When it comes to 1040 online tax filing for free, what’s the catch?
Have you heard all those commercials for free online tax filing? They puzzled me. How can those companies file taxes for people and charge nothing for their services? On top of that, those guys are paying good money to advertise those services. How do they do it? What’s the catch? Should you take advantage of it?
I did some digging and learned that the federal government set up this “Free File” program. Here’s how it works:
The IRS and some tax software companies partnered. The companies do the returns for eligible participants without charging the consumer a dime. Of course, these companies are getting paid by Uncle Sam, but I suppose it’s cheaper for the government to do this than to chase people who don’t file their tax returns.
Are you eligible?
If your 2010 adjusted gross income is $58,000 or less, you can participate. It doesn’t matter if you are single, head of household or married filing jointly. It also doesn’t matter if your income is generated by capital gains. The $58,000 AGI limit applies. Of course, each company that provides the service has its own requirements. They can set their own standards with respect to AGI or what part of the country you live in.
In order to participate, you don’t have to download any software. You simply go to the company’s website and have at it. These companies have also installed some pretty sophisticated encryption programs, so your privacy is protected. These companies also are required to provide customer support as part of the deal they made with the IRS. This way, if you have questions, you can contact the company and they will help provide answers.
Is free tax filing for you?
Well, if you qualify, I can’t see why not. If you have a complicated return, don’t go for it. But if you are thinking about taking these companies up on their offer, better do it fast. Some of the offers expire prior to 4-18-11.