E-file and Free File up and running today

Although Congressional procrastination on the alternative minimum tax means filing delays for some taxpayers (blogged here), the IRS is sticking to its usual schedule for most of us who plan to e-file.

Beginning today, we can electronically submit our 1040s to the IRS … if, of course, we don’t have to use one of the five forms the agency is still making sure meshes with its computer systems.

The affected forms are:

• Form 8863, Education Credits   
• Form 5695, Residential Energy Credits 
• Schedule 2, used by Form 1040A filers to claim
      Child and Dependent Care Expenses
• Form 8396, Mortgage Interest Credit    
• Form 8859, D.C. First-Time Homebuyer Credit

Filers like the hubby and me, who want to get our $300 credit for our new energy-efficient A/C, must wait until the previously announced Feb. 11 date to send in our tax paperwork, either by snail or e-mail.

The IRS warns us to not even think about trying to slip our 1040s and those verboten forms in a tad early. If they’re filed electronically, the returns will be immediately rejected. (Did you just hear Keith Hernandez and Walt Frazier, too?)

And if the forms are mailed in, well …

It’s not the official word from the IRS, but I wouldn’t be surprised if those paper forms that are filed too soon for AMT-related processing just get stuck on a desk somewhere. And if the desk they land on looks anything like mine, it could be a very long time before they’re found!

Free File also on track: Joining the regular IRS e-filing program in opening its electronic doors for business today is the Free File Alliance.

This partnership between the IRS and private tax software manufacturers is entering its fifth year. In 2008, 19 companies are expected to participate. As usual, the major players — TurboTax (Intuit), TaxCut (H&R Block) and TaxACT (2nd Story Software) — will be there.

So will, obviously, a large group of smaller software makers. And two of the companies will offer Free File services in Spanish.

The income cutoff this year — yes, taxpayer participation in Free File is still restricted based on earnings — is an adjusted gross income last year of $54,000. Make more than that, and you’ll have to pay the $10 or so bucks to have someone else deliver your tax forms to the IRS.

Waiting for free file for all: I know the software companies must, as private businesses, make a profit. So I don’t necessarily begrudge them the e-file charge, although it does seem a bit steep.

What I really want is some positive action from Congress.

When it comes to this basic responsibility of our society, lawmakers should do whatever they can to encourage us to pay our taxes. We already wade through the muckety muck of often incomprehensible laws or pay tax pros to do that for us. Can’t Washington at least give us the electronic equivalent of a postage-paid envelope?

There’s been talk in the past of a nominal credit of $20 or so dollars to offset e-filing charges. Since the agency says 70 percent of taxpayers qualify for Free File, that means the federal budget would only have to take a hit on 30 percent of us. A small credit for only a third of taxpayers shouldn’t ding the Treasury too much.

OK. You don’t have to call the guys in the white coats. I know wishing for federal funding for useful programs is Quixotic at best.

But while those folks on Capitol Hill are debating tons of other, more expansive, tax breaks, it sure would be nice if one day they could come us with at least a small fiscal "thank you" for all of us who conscientiously send in our 1040s every year.

Listen up: If you’ve got a few minutes, (4 minutes, 7 seconds, to be exact) click here to hear David Williams, Director of Electronic Tax Administration for the IRS, talk about the benefits of e-filing, the 2008 Free File program and AMT filing issues.