IRS again offers free online filing
By Deborah Adamson
Advertiser Staff Writer
The IRS made it less painful for at least 60 percent of the nation's 130 million taxpayers who file online.
For the second year in a row, the federal agency is offering free online filing at www.irs.gov with added features through a partnership with 16 tax preparation firms.
Last year, 2.8 million taxpayers filed their 2002 returns online through the program nationally.
In Hawai'i, the IRS said that a third of federal tax returns — or nearly 200,000 — were electronically filed from all sources. However, the bulk of it came through their tax preparers.
Also, reversing an earlier decision, the IRS says it won't require software companies to flag customers who use the government's program for free electronic tax filing. Last year, the IRS ran into a battle with the software industry when it ruled that companies must identify by electronic code any returns from taxpayers using Free File.
Free filing is only for federal taxes and you have to meet certain requirements. They run the gamut from earning either low or high incomes to whether you're in active military service or a resident of particular states. And unlike the old IRS Telefile system, which only allowed the filing of 1040EZ forms that don't allow itemized deductions, online filers also can use form 1040 and 1040-A.
Tax companies offering the service include such household names as H&R Block and Intuit, the makers of TurboTax, and smaller outfits.
H&R Block offers free filing services to taxpayers with an adjusted gross income of $34,000 or less.
Intuit offers free services to lower-income folks who qualify for the Earned Income Tax Credit, or those who were 22 years old or younger or 62 years old or older in 2003. Taxpayers who were on active duty in the military and possess a W-2 also can qualify, including reservists and National Guard participants.
Two companies offer free services to those with higher incomes. 2nd Story Software, through TaxACT.com, offers free filing to taxpayers with adjusted gross income of $28,000 or higher; 1040Now.net offers the same to those with AGIs of $100,000 and up as well as to 1040EZ filers.
IRS spokeswoman Shawn George said online filers get tax refunds in two weeks if you allow direct deposit to your bank account. If not, it's three weeks by mail, even to Hawai'i. In contrast, if you mail in your tax return, a refund can take up to six weeks.
Taxpayers are not obligated to sign up for any other services or buy products offered by participating tax software firms, such as refund anticipation loans, George said.
These are high-fee loans you can take out while you wait for your refund. But since online filing returns your money quickly, it doesn't pay to take out these loans.
For taxpayers who still feel more comfortable filing paper tax returns, the Hawaii Asset Building Coalition will prepare tax returns for free if you're a low-income, working individual.
Tax preparation offices will open starting in early February and run until April 14. For more information, dial 211, a new three-digit statewide number.
USA Today contributed to this report. Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
