Free e-filing for 2001 Taxes?

chipperdog asks: "I know this gets asked every year about this time, but are there any free alternatives for e-filing tax returns? In previous years, HD Vest offered free filing, but has discontinued it this year. I can't justify spending more than $10 for filing a return that I can send through the post office and IRS data entry people for approx $0.50-0.75. It would be nice if the IRS would just publish a standard submission format, so open source developers can work with it.."

Would be nice... sort of already tried...

[pease1]

The IRS has an amazingly complex process for processing their data into the different centers around the country. They like to very tightly control who has access (for good reason) to send them data, both for quality control and security.

Nonetheless, what is proposed might be possible. I worked at an govt. agency in 1995/6 that developed a web interface to allow filing of EZ1040's and 1040a's and from some popular tax programs. We tested end-to-end - from a browser and a tax product into IRS's mainframe systems. Total cost was something like $30 million.

The project was killed by Congress, specifically by Congressman Ted Stevens. He used GAO to nitpik the system to dealth on technical details (PKI wasn't really around back then) and rapid development/procurement practices used by the project. The GAO Report is here [gao.gov]. But hell, we did it in six months!

I think IRS is still gun shy on the issue.

Re:Would be nice... sort of already tried...

[Pituritus Ani]

The project was killed by Congress, specifically by Congressman Ted Stevens. He used GAO to nitpik the system to dealth on technical details (PKI wasn't really around back then) and rapid development/procurement practices used by the project. The GAO Report is here [gao.gov]. But hell, we did it in six months!

I think the nitpicking might have had something to do with the fact that the IRS and the tax preparation and electronic filing/refund anticipation loan people have a symbiotic relationship. And the industry has lobbyists on the hill. A Federal representative at a PKI briefing (back when the Federal government was a bit hotter on the idea) had said that there will never be free electronic filing available to the public, because they are reluctant to put Intuit, HRB, et al, out of business--and that if they feared being put out of business, they would be reluctant to innvotate with Treasury.

Re:Would be nice... sort of already tried...

[zsazsa]

Missouri, the state I live in, has free web filing [state.mo.us]. The only restriction is that you can't itemize your deductions. I used it last year and it couldn't have been easier.

This is definitely a step in the right direction. If enough states do this, Uncle Sam probably would be more apt to do free filing.

Ian

Re:Would be nice... sort of already tried...

[anthony_dipierro]

They like to very tightly control who has access (for good reason) to send them data, both for quality control and security.

That actually makes it the perfect place for open source software, because you don't have to worry about massive numbers of people downloading and using your software for free. Tax preparation and e-filing is a service, and selling services is exactly how you make money with open source software.

Specs & Info

[FredtheDead]

Here [irs.gov] is the IRS's "IRS e-file For Tax Professionals, Software Developers and Transmitters" page.
and here [irs.gov] is the "IRS e-file Technical Publications" page which has the e-file file layout spec.

Re:Specs & Info

[markhb]

On the first of those pages, I found a link to their progress report [fedworld.gov] on e-filing. Their stated intermediate goal by next year is for 100% of returns prepared electronically to be submitted electronically; overriding goal is that by 2007 80% of all returns (taken as 80% each of individual, commercial, and informational returns) to be filed electronically. Personally, I don't see how they can get to the 80% for individual returns without getting to "If you didn't pay to prepare the return, you don't need to pay to E-file."

Re:Specs & Info

[Tackhead]

> Personally, I don't see how they can get to the 80% for individual returns without getting to "If you didn't pay to prepare the return, you don't need to pay to E-file."

Real easy. Allow things like the AMT to filter down into the middle class tax brackets, add more goofy deductions and credits, further complicate the "long-term/short-term" capital gains situation by adding an "ultra-long-term" capital gains rate, just keep patching on layer after layer of complexity to the code.

The goal is that by 2007, nobody will be capable of filing their return without the assistance of a tax preparer.

