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IRS Free File Program

Source: IRS.gov, http://www.irs.gov/efile/article/0,,id=118991,00.html

Free File is online tax preparation and electronic filing through a partnership agreement between the IRS and the Free File Alliance, LLC. Services are provided by commercial companies, not the IRS. Not everyone will qualify for Free File. There are a few important points you should know before starting the Free File process:

Free Services provided by commercial companies
Members of the tax software industry (i.e., Free File Alliance, LLC) provide these free tax preparation and electronic filing services - not the IRS. Once you choose a particular company, you will be sent directly to the company's commercial web site. Any questions about a particular service or company should be directed to the company providing the free service and not the IRS. Please contact the company to resolve your particular income tax issue.

The government believes that private industry, given its established expertise and experience in the field of electronic tax preparation, has a proven track record in providing the best technology and services available. In addition, the government believes a partnership with private industry will: provide taxpayers with higher quality services by using the existing expertise of the private sector; maximize consumer choice; promote competition within the marketplace; and meet objectives in the least costly manner to taxpayers.

You are under no obligation to buy any additional services
During the course of preparing your free file tax return, you may choose to browse other products and services that some companies may provide for a fee. You are under no obligation to buy additional products and services. The decision to buy these services is entirely up to you. For example, a company may offer you an Individual Retirement Account (IRA) or a mutual fund or other investment related products for a fee.

You do not need to buy these products or services as a condition for preparing and e-filing your federal income tax return for free. As long as you meet the company’s free offer criteria, you may simply prepare and e-file your federal return for free.

IRS Free File does not endorse Refund Anticipation Loans (RALs) or any other advance refund banking products
You are under no obligation to use Refund Anticipation Loans or purchase any product from the participating company (Some participating companies do not offer such services). Obtaining a fee-based product is a decision left to the individual taxpayer. The IRS reminds you that taxpayers using e-file with direct deposit can lead to receiving a refund within two weeks or less.

What information do I need to determine if I qualify?
We have made every effort to ensure Free File is available to as many individuals as possible (You must be a U.S. citizen or resident alien). However, there are some limitations. To determine eligibility for free services, you may need access to the following information.

(1) Age and your spouse's age (if applicable) - Use your age as of December 31, .

(2) Your Adjusted Gross Income (AGI)

Adjusted gross income is defined as gross income minus adjustments to income. On average, AGI is equal to the Total Income for approximately 82% of all individual taxpayers. If your income (e.g., change in job) or personal circumstances (e.g., change in marital status) did not change from last year, we suggest you refer to your federal income tax return to get a quick estimate of your AGI. On your federal tax return, please refer to:

  • Line 4 if you filed a Form 1040EZ
  • Line 21 if you filed a Form 1040A
  • Line 34 if you filed a Form 1040

Important Reminder: If your filing status was single on your Tax Year tax return and you plan to file a joint return for Tax Year , then make sure to add your spouse's AGI to yours when estimating your AGI.

AGI is defined as your taxable income from all sources including wages, salaries, tips, taxable interest, ordinary dividends, taxable refunds, credits, or offsets of state and local income taxes, alimony received, business income or loss, capital gains or losses, other gains or losses, taxable IRA distributions, taxable pensions and annuities, rental real estate, royalties, farm income or losses, unemployment compensation, taxable social security benefits, and other income minus specific deductions including educator expenses, the IRA deduction, student loan interest deduction, tuition and fees deduction, Archer MSA deduction, moving expenses, one-half of self-employment tax, self-employed health insurance deduction, self-employed SEP, SIMPLE, and qualified plans, penalty on early withdrawal of savings, and alimony paid by you. Do not deduct your standard or itemized deductions.

For more details, see the Instructions for Form 1040 by accessing the IRS web site at http://www.irs.gov/pub/irs-pdf/i1040.pdf or you may want to refer to the Form 1040, http://www.irs.gov/pub/irs-pdf/f1040.pdf.

(3) State of Residence - Where do you live? Use the state that will be listed at the top of your federal income tax return.

(4) Form W2, Wage and Tax Statement

Add up the total number of IRS Form W2(s) you received or plan to receive from your employer(s). If you did not receive any Form W2s, select 0 from the scroll down box. If you only received wages from one employer, choose 1 from the scroll down box. Or for example, if you are filing a joint return and both you and your spouse received one Form W2 each, choose 2 from the scroll down box. If you received more than 2, select "more" from the scroll down box.

Employers must file Form W2, Wage and Tax Statement, for wages paid to each employee from whom:

  • Income, social security or Medicare Taxes were withheld or
  • Income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on the Form W4, Employee’s Withholding Allowance Certificate.

