E-Filing Free For All

Color of Money columnist Michelle Singletary breaks the news that the Internal Revenue Service is allowing all taxpayers to file electronic returns without having to purchase special software or going through a pricey tax preparer.

Since 2003, people with low to moderate incomes could file their tax returns electronically at no charge by going through the Free File program. The program is run through a partnership between the IRS and the Free File Alliance, a group of private-sector tax-preparation companies.

Free File, which is available in English and Spanish, enables taxpayers with adjusted gross incomes up to $56,000 — 70 percent of taxpayers — to use commercial tax software to file their federal tax returns. Participants are asked a series of questions to smooth the process and to determine the deductions and credits for which they are eligible.

Last week, the IRS announced that for the 2009 tax-filing season, regardless of your income, you can file for free electronically by going to http://www.irs.gov. Even if you earn too much to qualify for Free File, you can still use that program’s e-file forms to complete your taxes.

“The bottom line is there is virtually no reason every taxpayer shouldn’t be filing electronically this year,” said David Williams, the agency’s director of electronic tax administration and refundable credits.

I’ve always thought Free File was a good program, but it was irritating that it wasn’t available to those brave souls who file on their own. In 2008, 62.8 million people relied on tax preparers to electronically file their returns, while 26.9 million taxpayers e-filed returns using purchased software.

Read the entire column.

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