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Free File Alliance Can Save You Money

Free File Alliance

Americans hate paying income taxes.  That’s a simple fact.  The only thing worse than paying income taxes is having to pay to file them.  Paying money in order to pay money just doesn’t seem right to a lot of people, but tax preparation firms charge a lot for their services; it can cost several hundred dollars to have your taxes professionally prepared for you.  Even if you decide to do your taxes yourself, it can cost you up to $100 or so to make use of professional software in order to file your returns.  That price varies, of course, but it can still amount to a considerable sum of money.  Thanks to the Free File Alliance, it’s possible for many U.S. taxpayers to file their Federal income tax returns for free. Free File Alliance Can Save You Money

File For Free

Organized in 2002, the Free File Alliance is a public-private partnership agreement between the Internal Revenue Service and a number of companies that provide tax preparation software to the public.  The idea was to create a way for the majority of Americans to file their returns for free.  The program has been a success; since the Free File Alliance was created, some 40 million Americans have filed their Federal income tax returns this way at no charge. Free File Alliance Can Save You Money

Why the Free File Alliance?

There were a number of objectives in creating the Free File Alliance; among them were increasing the number of Americans who file their returns electronically, which speeds up the process and reduces IRS labor costs.  Giving taxpayers access to tax preparation software also helps minimize errors and makes the entire process easier for those filing the return.  Of course, the companies who participate in the Free File Alliance are still interested in making money by offering tax preparation products to the public, so it was agreed upon by all involved that certain limitations would apply.  After all, if everyone could file their taxes for free, then all of these companies would soon go out of business.  No one was interested in that, so some basic rules were created Free File Alliance Can Save You Money

An income limit was created that adjusts over time. In 2014, only filers with an adjusted gross income below $60,000 were allowed to file for free. In addition, individual participants in the Free File Alliance may have additional restrictions, which often restrict the ages of the filers. This varies from company to company, so you’ll want to look into this if you’re interested in filing your taxes this way. Furthermore, the Free File Alliance covers Federal tax returns only; state income tax returns will still require paying a fee. On the other hand, even paying a bit is better than having to pay a lot. Free File Alliance Can Save You Money

file free and save money additional qualifications may apply to those who wish to file for free. For the most part, only those who have relatively simple returns are going to qualify to use the Free File Alliance system. If you own rental property or a business or have a lot of deductions or a mortgage, your return is probably going to be outside of the scope of the system. The Free File Alliance is mostly designed to cover taxpayers who have basic W2 income only and few, if any deductions. Free File Alliance Can Save You Money

The system works through the IRS Website, but you then pick a software package that you’d like to use and you are then redirected to the Website of the company you have chosen.  You’ll have access to the system through secure, encrypted connections and you should have access to tech support through the company’s Website.  The nice thing about online access is that the software can be continuously updated, and you’ll always be able to access the most recent and accurate version of the software. On the downside, filing your tax return this way requires that you have a computer with access to the Internet, as this is not downloadable software that you can use offline. Free File Alliance Can Save You Money

While the software offered via the Free File Alliance is of the basic and no-frills variety, you also won’t have to worry about being sold add-on products such as Refund Anticipation Loans, which are prohibited by the program.  This is good, since many tax preparation companies push these products pretty hard, as they’re quite profitable.  Unfortunately, those taking the loans, also come with rather high-interest rates. So in the end, it’s a pretty basic service, but a welcome one, as more than 60% of all Americans are qualified to use it. Free File Alliance Can Save You Money

Keep in mind that tax preparation software, free or not, is only as good as the information you provide it.  If you’re entitled to a bunch of tax deductions, which will ultimately lower your tax bill, it’s incumbent upon you to provide the information.  The software will take it from there and calculate the amount of tax you owe, but the software isn’t going to know about all of the possible things you can deduct. Free File Alliance Can Save You Money

Free File Alliance Can Save You Money

As it happens, there are hundreds of things that may qualify as legitimate tax deductions which will save you money on your taxes, and most tax preparers don’t even know about a lot of them.  That’s not their fault; the U.S. tax code runs tens of thousands of pages and changes all the time.  Unless you’re spending all of your time looking for these deductions to help save money, you’re not going to be able to keep up. Free File Alliance Can Save You Money

Fortunately, some people do just that – spend all of their time looking for ways to save money on taxes via legal methods, not loopholes or tricks. If you could tap into what they know, you could apply that knowledge to your return, and save hundreds or even thousands of dollars on your taxes, and not just this year, but every year. Free File Alliance Can Save You Money

The truth is, many Americans pay more in taxes than they legally have to, and unless you know about all of the ways you could be saving money, your tax software is going to let you pay too much and the IRS is going to accept your payment without saying a word, whether you’re participating in the Free File Alliance or not.

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