Re:Specs & Info

[anthony_dipierro]

You should know that you have to be approved, submit your fingerprints, and pass an FBI criminal background check in order to connect to the IRS computers. I applied in mid-December and still haven't been approved. Even if I am approved the software will not likely be finished enough to pass the test until next year.

Quicken has free filling...

[biohazard99]

For people whose AGI was under 25000 here [quicken.com]. I used it last year and it was great, but it is a large web app so doing it over a 56k could mean a long night downloading instead of looking at tax tables and reciepts.

Need a Web-based solution

[PoiBoy]

What the IRS really needs to do is create a web site where anyone can file his taxes online with a simple web browser.

This way, whether one prepares his taxes using a software program which then prints out the relevant forms or by filling out forms manually, filing is a simple matter of going to the website, logging in, and typing the data into the forms.

The IRS could then perform a quick check for math errors or other booboos and let the person correct them immediately. If a person is not ready to submit the forms, his information is saved, and the next time he logs in, the forms are restored to the way they were when he was last there. Clicking on the final submit button is equivalent to signing the form and sticking it in the mail.

Seriously, this seems all very do-able to me. The current efiling system where you have to pay someone $50 to do basically the same thing you could do on the web yourself sounds like a scam and a political payoff to the tax accountants.

Re:Need a Web-based solution

[Anonymous Coward]

The current efiling system where you have to pay someone $50 to do basically the same thing you could do on the web yourself sounds like a scam and a political payoff to the tax accountants.


Or just do it yourself for free using a pen and the form they mail you, less the cost of a stamp. If you can fill out an online form without needing an accountant, why can't you fill out the same form offline without an accountant? Calculators will do wonders for checking your arithmetic, too. If you have some other need for an accountant, the web form won't help you anyway.

Re:Need a Web-based solution

[Havokmon]

Does anyone know how many EZ forms are used? That's about the only thing that could be done via the web... You're supposed to send copies of all your deductions along with the form. In my case have a mortgage, property taxes, consolidation loan (Never do one of those), 3 kids (ok, can't send them, though sometimes I'd like to), and 401k crap that needs to be sent... If you WANT to be audited, then I suggest taking a lot of deductions, and not sending any proof..

Re:Need a Web-based solution

[jon doh!]

i just got married and found myself not filing with the 1040ez this year for the first time. my wife printed out the .pdf files for 1040 and we did it pretty quickly. we don't take anything but the standard deductions though. the turbo-tax program wasn't that bad, if they had something like that web based, it would be pretty easy to file online.

Re:Need a Web-based solution

[rehannan]

the turbo-tax program wasn't that bad, if they had something like that web based, it would be pretty easy to file online.

They do [intuit.com]. It's even free [quicken.com] if your AGI was less than $25,000.

Re:Need a Web-based solution

[jon doh!]

sorry, i meant that if the gov't would make something like that web based, it would be easy to file online. luckily, i'm in a state that doesn't have income taxes, so the fed taxes are the only ones i worry about..

Re:Need a Web-based solution

[gordguide]

The obvious problem is bandwidth, etc. Canada's servers are up to the task, but they're pretty sluggish the last week before deadline, and it's just a secure ftp site.
Can you imagine all those who wait till the last hour of the last day trying to connect at the same time to fill out a huge webform (that also does math with the entries)?
Another reason why web-based forms were rejected as a solution in Canada is the SW performs a bunch of verification functions; there's a couple of pages of data that accompanies SW returns that basically minimizes (or flags, which is worse from a taxpayer's perspective) cheating, fudging, etc. Without those pages, they'll reject your SW return even if you mail it in.
Finally, some returns are not eligible; they want the paper and the docs.

itax.com has free filing

[Brandon T.]

I found out about itax.com [itax.com] through godaddy [godaddy.com], my domain name registrar. I haven't tried the service, but it says "100% free, no gimmicks" on their web site. I've been happy with their domain services so far so you might want to check it out.

