Last-Minute Tax Filers – Don't pay a fortune!
Even those who have delayed till the last week still have options for filing their tax return. If your return is complex you may wish to use a professional preparer, but many taxpayers can file their returns inexpensively or for free.
If your income is below about $42,000, find out if there are free tax preparation sites in your community. At these sites, IRS-certified volunteers will prepare your return at no charge, and in most cases will file it electronically for you. Two types of volunteer sites exist: VITA (Volunteer Income Tax Assistance) and AARP’s TCE (Tax Counseling for the Elderly). [Note: most AARP sites are open to people of all ages! ]
Volunteers Can Handle Basic Tax Filing Needs
In general, volunteers can prepare tax returns with income reported on W2 and 1099 forms, whether standard or itemized deductions are used, and they can assist with most typical tax credits (Earned Income Credit, Child Tax Credit, Dependent Care Credit, Education Credits, and more).
Depending on the level of expertise of volunteers at a particular site, they may also be able to prepare some returns for people who have a small business or are self-employed; volunteers can do these tax returns if they are eligible to file a Schedule C-EZ.
The IRS does limit what volunteers can do, so it’s wise to ask some questions about your particular tax-filing needs. For example, Rental Income, Farm Income, or anything involving depreciation are outside the scope of the volunteer programs.
Many volunteer tax sites operate on an appointment basis, so be sure to call ahead.
Other Free and Low Cost Options
In addition to volunteer tax preparation sites, other free or low-cost tax preparation options exist. At the Internal Revenue Service website (www.irs.gov) you’ll find a link to “IRS Free File.”
The IRS has made agreements with a number of tax preparation and software firms, so that people with income below $56,000 can find a resource to prepare their own federal return for free on-line.
State return preparation is often also available, usually at a low fee and sometimes for free.
If your tax situation is relatively simple, especially if it is very similar to last year (which enables you to compare your current year return to last year’s return), these do-it-yourself options are likely to work very well. Even if your income is too high to qualify for the “Free File” option, you may be able to purchase software or pay for online tax preparation that will be much less expensive than a professional preparer.
If, however, your tax situation is complex, with numerous business-related deductions, investment gains and losses or other complexities, it can be worth the cost to have a well-qualified professional prepare your tax return. The cost of an incorrectly-prepared return can be substantial.
In no case, however, is it considered wise to receive your tax refund through a refund anticipation loan. These “instant refunds,” which typically involve a short-term loan which you can receive 1-2 days after your return is prepared, are both costly and risky. The cost is generally quoted as a fee, but when it is equated to an Annual Percentate Interest Rate, it can be as high as 200-300%!
The risk is equally important to consider. If your tax refund turns out not to be as much as anticipated (whether through an error or due to a debt that is subtracted for back child support, unpaid student loans, back taxes or other debt) then it will not be enough to repay the loan.
–Barb Wollan, extension family resource management specialist
