No one enjoys the painstaking process of filing taxes. However, it is a mandatory task for all earning citizens, and for businesses, the process can even be more complicated. Although the task might seem daunting, there are options to help you file your taxes at no cost. Here’s a comprehensive guide on how to file your taxes for free.
The Internal Revenue Service (IRS) runs a program called the Free File Alliance, which is a coalition of tax preparation companies that partnered with the IRS to offer free online tax preparation and e-filing to everyday Americans. Individuals with an adjusted gross income of $72,000 or less qualify for free tax software offered by the Free File Alliance.
You can access these services via the IRS website. Each company in the Free File Alliance has its own eligibility criteria, so it’s important to review the options and choose the software that fits your financial situation the best. These tax software options are user-friendly and guide you through the process of preparing and filing your taxes, helping to ensure everything is done correctly.
If you earn more than $72,000 annually, you’re not eligible to use the free file software, but you do have access to Free File Fillable Forms on the IRS website. This is the electronic version of IRS paper forms. This platform is more suitable for those with experience in preparing their own tax returns.
In addition to the Free File program, various non-profit organizations offer volunteer assistance programs for eligible individuals. For example, the Volunteer Income Tax Assistance (VITA) program and the Tax Counseling for the Elderly (TCE) program offer free tax assistance for low-to-moderate income taxpayers, seniors, and individuals with disabilities. Certified volunteers help complete and file federal (and often state) tax returns electronically.
Now, filing taxes for free becomes more tricky when you have more complex situations, such as when you own a business or when you’ve foreign income or assets. One point of complexity could be when handling matters related to a ‘controlled foreign corporation cfc’.
A ‘controlled foreign corporation cfc’ is a corporate entity that is registered and conducts business in a different jurisdiction or country than the residency of the controlling owners. Control is generally defined by the percentage of voting power or equity interest in the entity. Understanding the rules and regulations about reporting the earnings and activities of a ‘controlled foreign corporation cfc’ can be complex, and making a wrong move could result in penalties. Therefore, it may not be advisable to handle such a situation without the help of a professional tax preparer or accountant.
If your tax situation is simple enough, you may choose to file your taxes for free using one of the aforementioned options. However, people with more complex returns or those who are not comfortable preparing their own taxes should consider seeking a professional’s assistance. Although there would be an extra fee, getting professional aid could save you from potential mistakes and save your valuable time.
Filing taxes for free is an excellent option for eligible individuals with simpler tax situations. It allows you to save money and offers a reliable way for you to file your taxes. However, be aware of the limitations of these services and know when a tax professional’s expertise becomes necessary.