In the past few months, politicians like Texas Gov. Rick Perry and House Speaker John Boehner have suggested Americans spend as much as $500 billion a year to file taxes.
That’s way off, according to Politifact. But they cite a tax expert’s opinion and a 2005 Government Accountability Office study that both suggest it is, however, probably above $100 billion a year.
That’s a crazy number, considering many Americans don’t have to pay anything. According to the IRS, 70 per cent of Americans are eligible for free tax preparation and filing software.
In the video below, Money Talks News founder and CPA Stacy Johnson has one of the most popular tax hacks around – where to get taxes done for free. Check it out, and then read on for more.
As you heard, there are different options depending on your age and income level – but everybody has a cheaper route than a tax pro…
Income below $50,000 in 2011? Free in-person help
Check out the IRS’ Volunteer Income Tax Assistance program, or VITA. They offer free preparation help and have information on tax credits you might qualify for. Most of them have no electronic filing fee, either.
There are thousands of these locations across the country in schools, libraries, malls, and community centres. You can look up free tax prep locations by ZIP code – there were five in as many miles near me, and only one required appointments. You can also give them a call at 1-800-906-9887.
Although many take walk-ins who show up with all their paperwork, it’s probably a good idea to make an appointment just in case. The closer to Tax Day (April 17) we get, the more hectic things will be.
Free in-person help for people 60-plus
If you’re a sexagenarian (a fun word for those in their 60s), the IRS has a Tax Counseling for the Elderly (TCE) program too. These experts provided through the AARP have special knowledge of tax issues related to retirement and pension plans.
You don’t have to be an AARP member to qualify – all you have to do is use their website to find an AARP Tax Aide near you. Alternatively, call 1-888-227-7669.
Free online prep and filing for incomes under $57,000
If you’re too young or fall in the income gap between $50,000 and $57,000, the IRS wants you to know about Free File tax software. Answer a few basic questions and the site will help you pick one of several free tax preparation options.
Just a little warning, though – while these sites will help you prepare and file for free, there’s often a fee for filing a state return, amending your federal return, or pulling up a previous year’s return. Fees vary, but can often run between $10 and $40 for each of these snags. So shop around, do things right the first time, and keep both digital and hard copies when you file.
Free online filing and tax help for everybody else
There are two components to the IRS free file system – the preparation help is only for those with gross income below $57,000. But the online filing part is free for everybody, so feel free to use the IRS’ Free File Fillable Forms instead of mailing in a pen-and-paper version.
And while you can’t get step-by-step guidance this way, you can always get free help from the IRS by visiting a local office or calling them at 1-800-829-1040. And though it may take some digging, IRS.gov has all its tax code publications online and a huge, searchable tax FAQ. Not the most convenient way to do your taxes, but still free.
Think your taxes are too complicated to handle on your own? We’ll be posting a lot more tax hacks in the coming weeks, and on Friday, we’ll talk about how to find the best tax pro. In the meantime, you might want to check out our first tax hack for 2012: home office deductions.