How to save money when you're filing your taxes
It's almost that time of year again, when you have to start gathering up all of your income statements, expense records and receipts so you can file your taxes by April 15. It can be an arduous task and potentially a costly one, especially if you make a mistake or opt to farm out the work to a professional.
In some ways, there is not much you can do about tax time: It is an annual, mandatory occurrence that requires time. The good news, though, is that it does not necessarily require money. Whether you end up owing the government money or receive a check after you file, why pay more than necessary to actually file? There are many options, with a range of support available, ranging from handling the paperwork yourself to paying professional tax preparers to fill everything out for you.
The available services vary widely, depending on the provider and other factors. Like other financial decisions, it is important to weigh your options and make an informed decision at tax time. Here are some options to consider:
IRS Free File allows for a no-cost federal return if your household's 2015 adjusted gross income was $62,000 or less. You can file using their online fillable forms or using brand-name tax software. To do the latter, you must select a service provider to file through (your options are outlined in the Free File section of the IRS website). Depending on which state you live in, you may need to pay for your state return. Some of the participating "e-file partner" companies provide free state returns as well; check the company's website for details.
Regardless of whether you meet the $62,000 limit, there are still many free federal filing options from many of the same providers. Everyone has access to free fillable forms; irs.gov/freefile is still a good place to start. 1040EZ forms are offered for free preparation and filing by e-Smart Tax and TaxSlayer. TaxACT has a variety of IRS tax forms and schedules for free preparation and filing. Basic IRS forms can be prepared and filed for free with TurboTax, which will import W-2 information, so tax filing requires less time to complete. State returns may have a fee to file with these providers, and adding more complex federal forms can bring additional costs to what began as a free federal return.
Depending on your age, income and military affiliation, you may also be eligible to receive tax assistance. Volunteer Income Tax Assistance is available to help people who meet the $54,000 or less threshold. They'll receive free basic income tax help with their electronic filing return from nearby IRS-certified volunteers. Look for a site that is located near you through the IRS website.
People 60 years old and above can also enjoy assistance from IRS-certified volunteers in their community who can also help with issues related to pension and retirement through the Tax Counseling for the Elderly Program. Active duty members of the military can use TaxSlayer's free federal version. The AARP Foundation's Tax Aide Program also provides support; you can look up the site nearest to you on the AARP website.
One of the most important steps you can take to help make tax time as painless (and least expensive) as possible is to stay organized all year long, especially with paperwork. If April rolls around and you don't know where to find important income statements or expense receipts you plan to claim as tax deductions, then the process can take much longer that it has to. If paper filing is a challenge, consider using a digital method such as Shoeboxed or Expensify. Both make it possible to scan and store receipts, so you don't have to worry about the paperwork. These tools aren't free, but they can be less expensive than the price of lost receipts or tax errors.
If you do opt for digital storage and organization, then you'll want to be sure to back up your accounts, too. You don't want to suffer through lost data just as you're trying to file to get your tax refund. And if you do get that refund, use it wisely: Consider putting it toward paying off debt or saving it for the future.
Whatever method you choose, make sure to file before the April 15 tax deadline. That way, you'll avoid potential fees if you owe money, and if you're owed a refund, you'll get it sooner.