Free Tax Filing

Did you know that if your adjusted gross income was less than $54,000 in 2007, you can file your taxes for free at the IRS website http://www.irs.gov/efile/article/0,,id=118986,00.html. The IRS doesn’t do the actual tax preparation; instead it hooks you up with one of hundreds of tax preparers who volunteer for the online service in exchange for the publicity and access to a broad client base.

The IRS website also lists companies that will file for free for people who are only filing a 2007 tax return in order to get a 2007 tax rebate. Retired persons who live on social security and have no income fall into this category, as do some other people who make less than $3,000 per year in qualified income and are not a dependent on anyone else’s return.

If you fall into one of these categories and don’t normally file an income tax return, it is worth visiting http://www.irs.gov/efile/lists/0,,id=179739,00.html and filing one for 2007. It’s free, and you may be entitled to a rebate check.

Many other companies offer what their ads refer to as ‘free tax filing’, but it is important to read the small print. If you have to give your bank account information to file, you may end up paying a fee even if you think you are getting the service for free. It’s so easy to use the official IRS free tax filing site that no one really needs to risk using a commercial service any other way, but if you want to do it, you can.

Often the free tax filing services that do the most advertising are (unsurprisingly) the least free and the most annoying. Avoid them if you can. If you want to pay money to have your taxes done, a good accountant still is the best way to go.

Automated e-file software and online services are great if you have a simple return and don’t need to ask questions, but again, if you have a simple return and don’t need to ask questions, why pay anyone to do your taxes. Go to the IRS free tax filing website and be done with it.

If your taxes are complex and you’re not sure how to do them, you will usually find that a good personal accountant will save you money. Big tax preparation companies tend to be conservative in their practices, and while they advertise that they will save you big money, they will err on the side of keeping themselves out of trouble even when it is costly to their customers.

Tax accountants generally know from experience which lines can be pushed and which ones need to be strictly followed, and they can also offer you good advice on what to do to save money on the coming tax year.

Of course, doing your own taxes the old fashioned way with a pencil, paper, and the appropriate tax forms is free too, but if you file anything more complex than a 1040EZ you may regret taking this on well before you finish.

The IRS has taken a lot of heat in recent years for not being particularly user-friendly, but they actually have cleaned up their act quite a bit and are very approachable. You can call 1-800 IRS call center numbers and speak to an IRS representative personally if you need that, but their website www.irs.gov is also packed with good information, tips, free publications, free tax filing services, FAQs on tons of topics, and every downloadable .pdf tax form you could ever possibly need, as well as some you will likely never need and don’t want to even know about.