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IRS free electronic tax filing program coming Jan. 17

Free File's income eligibility limit has been increased to $58,000 -- $1,000 more than last year.

By MSN Money producer Jan 10, 2014 3:30PM

By Kay Bell, Bankrate.com Bankrate.com


Taxpayers who want to take advantage of the Internal Revenue Service's free tax preparation e-filing program won't have to wait. The Free File program opens to taxpayers on Jan. 17, two weeks before the IRS starts processing 2013 tax returns.


Couple filing their taxes © Dave and Les Jacobs/Blend Images/Getty ImagesThe IRS will not start processing any tax returns until Jan. 31. The government shutdown in October 2013 slowed IRS updates of forms and tests of its computer systems, leading officials to push the official opening of this year's filing season to the end of the month.


But that doesn't mean taxpayers have to sit around. Free File companies will hold taxpayers' completed tax returns and then submit them on Jan. 31. 


The early opening of Free File is good news for millions of eligible taxpayers. They are among the group of electronic filers, which increases every year, primarily because they can get their refunds more quickly. 


And for the 2014 filing season, a few more taxpayers should be able to use the Free File option. The income eligibility limit has been increased to $58,000. That's $1,000 more than last year. 


Free File 2014 basics


  • You can file your 2013 tax return through Free File if your adjusted gross income is $58,000 or less.
  • The income cutoff applies regardless of your filing status.
  • Free File is for individual, not business, tax returns. However, a sole proprietor who files Schedule C with Form 1040 can use Free File.
  • Some participating Free File vendors also offer free state tax return preparation and e-file.
  • Some Free File companies offer free electronic extensions. But remember, you still must pay any taxes due by the April 15 deadline or you'll be charged interest and possibly penalties on any tax you owe.
  • You do not download anything. All of the software, which is encrypted to protect privacy, remains at the Free File company website you select, and your return is filed from there.
  • Access Free File by going to IRS.gov and clicking on the Free File icon. Beware of offers by outside websites to take you to the Free File website, as they could be scams operated by identity thieves.

The Free File program is a partnership between the IRS and the Free File Alliance, a group of tax preparation software manufacturers. Fourteen companies are expected to participate in the program this filing season. 


"All the (2014 filing season tax software companies) have done it before. We have experienced providers within the commercial world and the Free File world," says Tim Hugo, executive director of the Clifton, Va.-based Free File Alliance.


Free File was created in 2003 as a way to get more people to e-file. Its target is taxpayers who might otherwise not e-file because they don't want or can't afford to pay the cost of the computer filing programs or professional tax help.


Who qualifies?


The key qualification for Free File services is income. This year, taxpayers with adjusted gross income of $58,000 or less, regardless of filing status, can use the online program.


Participating tax software companies can establish other eligibility requirements. Some may limit usage of their programs based on geographic location, military service or other criteria.


To determine which software best fits your filing needs, the Free File website includes an online search tool to help you select one of the participating Free File companies.


Free File contributions to e-filing


In 2013, almost 144 million tax returns were filed electronically, according to IRS data complete through May 2013. That represents a nearly 2 percent increase in e-filed returns over the previous year. The sector that showed the most growth last year, according to IRS statistics, was tax returns prepared and filed by taxpayers on their own. 


Around 3 million of those self-prepared returns e-filed last year came through Free File, says Hugo. That number has held steady for the past few years. 


Three million of those returns e-filed last year came through Free File, says Tim Hugo, executive director of the Clifton, Va.-based Free File Alliance. 


"We would love to have more," says Hugo, but he points to the program's overall contribution to e-filing. Since its inception, says Hugo, Free File has accounted for the submission of more than 40 million federal returns. 


"We get people in the door for e-filing, people who've never e-filed before," says Hugo. "They may go to a commercial product later on, but they will continue to e-file. We are very pleased with that." 


Hugo says the program also has evolved to meet taxpayer needs. "We look at Free File as a three-legged stool," he says. "There is the traditional Free File, fillable forms and VITA providing services to every income."


Working with VITA 


The filing needs of lower-income taxpayers are addressed through Free File's continuing partnership with the federal Volunteer Income Tax Assistance program, popularly known as VITA. 


VITA tax-filing clinics are set up each year in public places -- from libraries to community centers to shopping malls. Its volunteers provide free filing assistance to low- and moderate-income taxpayers who might not be able to afford tax software or professional filing help. This filing season, the services of IRS-certified VITA volunteers are available to people who make $52,000 or less. 


Hugo says Free File is again placing kiosks, similar to self-checkout stations in retail stores, at VITA sites nationwide. 