Brandon Tallent

Re:itax.com has free filing

[bab5freak]

E-filing is not free. They just let you print out your return and send it in. It is $8 to actually e-file. And what about state taxes?

Re:itax.com has free filing

[Gkeeper80]

site says they have a limited number of states avaliable, but those are $8 also

Move to Canada.

[checkyoulater]

Last year, CCRA (Canada Customs and Revenue Agency) allowed all Canadians to file online, or even over the telephone. There was only 1 catch, and that was you needed to use software approved by CCRA.

If I recall, there were a few online offerings that were free for personal use.

Of course, this doesn't really answer your question though. Perhaps I am just bragging? It is actually a pleasant surprise to see our government do something right!

Re:Move to Canada.

[cperciva]

As far as netfiling goes, I don't think Canada is any better than the US: You must use approved software, and almost all of it costs money. (The only exceptions I know of are places which don't charge you if your total income is below a threshold).

Filing by telephone, however, has been available for a number of years (quite a bit longer than netfiling) and is free. Of course, punching all those numbers in by telephone is a bit irritating.

Re:Move to Canada.

[Stavr0]

Filing by telephone, however, has been available for a number of years (quite a bit longer than netfiling) and is free. Of course, punching all those numbers in by telephone is a bit irritating.

"Marge, fetch me my telephone hat, it's tax filin' time ..." (obscure Simpsons reference that no one gets) [everything2.com]

Re:Move to Canada.

[Tackhead]

> Filing by telephone, however, has been available for a number of years (quite a bit longer than netfiling) and is free. Of course, punching all those numbers in by telephone is a bit irritating.

And the look on the tax auditor's face when you say "What forms? I don't have forms, I filed by telephone! Don't you have all my records?" is even better.

Re:Move to Canada.

[gordguide]

For telefile you gotta prepare the regular forms, and keep them w/relevant supporting docs. Without the completed return in front of you, you can't punch in the data.

Although not mandatory (an electronic copy is OK), it's a very good idea to print out your eFile return, and again you still have to keep relevant docs.

Exactly how long you have to keep them varies a bit (regulations change and some court challenges have revised the statute from time to time), but CCRA's website is reasonably helpful (considering).

Re:Move to Canada.

[gordguide]

Actually, I've been eFile-ing for years.

I did returns as a way to make a few extra bucks while a student, and have always used SW since Tax Year 1994 (which allows about 25 returns before you have to pay a bit more for another 25). If you used tax SW to mail in a return in TY1995, Revenue Canada sent you an invitation to eFile for tax year '96; the actual tax software didn't have to support it (I guess I was a beta tester).

Now anyone can do it, but the SW has to support it.

There have always been secure online return prep sites for free, if you bothered to look; you don't have to pay for SW.

All Canadian eFile-ing requires a 128bit browser (not a problem).

eFile is free; Revenue Canada (now CCRA) wants everybody to use it, because it saves them big bucks.

Probably the biggest reason it was easier to implement in Canada than the US is because a long-standing agreement with the provinces means that the feds manage the returns for both and pay out relevant monies to the provinces (there is usually a 1 page provincial form, but it varies). Quebec is an exception, but they always are; and it's not a big deal for SW to implement that if there's only one.

I can't imagine a lot of US states would go for this, they're kind of suspicous (at best) when it comes to state's rights and the US federal gov't, and of course some states have no income tax at all.

Telephone filing is available, but if you don't like voicemail you'll HATE telefile.

www.taxactonline.com

[haystd]

E-File is $7.95, paper return is free. Used them this year and they worked ok. Not quite as much hand-holding as you'd get with Tax Act or Turbo Tax, but fine for most tax returns if you're used to filing your own taxes.

Re:www.taxactonline.com

[TBone]

TaxAct works ok if you work, get paid, and spend your money.

Their calculations when it comes to mortgage appreciation, stock divestiture, exempt expenses, and the like....well, they suck.

