. Remeber, you can always go back.
- When you have completed that, you will then get a message that says, "you are about to leave the IRS website. Just say yes. [At this time the IRS is giving an error, I have sent them a message and finish] - There should be a listing from the best match first of the companies that can best help you.
- Keep in mind, the more help you request from Tax Software companies, the more they can charge. Keep track of your time and what they are charging you.
- August 14, 2010 - This is a time of transition as far as the IRS is concerned, many tax rules and codes are being adjusted according to what Congress does...so this will be updated accordingly.
The Second Half of the Free File Page
"Free File Fillable Forms - I want to fill in the tax forms and file them online without tax software"
There are Two Push Buttons here as well:
- Start my Free File Fillable Forms
- Finish my Free File Fillable Forms
FFFF (Free File Fillable Forms) is just like old school filling out paper forms, except it is on-line, and you can link directly to the IRS for further information. This is completely free, no matter the income limits, and complexity. This is Federal only. Who knows, perhaps they will develop links to the States soon.
Coming Soon...FFFF (no, not the Fabulous Furry Freak Brothers! - Free File Fillable Forms!)