2015 Tax Filing Options

2015 Tax Filing Options
Eileen St. Pierre, The Everyday Financial Planner

funny-dog-new-tax-codesThe 2015 tax filing season began on January 19. Last year, at least 91% of returns were e-filed according to efile.com – over 50 million of us prepared and e-filed our returns ourselves. The average direct-deposit refund was $2,935, up 1.1% over the previous year. If you do plan on having your taxes done, make sure you know your tax filing options before you shell out money to a perfect stranger.

You have four basic options if you choose to e-file:

Free File

For those with an adjusted gross income (AGI) of $62,000 or less, the IRS offers a special Free File program. Free software is provided by the members of the Free File Alliance, a consortium of 13 tax preparatory firms including H&R Block and Turbo Tax. You don’t actually download the software. Instead, you are linked securely to their site. Then the software takes you step-by-step through the process, building your return for you based on your answers to specific questions.

  • If you qualify for this program, choose a provider from the list that also offers free e-filing of your state return.
  • Too confusing? The IRS has a neat wizard tool that will help you find providers.

Update on 1/30/16: The United Way has partnered with H&R Block to offer a free service MyFreeTaxes for those with an AGI below $62,000. This includes both federal and state return filing. When you are transferred to H&R Block, make sure the MyFreeTaxes logo is in the upper left-hand corner after you log in.

Online Fillable Forms

Regardless of your AGI, anyone can use online fillable forms that are electronic versions of the IRS paper forms. You can then e-file for free. This option is good for those who want to fill out the forms themselves, but don’t want to wait for their refund to come in the mail. However, this system does not support state tax returns and only does basic calculations.

Buy Software.

If you don’t qualify for the Free File program and you want to prepare your return using tax software, you can always buy your own software. E-file through your software vendor’s secure channel (don’t email it). Make sure you do your homework before purchasing software.

  • I have personally used software from Turbo Tax and H&R Block, and found both very easy to use.
  • Watch out for extra fees, referred to as value-added offers.

Pay someone to do it for you.

Finally, you can e-file through a paid tax preparer. Make sure the preparer is properly certified. They must have an IRS Preparer Tax Identification Number (PTIN). Always remember that you are ultimately held responsible by the IRS for what is on your tax return – ignorance is not a defense.

Don’t forget about VITA.

For those making $53,000 or less, you can get your taxes done for free at a VITA (Volunteer Income Tax Assistance) site. IRS-certified volunteers provide free basic income tax return preparation with electronic filing. Some sites offer assistance in Spanish and other languages. To find a VITA site in your community, use the  IRS VITA Locator Tool or call 1-800-906-9887. The IRS also has the Tax Counseling for the Elderly (TCE) Program that offers free tax help to taxpayers who are 60 and older.

Be aware of tax identity theft.

E-filing has also become popular with identity thieves. They use stolen Social Security numbers and other information to file fake returns and collect the refund that was supposed to go to you. Taxpayers don’t realize they are victims until they try to file their taxes and find out someone else has already claimed their refund. Read my  Tax Identity Theft column for tips to avoid this type of identity theft and what to do if you become a victim.

It’s still safer to e-file your taxes than send them in by mail. Of course, the easiest way to protect your data is to do your taxes yourself! Visit my Taxes page for more information.