How to get your taxes done absolutely free

For the 30 years I’ve been in the TV news business, I’ve been telling viewers and readers how to get their income taxes done as inexpensively as possible. And every year I’ve been amazed at how the big tax preparers rip Americans off by charging them tons of money to prepare their taxes and/or sell them software when they’re well aware those Americans could get their taxes done for nothing.

For many years now, we’ve written articles like “6 Ways to Get Your Taxes Done for Free,” explaining that volunteer tax preparers are waiting at thousands of destinations nationwide to do your taxes absolutely free, provided your income is $56,000 or less. If you make less than $66,000, you can get free software from the IRS Free File program, a partnership between the IRS and makers of commercial tax-preparation software.

Purveyors of in-person tax preparation and/or software, however, aren’t legally required to disclose they’re charging for services they know are available for nothing, so they keep their mouths shut and ring the register.

ProPublica has done an excellent series of articles on this issue. Read them here

RELATED: Take a look at these super easy ways to lower your tax bill:

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5 ridiculously simple ways to lower your taxes
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5 ridiculously simple ways to lower your taxes

1. Contribute more to a retirement account

If you put money into a traditional IRA or 401(k) plan, you'll benefit in two ways. First, you'll get the financial security that comes with having savings available in retirement, and the earlier in life you start contributing, the more opportunity you'll give your money to grow. But you'll also benefit from a tax perspective, because the amount you contribute will go in pre-tax. What this means is that if you make $50,000 a year but put $5,000 into your 401(k), you'll only pay taxes on $45,000 of income. Talk about a win-win!

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2. Donate items you no longer use

Is your basement or hall closet overflowing with clothing, tools, and gadgets you don't need? If you donate those items to a registered charity, you'll get to claim a deduction on your taxes. All you need to do is obtain an itemized receipt of what you give away to verify your donation, and you're all set.

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3. Open a flexible spending account

Medical care can be a huge expense for some families. Americans spent an estimated $416 billion on out-of-pocket medical expenses in 2014, and that number is expected to climb to $608 billion by 2019. But if you sign up for a healthcare flexible spending account (FSA), you'll get to pay for eligible medical expenses, like copays and prescription drugs, with pre-tax dollars. For 2016, you can allocate up to $2,550 to an FSA, which means that if your effective tax rate is 25%, you'll save $637 by contributing the maximum. But don't make the mistake of overfunding your FSA. The money you contribute goes in on a use-it-or-lose-it basis, so if you put in the full $2,550 but only rack up $2,000 in eligible expenses, you'll have to kiss that remaining $550 goodbye.

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4. Use pre-tax dollars to pay for child care

Childcare is one of the greatest expenses families with young children face. The average American household currently spends $10,192 a year on full-time day care center care, $7,700 a year on regular after-school babysitting, and $28,900 on a full-time nanny. The good news, however, is that you can shave a fair amount of money off your tax bill by opening a dependent care FSA. Similar to a healthcare FSA, a dependent care FSA allows you to allocate pre-tax dollars to pay for eligible child care expenses, which include preschool and summer camp. For 2016, a couple filing a joint tax return can contribute up to $5,000 a year in pre-tax dollars. If you max out that limit and your effective tax rate is 25%, you'll save $1,250 in taxes. The only catch is that like a healthcare FSA, if you end up spending less during the year on eligible expenses than what you put in, you'll forfeit your remaining balance.

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5. Sign up for commuter benefits

Traffic and rail delays can be a huge source of daily aggravation. But if your commute can't serve the purpose of helping you relax and ease in and out of your workday, it can at least help you lower your taxes. All you need to do is sign up for commuter benefits through your employer, and you'll get to use pre-tax dollars to pay for the costs you already incur. For 2016, you can allocate up to $255 per month in pre-tax dollars for transit and up to $255 a month for parking for a combined total of $510. If you hit that maximum and your effective tax rate is 25%, you'll save $1,530 a year on your taxes.

Nobody likes paying taxes, and there's certainly no reason to pay more than you have to. With a few smart moves, you can lower the amount you ultimately fork over to the IRS and keep more money in your pocket.

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Now there’s free tax prep for everyone

Now there’s another free option that takes all comers, no matter their income or the complexity of their retire. It’s Credit Karma, the personal finance site known for offering free credit scores and monitoring, as well as credit cards, loans and other financial products. They began offering free tax prep several years ago, presumably to attract new members.

Credit Karma tax prep will work in nearly every situation, not just simple ones. You can itemize and even file business returns. There are situations, however, it can’t accommodate, like Foreign Tax Credits, multiple state returns and certain types of trusts.

The way it works

You can use Credit Karma tax prep on a desktop, laptop or mobile device. Just answer a few questions, and the service will help you do everything from determining your filing status to completing your federal and state returns.

To start the process, you can also upload your prior year’s Form 1040 from most of the major software companies, including TurboTax, TaxAct and H&R Block. You can also use your smartphone or tablet to take pictures and upload documents.

The service is easy to use, with a clean, simple and intuitive interface.

Like most decent software, when you’re done, the app will review your return and look for potential problems. It even offers audit defense as well as guaranteeing to get you the maximum refund.

In short, this is a robust program at the best possible price: zero. This is a genuinely free product.

What’s the catch?

As I said above, Credit Karma is presumably providing this free service to attract new members. You’ll have to sign up for the site to get the tax-prep benefit, and signing up means getting periodic offers for things like car loans, personal loans, mortgages and credit cards.

Another potential drawback: While they do provide an online help center, as well as email support for their tax product, they don’t provide phone support.

While signing up for most sites, including this one, is as simple as providing an email address, signing up for Credit Karma requires your name, address, date of birth and the last four digits of your Social Security number. The site should, however, be safe: They say they use bank-level encryption. They also offer two-factor authentication.

The bottom line

If there’s one thing I can’t stand, it’s watching people pay for things they could get free. Now tax returns are one more thing to add to the list.

If you’re confident enough to file a tax return using software, try Credit Karma.

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