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Do your taxes online. For free.
Okay, January's almost over. That means that you probably have all of your tax forms by now: your W-2s, your 1099's, and so on. And you're starting to see ads all over the place for That Green Square Company That Has People, and for That Fast Software Company. Yep, it's tax season.
But I'd like to offer you an alternative to those places. You see, my company has long produced internet-based tax software and government benefit application software to help lower and mid-income people do their taxes and apply for benefits for free. It's a wonderful program that I'm proud to work for, and we've helped connect many people in need to money and other services. But one drawback to our program was that it's always been counselor-assisted. You had to go to a clinic and sit down with a counselor to use the program. Great if you live near a clinic, and great if you aren't computer-literate, but less useful for those of you reading this.
Well, that's not a problem anymore. This season, we've completed a pre-release of the self-serve version of our software, currently called Sidney. (Sidney's a cute robot.) With this program, almost anyone who made under $52,000 this year can file their federal taxes online for free, among the first 75,000 to sign up. Additionally, we offer state taxes in 5 states (PA, MD, MS, DC, and OH), and many other states don't have state tax returns. So probably half of you reading this can use our program to do ALL of your taxes. It's quite easy to use; we aim for high usability and easier reading levels. It's obviously a lot cheaper than many other places. And I'd love for you to try it out. And tell your friends, especially if you make too much money to qualify, since you probably know lots of people under the limit.
So go check it out! I'd love to hear your feedback.
But I'd like to offer you an alternative to those places. You see, my company has long produced internet-based tax software and government benefit application software to help lower and mid-income people do their taxes and apply for benefits for free. It's a wonderful program that I'm proud to work for, and we've helped connect many people in need to money and other services. But one drawback to our program was that it's always been counselor-assisted. You had to go to a clinic and sit down with a counselor to use the program. Great if you live near a clinic, and great if you aren't computer-literate, but less useful for those of you reading this.
Well, that's not a problem anymore. This season, we've completed a pre-release of the self-serve version of our software, currently called Sidney. (Sidney's a cute robot.) With this program, almost anyone who made under $52,000 this year can file their federal taxes online for free, among the first 75,000 to sign up. Additionally, we offer state taxes in 5 states (PA, MD, MS, DC, and OH), and many other states don't have state tax returns. So probably half of you reading this can use our program to do ALL of your taxes. It's quite easy to use; we aim for high usability and easier reading levels. It's obviously a lot cheaper than many other places. And I'd love for you to try it out. And tell your friends, especially if you make too much money to qualify, since you probably know lots of people under the limit.
So go check it out! I'd love to hear your feedback.
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(And, unfortunately, I don't have my W2 for my Former Employer for whoom I workd three months in 2006; the Former Employer is notorious for not getting people their W-2s until the begining of February. And since the Former Employer /is/ the government, then can get away with it. :P)
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Funny thing - the first W-2 I got (out of 3) was from the oldest employer. My current employer just got mine to me, after totally fucking with the entire company's payroll. Well, okay, to be fair, their outsource vendor fucked with payroll, sans-authorization from corporate.
The one W-2 I'm missing is from the temp agency that I got my current job through, who specifically e-mailed me to ensure they had my correct address. WTG! :)
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http://www.irs.gov/efile/article/0,,id=118986,00.html
The IRS seems to have some kind of deal with various tax assistance providers to allow free filing for people under a certain AGI. Last year was $50,000, this year is $52,000. However, many of these places seem to allow anyone to file for free as long as all you need to file is the 1040EZ or something equally as simple--more advanced functions are relegated to "premium" versions of these services.
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That said, the cost to the IRS of the mere act of *receiving* a personal income tax return should be largely independent of the amount of your income. If online is cheaper than hard copy, it's cheaper. If hard copy is cheaper than online, it's cheaper. As such, the government's goal here should be to minimize costs of receiving returns. It doesn't appear that the income limit contributes to such a goal.
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The IRS doesn't set its own policy. To a large extent, the government sets it. What if the government can make a lot more money from
bribeslobbyists for the paid tax preparer industry than they can save from the (relatively few) remaining paper filers e-filing instead? And what if the paid tax preparer industry has a vested interest in making it as hard as possible for people to file on their own? And what if the only way this arrangement could pass muster in congress is if an exception were carved out for people who make under a certain threshhold?no subject
Incidentally, I think the AMT is hitting a few people under 52K, since it was never indexed to inflation.
