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Companies including H&R Block and Intuit are working with the IRS to offer electronic preparation and filing.
By HELEN HUNTLEY, Times Staff Writer
© St. Petersburg Times, published January 17, 2003
Most Americans will be able to prepare and file their tax returns online for free this year under a new initiative aimed at boosting electronic filing.
The details went up on the IRS Web site (www.irs.gov) Thursday along with links to the 17 private companies participating. Tax software leaders H&R Block and Intuit are among them.
The companies are expected to benefit from their participation through the sale of services such as refund anticipation loans and state tax returns for residents who live in states with an income tax. The links from the IRS site also are expected to bring in paying customers for return preparation since not everybody is eligible for the free service. In addition, the arrangement keeps the IRS from developing its own filing software in competition with private companies.
About 60 percent of all taxpayers -- 78-million people -- are expected to qualify for free preparation and filing. Of course, to use the service, you must have Internet access and you must be able to use a computer to type in your financial information and click your way through the steps of the software program.
Each company sets its own standards for eligibility for free filing, but the IRS Web site makes it easy to sort through them.
Young people and those with modest incomes are covered. But one company also offers free filing for those with incomes of $100,000 or more. Another company promises free help to anyone 45 or older. And some companies offer the free filing to residents of a particular state; New York, Illinois, Michigan, Georgia, Arizona and Wisconsin are covered.
Floridians who don't qualify for free filing are those who are ages 21 to 44, earn between $33,000 and $100,000 a year, are not on active duty in the military and do not qualify to file a Form 1040 EZ or receive the Earned Income Tax Credit.
"We're targeting pen-and-paper do-it-yourselfers," said Betsy Stephens, a vice president for H&R Block. "It's the same product our paid clients get as well."
While most of the companies' software programs will handle complicated as well as simple returns, some have special restrictions. For example, free help is not available from FreeTaxUSA if you own a business, have rental properties or worked in another country last year. OnLine Taxes says it won't do free filing April 10 through 20, crunch time for tax preparers.
Last year the IRS received 47-million returns electronically and another 85-million through the mail. The free filing is designed to help the IRS meet a congressional goal of having 80 percent of returns filed electronically by 2007. Electronically filed returns are more accurate and less expensive for the IRS to process. Taxpayers benefit by getting their refunds faster.
"E-file is the best way to confirm the IRS received your return and it's the fastest route to a refund," said Robert Wenzel, acting IRS commissioner.
If taxpayers file electronically and choose to have their refunds deposited directly in their bank accounts, a refund should be received within 10 days, the IRS said.
-- Information from Bloomberg News was used in this report. Helen Huntley can be reached at huntley@sptimes.com or (727) 893-8230.