Its tax time again. Washington may be stuck in gridlock, but Uncle Sam still wants your money.
The IRS is finally ready to accept almost everybodys tax return, including those with education credits, amortization and depreciation expenses. A small percentage of people with some unusual items such as credits for electric vehicles will have to wait until the first week in March.
Just because the IRS is late doesnt mean you can be late too. The filing deadline is still April 15. Congress gummed things up by waiting until New Years Day to work out the new tax law, and it has taken the IRS a while to reprogram its computers. You can find a list of forms that cant yet be filed at http:///www.irs.gov.
Heres what you have to know this year, as well as a few things that could make the ordeal easier and cheaper.
FILE FREE (OR CHEAP): Tax preparation may be the only area where its better to be a working stiff than to be rich. For most working folks, tax preparation is cheap or free if you know where to look.
If your income is under $57,000, you can prepare your federal taxes for free through the IRSs free-file program. About 70 percent of all taxpayers qualify. Go to http:///www.irs.gov and click Free File under Hot Topics.
The IRS signed up a raft of private tax software firms to provide the service. The software asks you questions, and it uses your answers to fill out the tax forms and file them electronically. Little brainpower is required from taxpayers.
Of course, theres a catch. The firms generally want to charge you for filing your state return. But the charges are reasonable $12.95 through eSmart, or $14.95 through TaxAct or Online Tax Pros.
Theres a way around this, courtesy of Wal-Mart. The retail giant is offering free federal and state preparation through http:///www.myfreetaxes.com for people with income under $57,000. It uses the H&R Block tax software.
GET FREE LABOR: The IRS Volunteer Income Tax Assistance Program provides free help to those earning $51,000 or less.
For a location, call the IRS at 1-800-906-9887 or check online at http:///www.irs.gov.
The IRS also sponsors the Tax Counseling for the Elderly program, providing free tax help for people 60 and older. As part of the program, AARP volunteers offer tax prep help to low- and moderate-income people, concentrating on people over 60. Information online is at http://www.aarp.org/money/taxes.
PAY UP: People earning more than the $57,000 limit will have to pay for help, or tackle the forms themselves.
The online world is full of tax prep competitors. TurboTax, the big kahuna of the field, charges $19.99 for a federal return done online with its basic service, plus $36.99 per state return. You can also buy the CD version.
H&R Block at Home has a free federal version for simple returns and charges $27.50 for a state return. Its version for more complex federal returns runs $19.95, with $34.95 per state.
Lots of others are undercutting the big twos prices. TaxActs free basic federal edition charges $14.95 per state. Its deluxe edition charges a combined $17.95 for federal and state. Other competitors are TaxSlayer, 1040Now, eSmart Tax and TaxHawk.
You can also bring your shoe box in to a tax prep office, but expect to pay more.
If you do, you might be offered a refund anticipation check. These are temporary bank accounts set up to receive refunds. They allow the preparer to deduct tax preparation fees from the refund, so the consumer doesnt have to pay up front.
But big fees can make such loans a bad deal for consumers. The banks often charge $30 to $35, and tax preparers sometimes add their own fees, according to the National Consumer Law Center. They dont speed up refunds; consumers have to wait until the IRS pays the bank to get their own checks.
WHERES MY REFUND? Heres what the IRS says: If you e-file and ask for direct deposit to your bank, youll get your refund in 21 days or less. If you e-file and want a paper check, youll wait four weeks. File a paper return and youll wait four to six weeks.
You can also check the status of your refund online, but the IRS on Thursday begged folks to only check once a day, because the website has been inundated with cash-hungry taxpayers.
WHATS NEW? Despite all the noise from Washington last year, federal taxpayers wont find a lot new on their 2012 tax forms. Still, here are some things the IRS thinks you should know:
If you dont make a lot of money, dont forget the Earned Income Tax Credit. About 1 out of 5 eligible people neglect to file for it. A family with three children is eligible with income up to $45,040 for a single parent and $50,270 for married couples.
The 2012 rate for business use of your car remains 55.5 cents a mile. The 2012 rate for medical care or moving is down to 23 cents a mile.
Use Schedule 8812 to figure your additional child tax credit for 2012, says the IRS. Schedule 8812 is new for 2012.
Source: MCT Information Services