Fast, free tax filing from your friendly IRS

MADISON, Wis. (2/1/10)--You still have to pay, but at least the government is making it easier to report what you owe. The Internal Revenue Service (IRS), working with selected vendors, is making tax preparation software and electronic filing of the federal tax returns available to most taxpayers at no charge.

"Free File is a great choice for either the novice taxpayers who need some assistance or the experienced taxpayers who prefer to do the work themselves. It's fast; it's safe; it's free," said IRS staffer David R. Williams.

Visit IRS.gov/freefile 24 hours a day through April 15 for two basic options:

• Traditional Free File. This software option covers tax preparation, which includes guiding users with questions, doing the math, and entering the results on the proper forms. It also includes free electronic filing of your return and its supporting documents.

The IRS provides Traditional Free File through a partnership with the Free File Alliance LLC, a group of about 20 private sector tax software companies. Each company sets its own eligibility criteria, such as state residency, age, income, or military service. However, an individual or family whose adjusted gross income was $57,000 or less in 2009 will find some tax preparation software they can use. This includes approximately 70% of the nation's taxpayers, or about 98 million people, according to the IRS.

Several companies offer their software in Spanish. Several also offer state tax preparation, although fees may apply. Taxpayers are under no obligation to make any purchases from the software companies.

• Free File Fillable Forms. This option is for taxpayers who are comfortable preparing their own tax returns. Almost everyone is eligible for this service, which provides electronic versions of IRS paper forms. Taxpayers complete the tax forms online and file electronically. The fillable forms perform simple math functions, but do not use the question-and-answer guidance format that the software does. There are no income limits and almost all tax forms are available. The Free File Fillable Forms option does not support state forms or state electronic filing.

  Traditional Free File can help you identify new tax credits or deductions you might be eligible for, such as new and expanded benefits for energy conservation, new car purchases, college tuition, and first-time homebuyers.

  If you are eligible for a first-time homebuyer credit, however, you will not be able to e-file because you must attach proof of purchase to your tax return. In that case, you still can use Free File to prepare your tax forms, then print and mail them to the IRS.

Additional benefits from free e-filing with the IRS include:

• Quick acknowledgement--within 48 hours, telling you that the IRS has received and accepted or rejected your return;

• Reduced error rate--typically 1%, compared with 20% on average for a paper return;

• Fast refund--as few as 10 days when you use direct deposit;

• Electronic tax payment scheduling and the ability to apply for an automatic extension of time to file your federal return (IRS Form 4868). For taxpayers who request an extension, Free File will be available through Oct. 15.

For more information about taxes, read "Roth IRA: To Convert or Not to Convert?" in the Home & Family Finance Resource Center.