Free Tax Filing and returns can be very complex, depending on the income. All the information provided to the IRS should be accurate to get a refund. Besides, the filing should be done so that the refunds are high.
You can file for returns yourself or you can take the help of a professional tax preparer. Professional tax preparers not only help in preparing the forms but also provide advice for obtaining maximum returns. There are certain forms tha have to be filled for paying taxes as well as applying for any eligible refunds. The basic form 1040 (or 1040EZ or 1040A) has to be filled by everyone, apart from any other forms. Form 1040 is meant for all kinds of incomes, if the annual income is more than $50,000. This form is also used for itemizing deductions when not applying standard deduction. 1040EZ is for single people or when married and filing jointly. The applicant should not have any dependents, should be less than 65, not blind, and taxable income (from certain sources) is less than $50,000, the earned interest is less than $400 and deductions are not itemized. Form 1040A is for people who have annual income less than $50,000 and have itemized deductions.
The forms can be obtained from the public library or IRS. After selecting the right form, prepare the return using W-2s (wage and tax settlements given by the employer), 1099s (dividend and interest forms given by banks, mutual funds and other investments), and other receipts. Attach all the required documents to the form including the payment voucher form 1040-V (if required). Make sure that you sign the form and the social security number on the form is correct.
The information required for Free Federal Tax Preparation is: wage statements (Form W-2), Pension, or retirement income (1099-Rs), Social Security card(s), driver's license(s), dependents' Social Security numbers and dates of birth, last year's tax return, information on education expenses, commissions received and/or paid, sales of stocks and/or bonds, self-employed business income and expenses, lottery and/or gambling winnings and losses, state refund amount, social security and/or unemployment income, income and expenses from rentals, Alimony paid or received, record of purchase or sale of real estate, medical and dental expenses, real estate and personal property taxes, estimated taxes or foreign taxes paid, cash and non-cash charitable donations, mortgage or home equity loan interest paid (1098), un-reimbursed employment-related expenses, job-related educational expenses and childcare expenses and provider information.
These days, returns can be filed even online, or using certain software that can be downloaded online or bought from professional agents.
Online Tax Preperation provides detailed information on Tax Preparation, Income Tax Preparation, Tax Preparation Software, Tax Return Filing Preparation and more. Tax Preparation is affiliated with IRS Tax Help.
The IRS started the e-file program as a pilot project for the 1986 filing season in conjunction with tax-preparation software providers and the professional tax community. During the test year, five third-party transmitters were approved by the IRS to file Tax Returns electronically; they submitted 25,000 returns at three locations. Initially, tax preparers could file returns electronically only if no tax payment was due. The taxpayers that could participate in the program and the types of returns they could file were limited.
More and more Americans are choosing e-file, which lets them electronically file an accurate tax return or get an extension of time to file without sending any paper to the Internal Revenue Service. The 2007 filing season has set a series of records, highlighted by more than 72 million tax returns being filed electronically this year and home computer usage jumping 18 percent.
The jump in e-file reflected a larger increase in the use of electronic services. The IRS saw new records for in filings from home computers and the use of IRS.gov.
The 70 million e-file returns accepted through April 21 topped the 68.5 million electronic returns received for all of 2005. The agency expects the e-file number to increase before the close of the e-file season in October.
Benefits of E-filing :-
The most common benefit was that respondents found it to be more efficient, indicating that e-filing saved them both time and money.
The second-most- mentioned benefit was the reduced number of errors, attributable to the one-time entry of figures and the checks performed by preparation software.
Another benefit of e-filing was that it enabled e-filers to be more productive, presumably because it saves on paperwork costs, makes it easier to correct errors, which helps you to file your return smoothly and getting Fast Tax Refund.