I plugged my numbers that I could into both TaxAct and TaxCut last year, and TaxAct missed something like $1500 that I would have had to pay in addition to the bit of tax I already owed.

So if your income model is pretty basic, it might work fine, but if you do any serious money moving, go for one of the ones you buy.

They do have a standard format

[anthony_dipierro]

But you have to send them your fingerprints to be able to use it. I'm working on an open-source (QingPL) e-filing program. It probably won't be finished until next year without help, but it is available for your examination at http://sourceforge.net/projects/tax/.

Its not just federal, though...

[__aaanwh8370]

You have to adhere to all of the state (and municipal) standards for e-filing. And each one is different. Pathetically, wretchedly different. Some require piggy-backing of the state return to the federal return, some require fed ack before allowing state filing. Some even require ritual sacrifice (maryland).

I work at Intuit, in the back-end e-filing group, not in the consumer division (TurboTax) but for one of the CPA-grade tax products we produce (Lacerte). The stacks of IRS and state reg manuals we implement each year is enough to make you want to...

...charge people for letting them use the system you implemented.

I do believe that there's a web version of TurboTax that lets you skip the software purchase (but still requires the e-file fee). Or you can buy the software (windoze) and get a voucher for a free e-filing). Or you could STEAL the software and use the voucher!

You could watch CompUSA

[John Q. Public]

For the last couple of years, I've watched until TaxCut went on a special discount -- you know, the 100% rebate. It's for Windows, but then you get a coupon inside to have your first e-file charge rebated as well...

TaxAct allows Free Paper Filing, $7.95 for e-file.

[Arthur Dent]

http://www.taxact.com/ [taxact.com] allows you to print and file your federal return for free. The e-file option costs $7.95 which meets the OP requirement of costing below $10.

The software can be downloaded or used over the web.

use a spread sheet and then copy over ...

[josepha48]

I started using a spread sheet. I fill out the W2 sheet and it copies over the data to the Federal tax form. Then I fill out my Schedule B and Schedule D forms and the data from them is copied over to the 1040 Form and my state tax form. Then the only thing I have left is to look up the tax I owe. No calculations cause it is all done in a spread sheet. This can be done in excel , gnumeric, star office or any other spread sheet. You have to know what form(s) to fill out. But that is not that difficult. One you set up the spread sheet you just add to it and update it. Many of the tax forms really have not changed that much the only things that have changed are what you can itemize and the tax laws so the spread sheet should not change that much from year to year and you can add sheets as you need them. Next year I'll add 1099 sheets. It would be real nice if the US gov used these and distributed them. Think about it you just fill out the forms that you get for your taxes like 1099 and W2 and 4xxx.

If you have just one employeer and no interest or less than 400 in interest and no stocks or bonds or investments, you could probably use a 1040EZ. Other wise you may need a 1040.

Even if you did use turbo tax or one of the other programs you'd have to fill out your w2 forms, and 1099 and any other forms. I'd recomend breaking down and spending the 20 or 30 for Turbo Tax if you have lots of forms especially if you recieved some of those 4000 series forms.

Personally I think the goverment and states should be required at this time to send people forms that do the computations for you. There is no reason that they cannot.

HRblock

[Anonymous Coward]

I used www.hrblock.com last year. No software, it's all done online (a little sludgy in some spots if using dial-up), and the total fee for e-filing 1 federal and 1 state (regardless of # of employers) was $14.95. I found it to be beyond easy and extremely helpful. They'll hold your hand all you want, just click on the icons for explanations of the data they're asking for. They even give you hints on when to and not to enter certain info, depending on your situation, to help you gain the largest return. Also, you can prepare as many returns as you want (say, married filing jointly and married filing separately to see which gets the biggest return) and there's no fee, and after you've finished them all, you can select which one to actually file. If you get interrupted, you can save where you are and come back to finish it later. Finally, they save the filed return for you online for you to access for years to come. I haven't checked them out yet this year, but if nothing's changed I definitely plan to use them again. Good luck.