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Do you need tax help? As the April 15 tax deadline approaches, do you need income tax help to avoid IRS tax problems? There are a number of places for free tax help.
Free Tax Help
Military families can get free tax help on base through the Voluntary Income Tax Assistance Program, also known as the VITA Program. The volunteers who provide assistance are trained to address military-specific tax issues, such as combat zone tax benefits.
There are also VITA locations for some deployed units. Check with your location to see if there is a VITA office on base.
If VITA assistance is not available at your location, you have other options for free tax help.
The IRS offers information about free income tax help. Click the link above, and type "free tax preparation" or "free tax help" (without the quotes) into the search box at the top right.
The IRS offers Free File, which provides free federal income tax preparation and electronic filing. If you e-file, you will receive a confirmation within 48 hours from the IRS that your return was received. If you e-file and choose Direct Deposit for your refund, you could received your refund in as few as 10 days! (But see caution below regarding e-filing.)
With Free File, you can choose whether to manually fill in the forms online and file them, or, if your Adjusted Gross Income for 2009 is $57,000 or less, you may choose to use free tax software with step-by-step tax help. The IRS reports that 70 percent of American taxpayers (or 98 million people) fall into this category, and thus will qualify for free step-by-step tax help from free tax preparation software. And some companies waive the $57,000 income limitation for military families.
Using the free tax preparation software may help you take advantage of new tax changes you may not be aware of. There are new tax credits and deductions available, and many new and expanded benefits for things such as energy conservation, new car purchases, college tuition and first-time home buyers. Taxpayers who qualify for the first-time homebuyer credit will not be able to e-file because proof of purchase must be attached to the tax return, but they can still use Free File to prepare their tax forms, and then print and mail them to the IRS.
The Tax Counseling for the Elderly Program (TCE) provides free tax help to people aged 60 and older. As part of the IRS-sponsored TCE Program, AARP offers the Tax-Aide counseling program at more than 7,000 sites nationwide. For more information on TCE, call 1-800-829-1040. To find the nearest AARP Tax-Aide location, call 1-866-227-7669.
The IRS also offers free Taxpayer Assistance Centers for those with IRS tax problems who believe their tax issues cannot be handled online or by phone and want face-to-face assistance. IRS representatives in these offices can help with inquiries, adjustments, letters and notices, and payment plans for those who owe tax but cannot pay the amount in full. Locate the Taxpayer Assistance Center nearest you.
If you qualify, you may be able to have the IRS prepare your tax return for you.
The IRS also has a Taxpayer Advocate Service, an independent organization within the IRS to provide tax help for taxpayers experiencing economic harm, who are seeking help in resolving IRS tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. If you believe you are eligible for TAS assistance, call them at 1-800-777-4778.
Avoid IRS Tax Problems
The deadline for filing your federal income tax return is April 15. If mailed, your return must be postmarked not later than April 15. If you cannot complete your tax preparation by April 15, be sure to request an extension of time to file using Form 4868. You may also e-file your request for an extension using Free File. In most cases, the extension is automatic, and is for six months, which would give you until October 15 to file your return.
Please note that the extension is an extension of time to file your return only. It does not extend the time to pay any taxes due, which must be paid by April 15, or a penalty will be assessed on any unpaid amounts. It is very important for you to file the request for extension if you cannot file your return by April 15. If you don't, penalties increase substantially, generally an additional 5 percent of taxes owed for each month you're late, plus interest, up to a maximum penalty of 25 percent.
However, if you file your return or request an extension by April 15, the penalty drops to 0.5 percent per month, plus interest. Contact the IRS early if you won't be able to pay on time; they may even waive the penalty, depending on your circumstances. Call 800-829-1040 or visit www.irs.gov for more information.
You may also avoid a penalty by using a credit card to make your tax payment. The IRS accepts payment by credit or debit card, with a small convenience fee that is tax deductible. But if you choose to pay this way, be sure you can pay off your credit card balance within a few months, or the interest you pay on the credit card may be more than the penalty you would pay the IRS.
If you do not owe additional tax, or are expecting a refund, there is no penalty for filing your return after April 15. Just be sure you have filed the request for extension by April 15.
Tax Filing Tips
Although the IRS encourages you to e-file your return by promising you a faster refund, we would like to share with you some information we learned from CPA and tax reduction specialist Al Aiello.
Al explained that the IRS developed the e-file system not to make it easier for you to file your tax return, but to make it easier for the IRS to AUDIT your tax return. When you e-file, all of the information on your tax return is instantly and electronically entered into the IRS computer system. That makes it much easier to them to run a program to see if an anomaly on your return pops up, as compared to other similar returns. So by e-filing, you could be increasing your chances of an audit.
Also, you may increase your chances of an audit by filing your return early. We know some of you are organized and on top of things, and start gathering the information to file your return on January 1, so that as soon as you receive all your W-2s and 1099s, you're ready to file your return. You pride yourself on filing early and getting it over with, and even having your refund in hand before April 15, while the rest of us haven't gotten around to filing yet.
But consider this: If you file early, when only a few returns are filed, you give the IRS more time to review your return. Since there are fewer returns to review, they can spend more time on each return. That could also increase your chances of an audit.
Al also pointed out that your risk of an audit is much higher if you file your tax return on or before April 15, as compared to requesting an extension and filing your return between April 15 and October 15. No one is quite sure why that is, but apparently the statistics indicate that is the case.
So, according to Al, the bottom line is that by filing a paper return (not e-filing), after April 15 (but with a request for extension filed by April 15), you can reduce your chances of an audit somewhat. You can still request Direct Deposit for any refund, and our experience is that by doing it this way, any tax refund is still received in about 10 days to two weeks.
Are you taking all the deductions you've earned? Many of you operate home businesses, and you may not be aware of some of the deductions available to you. Check our Small Business Tax Deductions checklist.
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