The 2007 tax filing season isn’t quite over (Oct. 15 is the ultimate deadline), but already some are thinking about filing — and doing so for free — next year.
The Wall Street Journal says that the IRS has asked private, tax-software companies to find a way to let all taxpayers file for free. And one company apparently is planning on opening up the free-file doorway a bit wider in 2009.
Desktop users of TurboTax, according to a report by WebCPA, should be able to use the tax preparation software and then electronically file for free, regardless of income.
This year, the Free File partnership that the IRS entered into with the firms allowed no-cost electronic filing only for taxpayers whose adjusted gross income was $54,000 or less.
Free File for those income-eligible taxpayers is still available through the Oct. 15 deadline for 2007 returns.
Income limit effects: Back in 2005 (when 2004 returns were due), the Free File program saw record-setting usage. The main reason? There was no income limit.
That filling season, any taxpayer, regardless of how much they made, could use the online electronic file-for-free system.
The next year, the income limits returned. The IRS and members of the Free File Alliance, the group of participating tax-software companies, said it was to bring the program back to its original purpose of making e-filing available to under-served and low-income taxpayers.
By opening it up to everyone, said Free File members, the program strayed from its initial purpose. Re-establishing income limits, they argued, "refocused" efforts to get services to those who need it the most.
The thinking is that taxpayers making six-figure incomes shouldn’t have any problem paying the e-filing fees, which generally start at around $15.
Principle, not money: Free-for-all advocates, however, say that money is not the issue.
Rather, if the IRS is going to continue to push for electronic filing, it should make it more easily available and more price competitive with other filing methods. The cost to send a paper return by certified mail, for example, returns runs around $5.
The WSJ says the latest effort to make free e-filing available to every Form 1040 (or 1040A or 1040EZ) filer were revealed in a letter from Intuit Inc., maker of the popular TurboTax, to Sen. Charles Schumer (D., N.Y.), chairman of the Joint Economic Committee.
The company plans to make free e-filing available to all its desktop product users next filing season, according to WebCPA. However, such an offer to is not likely to be made by Intuit to professional tax practitioners.
Schumer has been one of the most vocal about making free filing available to all taxpayers. His committee research found that taxpayers spent more than $1 billion in 2007 on electronic tax filing fees.
IRS spokeswoman Michelle Eldridge told the newspaper that the agency is in an "ongoing dialogue" with the Free File Alliance about opening up the program, but didn’t provide details.
Congressional action continues: Legislation was introduced earlier this year, as it has been in the past, to require the IRS to provide free e-filing through an electronic portal.
Other measures call for the abolishing all e-file related fees.
As in previous years, such proposals are not going to make it into law.
How do you file? Did you, or will you, e-file your return this year? Did you pay to do so?
Or did you, like me, use the tax software to figure your tax liability but send it in (or, in my case, will send it in) via the Postal Service?
Since I’m not getting a refund, and indeed already paid my tax bill back in April when I got the extension, I don’t want to spend $15 to deliver the documentation. By using the Post Office, I can afford two more Venti Mocha Frappuccinos!