You should receive your Form W2(s) by January 31, . Please refer to attached form for more information: http://www.irs.gov/pub/irs-pdf/iw2w3_03.pdf

(5) Eligibility for filing using Form 1040EZ

You can use Form 1040EZ only if all of the following apply:

  • Your taxable income (line 6 of the Form 1040EZ) is less than $50,000. (If your AGI is $65,600 or more you can not use the Form 1040EZ)
  • Your filing status is single or married filing jointly
  • You (and your spouse if filing jointly) were under 65 and not blind at the end of . If you were born on January 1, 1939, you are considered to be age 65 at the end of and cannot use Form 1040EZ.
  • You do not claim any dependents.
  • You do not claim the educator expense deduction, the student loan interest deduction, or the tuition and fees deduction.
  • You do not claim an education credit, the retirement savings contributions credit or the health coverage credit.
  • You had only wages, salaries, tips, taxable scholarship or fellowship grants, unemployment compensation or Alaska Permanent Fund dividends and your taxable interest was not over $1,500.
  • You did not receive any dividends (other than Alaska Permanent Fund dividends) or receive any Form 1099-DIV payments.
  • You did not receive any advanced earned income credit payments.
  • You do not owe any household employment taxes on wages you paid to a household employee.

For more details, see the Instructions for the Form 1040EZ by accessing the IRS web site at http://www.irs.gov/pub/irs-pdf/i1040ez.pdf or you may want to refer to the Form 1040EZ, http://www.irs.gov/pub/irs-pdf/f1040ez.pdf.

(6) Eligibility for claiming the Earned Income Credit (EIC)?

The credit is called "Earned Income" because to qualify, you must have earned income. Earned income generally means wages, salaries, tips, other taxable employer compensation, and net earnings from self-employment. Items such as interest, dividends, pensions and annuities, social security, alimony and child support, welfare benefits, workers' compensation benefits, and veterans' benefits are not considered earned income.

To claim EIC, you must be a United States citizen or resident alien all year, have a valid social security number and have earned income. Generally, if your investment income is more than $2,600, you cannot claim the EIC. If you file Form 2555, Foreign Earned Income or Form 2555-EZ, Foreign Earned Income Exclusion, you cannot claim the EIC. If your filing status is married filing separately, you cannot claim the EIC.

You are NOT ELIGIBLE for EIC if your Adjusted Gross Income is equal to or more than the dollar limits listed below.

Find the category below for the number of qualifying children you have and select the amount by your filing status.

If you have more than one qualifying child:
  • $33,692 for single, head of household, or qualifying widow
  • $34,692 for married filing jointly

If you have one qualifying child:

  • $29,666 for single, head of household, or qualifying widow
  • $30,666 for married filing jointly
If you have no qualifying children:
  • $11,230 for single, head of household, or qualifying widow
  • $12,230 for married filing jointly

Your qualifying child must meet the relationship, age, and residency tests. For more information about a qualifying child or if you are unsure whether you qualify for EIC, please refer to the Publication 596, Earned Income Credit, a comprehensive guide designed to help you determine whether you are eligible for the EIC. The "EIC Eligibility Checklist" on the last page of IRS Publication 596, can be used to quickly determine your eligibility for the credit.

(7) Military Status

All active armed forces, federal reservist and National Guard personnel are eligible for Free Filing. Veterans and retirees are not automatically eligible. You or your spouse must have a Form W2, Wage and Tax Statement from one of the military services.

You may exceed eligibility criteria after selecting a company
If you do not qualify for the selected company’s free offer, you may want to check other free file company offers by accessing the IRS.gov Free File page. If you are on the company’s web site, look for the link that returns to IRS.gov and search for another Free File service. Go back and scan the listing of free company services.

If you do not qualify for the company’s free offer but continue with the preparation and e-filing process with this company, please be aware you will be charged a fee for preparing and e-filing your federal tax return. For example, if you select a company whose free services are provided to individuals with an Adjusted Gross Income (AGI) of $26,000 or less and, based on your tax data, the company determines your AGI exceeds the $26,000 limit, you will be notified you may be subject to a fee. It is important you understand each of the company's eligibility criteria before selecting a company.  You may find the fee by looking under “more details” next to the company’s description on the Free File pages.

Access the Free File services by selecting a company from the IRS.gov web site
When selecting a company for the first time, make certain you access the company’s web site through the IRS.gov web site. If you choose to access the company’s web site directly, even if you qualify for their free offer, you may not remain eligible for the free service. After you enter a company’s free file site from the IRS.gov site for the first time, you will remain eligible for the company’s free offer even if you return from another web site or URL.

Your tax information and data will be protected -- Privacy and Security concerns
Your tax information and data will be protected. To ensure your data's safety, we require participating companies to obtain both privacy and security seal certifications. These certification programs, administered by third party providers, certify your tax return information is protected from unauthorized access during the tax preparation process. For more information, we encourage you to visit the company's privacy and security policy located on the company’s web site.

How will Taxpayers' security and privacy be protected?

  • Tax return preparation is accomplished using proprietary software approved by the IRS; transmittal is through the established IRS e-file system.
  • Each company must attain a third party privacy and security certification.
  • Alliance companies must comply with all federal rules and regulations on taxpayer privacy for paying and free customers. These rules prohibit use of tax return data for purposes not specifically authorized by the taxpayer.
  • The IRS monitors the progress of each of the companies. If any problems develop, the companies are required to alert the IRS. If appropriate, the IRS will remove the company from the IRS.gov site until the problem is resolved.
  • For more information about IRS Privacy and Security Policy, please visit the “ IRS Privacy and Security Policy” page.
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