Here's the weird thing. My NY State tax return has a box for me to check if I don't need a tax booklet next year, so that I can help save the state money. If I'm going help them save money, they should help me save money!
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I have no doubt though that many tax preparing agencies provide a "free" version of their software or service (even without the IRS's incentive to do so) with the hope that many people upgrade. I know the program I use constantly teases me with services I could get if only I paid for the upgrade. I just ignore it, but I'm sure not everyone does.
Actually, I even saw somewhere on the IRS's website that you can mail to the IRS your W2s and 1099s and they will calculate your taxes for you, as long as you don't need anything complicated (I don't remember just how complicated is "too" complicated).
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I've never paid anyone to do my taxes. (My Cousin The Accountant used to do them for me, and then I did my own "by hand" for a couple of years, and this year of course I'll use my company's program.)
And from what I hear, a standard with free programs (Free File Alliance or otherwise) is that federal taxes might be free, but state taxes almost never are. I'm not sure if that matches up with your experience or not.
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I don't think the Free File Alliance or the income cap is meant to save the IRS money (though maybe, I don't know). I think it's a way that the IRS encourages private tax filing companies to provide free simple tax services to people with low incomes and simple filing needs. It actually doesn't require e-filing. Some of the services allow you to print out your tax form and mail it in, if you don't care to e-file.
It's also not a service that the IRS provides themselves. Their website simply links to those private businesses that are part of the Alliance.
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"Some companies offer free e-filing of the Form 1040EZ-T, Telephone Excise Tax Refund, for those who want to claim the refund credit and are not required to file a federal income tax return." (Bold mine)
Incidentally, it is hard to imagine a situation in which one makes more than $52K and is not required to file a return, so by definition this set of people is mostly under the income cap anyway.
I think Desh's hypothesis, that the IRS is caving to lobbyists of something, but at any rate does not have as its goal maximizing returns makes the most sense. With a for-profit entity (i.e. one with the goal of maximizing profits, not merely turning a profit) minimizing the cost of doing business (for the IRS, "doing business" includes sending out tax forms, collecting the returns in some form be it hard copy or electronic, and processing the data in those submissions) is an important goal. My possibly mistaken assumption was that Our Fair Bureaucracy would attempt to do the same.
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"Free File allows taxpayers with an Adjusted Gross Income (AGI) of $52,000 or less in 2006 to e-file their federal tax returns for free."
After that, they say:
"Some companies offer free e-filing of the Form 1040EZ-T, Telephone Excise Tax Refund, for those who want to claim the refund credit and are not required to file a federal income tax return."
I interpret that to say that the Free File program is specifically addressing and allowing for the free filing federal income tax returns (1040, 1040EZ, etc) for those who make below $52k, but they mention the 1040EZ-T to inform those people that are not required to file a tax return that they also may be eligible for services by the same private tax return companies. Basically, the page I linked is addressing all people who make under $52k, and that bullet about the 1040EZ-T is to address a smaller subset of those people (i.e. those people who make so little that they don't even need to file a tax return at all).
What I do find interesting about this whole operation is that if you go to the link I provided, check out the various services that provide federal filing for free to those below the AGI cap, and click on their links, you are ostensibly taken to their website. However, if you type in their website into a new browser (rather than get their through the link on the IRS website), they provide you with different information (probably by detecting the referrer site i.e. the IRS). And many of them have versions of their software or service that allow you to file for free anyway, regardless of income (as long as you don't need any of their more complicated services).
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Ultimately I had a good experience with the program, but during the initial quiz about forms I found myself checking "yes" to things that seemed right based on the short description and/or form name (although maybe I should have checked "I don't know"). This lead to a lot of frustrated backtracking.
Perhaps it should have an option to the effect of "If you already know the forms you do and do not need to file, please use the radio buttons to let us know. If you aren't sure, we will prompt you for each form as we progress through your return." I highly preferred the fully detailed explanation pages to appear one at a time, but I'm sure not everyone would agree.
Also I feel that if you click "What if I accidentally" it should either offer you the offending check box directly, or send you specifically to the page it appeared on. Also, the map of progress should have subheads for each individual page, as I had to keep retreading entire sections.
The instructions and help for "Amount of State and Local Income Taxes" was incredibly confusing, even though I knew exactly what it was talking about.
Otherwise, everything was extremely smooth. I especially liked the way it handled the itemized vs. standard deductions.
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