"You can do your return there or partially do your return and, if you need help, ask a VITA volunteer," says Hugo. "This helps some of those who are most in need of tax help." 


The IRS has an online search tool to help taxpayers locate a nearby VITA site. Taxpayers also can call (800) 906-9887 for VITA locations. 


Free fillable forms remain 


The IRS says that Free File is available to 70 percent of taxpayers. But if you are among the 30 percent making too much money to use the service, you still can file for free using the tax agency's fillable federal return form option. 


Here, online versions of the most commonly used IRS tax forms are available through the Free File page. You fill them out on your computer and then e-file the documents at no charge. 


Just don't mistake the forms for tax software. 


The fillable forms offer only basic calculations of what's entered on the form. And you must figure out what goes on the form without the online prompting found in software. 


Also, the information is not automatically transferred to associated forms. That means you must, for example, manually enter your itemized deductions total from Schedule A to the appropriate line on Form 1040. 


Still, taxpayers with relatively simple filing needs who don't want to buy tax software might find fillable forms a welcome alternative. 


Note, however, that you'll have to wait a bit longer to use the free fillable forms option. They won't be available until Jan. 31, the same day that the IRS opens its filing doors to all taxpayers.


More from Bankrate.com:


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16Comments
Jan 10, 2014 4:21PM
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What a bunch of crap, it should be free to file for everyone.  Why should some one have to pay money to get money that is owed to them.  What a bunch of crooks.
Jan 10, 2014 5:07PM
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Take the monstrosity that is the US Federal Tax Code - 73,954 pages, add in the 20,000 pages in rules and regulations under Obamacare, growing daily with additional rules and regulation from HHS. The result is an endless web of bureaucracy which will make going to the DMV a welcome break.  The IRS cannot give correct information about tax preparation, imagine what they are going to do with your health insurance records.
Jan 10, 2014 6:43PM
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It's always been possible to file for free you simply have to do it yourself.
Jan 10, 2014 6:33PM
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What the i.r.s. should of did a long time ago is set a flat tax from a persons wage to be deducted from hourly/salary, & thus the filing could have been done away with. Then there would of been no more end of the year tax returns for the individual. The only reason why they haven't done it is because there is money in tax prep work, & most of all if not the first thing is the money that the i.r.s. holds during the year that people get in their tax return is collecting interest for them, & years end they give it back to you with no extra. People wouldn't put their money in a bank CD for the bank to collect the interest, so why do people want to do that for them? it is still puzzling.Just think if half the U.S. population does that how much money are they making. i think that it is kinda funny. Maybe one day people will figure it out. Maybe the economy could have been fixed a long time ago that way.
Jan 10, 2014 7:32PM
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Somebody is paying for it!  You think a bunch of volunteers are setting up computer programs to allow people to file free for nothing?  If you believe that, I have a 35 year old car I'm willing to sell you for half of what it's really worth!
Jan 10, 2014 5:57PM
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Many states also have a free service.  In Michigan if you use the e-file link through the state website rather than the federal one you can qualify to file the state free as well.  This is not new information by far.  I've been doing my taxes this way for 7 years.
Jan 31, 2014 3:08AM
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Been using turbo tax for about 4 years now. Its so much easier and cheaper than H&R BLOCK. walks you through everything ask more questions then H&R BLOCK ever did or cared to!!!! LOVE IT. Also got the coupon from www.a2zdeals.com/coupons/Turbo-Tax/. It saved my dollars on the software.
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So the people with an AGI more than 58K didnt pay any taxes and should be shunned by their guberment?  What I find funny is how will you KNOW what your AGI is UNTIL you file??

I would think the IRS would want all the cheating, filthy people making more than 58K to put all of their info directly into the the IRS abyss software so they can detect the cheaters faster and wring more money out of them!

Personally I LIKE doing mine on paper and mailing it to the IRS.... Less people have a chance to look at my return that way.....

Oh and I just wanted to say good morning to the NSA that is sitting there reading my email and forwarding it to the IRS....

Jan 10, 2014 8:56PM
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 This is great democrats dont have to spend money to get free money! party on morons!
Jan 10, 2014 11:02PM
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Yet ANOTHER brain dead IRS clusterf*ck POS that is giving money to the "inequal" lazy bast*rd (DUMBocrats) Nice try, you inept doucheb*gs. You f*cked up WAY too much with your many scandals. Like the incompetent doucheb*g PresIDEBT Blowbama thj Wonder TURD, your credibility is at the bottom of the ocean with Osama Bin Laden's "Body"   HAHAHAHAHAHAHAHAHHAHAHH.

 

F*CK Blowbama and F*CK the Incompetent Ridiculous Service.

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