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Wednesday, February 8, 2012

Income Tax: Capital punishment


Ok, you should have all your W-2 forms (due to be sent by January 31st by employers) and soon to receive your bank or broker 1099 forms. Its now time to pull together your tax documents to drop off at the tax preparer or to handle your own through e-file or even regular filing via the mail by this year’s filing deadline, April 17.

About 77% of Americans are now filing online, often receiving their 79 million refunds, electronically deposited, just a couple of weeks after filing.  So, does it cost money? It depends. It is worth checking out your options.  You can visit the IRS website for a listing of various free e-file companies. Link: Free File Companies on the IRS Website. 

If you qualify for EITC (Earned Income Tax Credit), an active duty military with an AGI (adjusted gross income) of $57,000 or less, or has an AGI of $31,000 or less, you can use TurboTax Online Tax Freedom Edition.

There is also a TurboTax Free file for the 1040EZ & Simple Federal Tax Returns. This will be perfect for my son since he doesn't have any major deductions, has a very low AGI and will only be getting a refund.

 You can file with H&R Block's Free File if your Adjusted Gross Income is $57,000 or less,you are 52 or younger, and live in any state or U.S. Citizens and resident aliens with foreign addresses.


If you have simple tax situations, you most likely won't pay a fee through these programs for your Federal taxes but to file your state taxes electronically, you will need to pay a fee (all fees are tax deductible along with any costs for an accountant, tax software or cost of tax publications, internet subscriptions about taxes and books about taxes). Note: the deduction for tax preparation expenses is only available in the year that you actually spent the money.  So if you pay for the software today, it is taken off of next years taxes. Save those receipts.

Not sure which company to use? Have some unique circumstances?  Take the time to read the different websites and ask questions. I personally have used TurboTax, TaxSlayer and TaxAct without a problem in the past.  You can also use the Free File Fillable Forms, the electronic version of IRS paper forms, with no income restrictions.

Small Print Note: I am not an accountant or a tax attorney, etc. Although the information contained here is presented in good faith and believed to be correct, it is General in nature and is not intended as tax advice. Furthermore, the information contained herein may not be applicable to or suitable for the individuals' specific circumstances or needs and may require consideration of other matters.


E-Filing By The Numbers
Click image to enlarge. Source: H&R Block

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