IRS Makes e-Filing Easier
With the new Free File program, you can get your taxes done without breaking the bank.
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As you gear up for the 2002 tax season, there's probablylittle you wouldn't do to make your life easier. And that'sjust what the IRS is hoping for with its new Free File program.
Sign up with one of 17 services offering Free File, which allowstaxpayers to file their taxes electronically for free, and you cannot only avoid the fee typically associated with e-filing, but alsogive yourself a better shot at getting a faster refund. Through theIRS' Web site,taxpayers are connected to the tax-preparation companiesparticipating in the program. Each company has different criteriafor e-filing, ranging from age to income. You can determine whichservices you're eligible for by either browsing through thelist of requirements for each company or by using the Free FileWizard, a questionnaire that assists in identifying the freeservices for which you may qualify.
"Free filing or e-filing will produce a more accuratereturn that will not subject the taxpayers to IRS notices onmathematical problems," says Walter R. Knepper, a partner withRubin Brown Gornstein & Co. LLP, a St. Louis accounting andbusiness consulting firm. "They will result in faster refundsof 10 to 14 days compared to four to six weeks."
E-filing in general has a smaller margin of error. "Theaccuracy rate of e-filed returns is higher than that of paperreturns because you've eliminated the data-entry processing atthe IRS," says Tom Linafelt, communications manager for KansasCity, Missouri-based H&R Block, a Free File Alliance member."The IRS estimates that e-filed returns are 99.5 percentaccurate while paper returns are about 80 percentaccurate."
Despite its many benefits, Free File is not for everyone."Free File is limited to certain incomes and will not handlecertain schedules, deductions and credits," Knepper says."Certain deductions, such as the first-year expensingallowance and credits, may be missed by a small-business owner ifthey do not consult a professional tax preparer."
In addition to filing their own taxes, small-business owners canalso do employment tax filings online. PayCycle Inc., a Palo Alto,California, Internet payroll services provider, has partnered withthe IRS to let its clients do one-click filing of their quarterlyreturns. "When a quarterly return comes due, our customerswill get an e-mail from us telling them it's time to filereturns, they'll click on that link, they check a box that says'Send to the IRS,' and once they check that we'll takecare of filing it directly," says Rene Lacerte, CEO ofPayCycle.
To see if you qualify for Free File, or for more information onother e-filing options, visit www.irs.gov.