The IRS’s online filing system is up and running on time. No last-minute bits of legislation to change the whole playing field. What’s the big news this year? Lots of free advice and better question paths in all services.
How to file your taxes for free-From MarketWatch
About 145 million tax returns were filed last year. The IRS estimates that over 70% of taxpayers are eligible to file for free using the Free File Alliance program or the Free File Fillable Form system .
With that system, skilled computer adepts can avoid commercial tax firms. This no-frills system doesn’t integrate with any state filing systems. It’s useful for folks who are either in a state without a state income tax, or a state with an online tax-return system.
Meanwhile, under the Free File Alliance program, 15 companies offer free federal tax returns to taxpayers with income under $57,000. Each provider has different age and form restrictions and other conditions. Most service all states. But some don’t. For instance, ezTaxReturn.com says it covers “any state, except...” — then lists 30 states it doesn’t service.
Some providers have age restrictions. Most provide free services to active members of the military. Many services accept taxpayers with foreign address.
Drawbacks of both systems
While the federal tax returns are free, all of the companies require that you pay for the state tax return, if you need one.
One benefit of the Free File Alliance program is that the companies may not try to sell you additional products or services.
Once you’ve entered all the information, if your tax return doesn’t qualify for the free program, you’ll need to exit and start all over again with the company’s regular software. Neither system stores your information from one year to the next. So you always have to start over.
What’s the alternative? Today, most online tax-return processors offer free versions of their own these days. With lots of desirable benefits.
More free services
All major providers allow you to start your tax return for free. You can print or e-file the free federal returns. You can save your file with a username and password, without entering a valid Social Security number.
Test the services without worrying about compromising your security or identity. Once you become a user, even of their free services, they generally keep your prior-year tax return on file for years. Some of them, forever.
Don’t worry about selecting the right starting level. Start at the cheapest level and enter data. Before you finalize your tax return, the software will let you know if you have reached more expensive levels of service. While the federal return may be free, in all cases you must pay for the state return. They all provide accuracy guarantees
What they each offer:
What are the companies excited about this year? Let’s look at them in alphabetical order.
CompleteTax:
The basic tax-preparation service is free. That covers your 1040EZ for all filing statuses. You can produce estimated tax vouchers if you need them. You can import a PDF version of last year’s tax return from a competing company. You can import W-2 and 1099-INT and dividend data. If your tax return is more complex than the Basic level allows, your potential fee is locked in, based on the date you start your tax return. Free tech support is provided by email. For $19.95 you’ll get three months of unlimited phone support with a tax professional. (State return: $34.95.)
H&R Block Online:
In addition to the 1040 EZ and 1040A, most common forms are supported. You cannot import prior-year returns or W-2s and 1099s at the free level. That capability starts at the Basic/$19.95 level.
Although you cannot prepare estimated tax vouchers, you can prepare a full 1040 return, including itemized deductions, employee business expenses, capital gains, and more. Support is available online, via the new Tax Answers resource, or by telephone. Worry-free Audit Support® is included, at no charge, with the free version. That means, H&R Block will not only help you answer any tax agency correspondence, they’re even prepared to represent you at the audit. (State return: $27.95.)
TaxAct:
The free service includes all forms that can be e-filed, including Schedule C for business and rental income. Extensions are free. You can import the PDF file of your prior-year return.
Using that, TaxAct offers a prior-year comparison of numbers, for returning clients. Email support is free. You can expect a reply within 1-2 business days. Everything is iPad compatible. A one-time fee of $7.95 gives you phone support for the entire tax season, or upgrade to the Deluxe service for $9.95, which includes the phone support. They are the only company with a tool to help you with your FAFSA (financial aid) applications for private school or college. You can prepare multi-state tax returns (though the additional states are not free). (State return: $14.95.)
TurboTax:
This free service includes lots of forms, including the Treasury Report of Foreign Bank Accounts (FBAR), installment agreements, and even the application for a federal ID number (Form SS-4). It does not include estimated tax vouchers. Most credits are included. Business and rental schedules are not included. Multi-state tax returns are supported (though the states are not free). This year’s software allows you to import practically all of your data, with little or no additional typing on your part. The big news is the free telephone support. Ask a Tax Expert provides free phone and chat support to anyone. Or use the Live Community database, with years of questions and answers. (State return: $27.95.)
Face-to-face help
While free online filing options abound, some people prefer the personal touch. You can get free, live, walk-in help at tax centers all around the country. IRS and the Taxpayer Advocate Service support the VITA and TCE programs for seniors and low-income taxpayers.
These programs are staffed by trained volunteers and tax professionals, who are required to pass an IRS test . They will answer your questions with great patience. VITA volunteers understand about support disputes, retirement distributions, and other complicated tax issues. They can help you find credits and deductions you may not realize are available to you. If the tax returns are too complex, they can often refer you to someone who can help.
VITA Program.
The Volunteer Income Tax Assistance program offers free tax preparation and efiling assistance to low-income households outside urban areas and in hard-to-reach urban areas.
You qualify if your household income is below $50,000. You will find VITA centers at libraries, colleges, community centers, religious centers and more. For instance, starting Jan. 28, Golden Gate University has teamed up with Goodwill Services and Tax-Aid to provide Saturday open-houses to help taxpayers in San Francisco Bay Area. To find a site near you, call 1-800-906-9887 or scan this partial VITA site list .
The armed-forces version of VITA is called AFTC, for Armed Forces Tax Council. Volunteers and experts know the special credits, deductions and exclusions available to members of all branches of the armed forces, and their families. They understand about state income-tax exclusions.
TCE Program. Tax Counseling for the Elderly, or TCE, volunteers understand issues related to retirement income, Social Security, IRAs, etc. They may be able to provide counseling on other financial issues as well, since many of the volunteers and staff are in the same position as you. AARP’s Tax-Aide is one of the largest TCE programs in the country. Visit the AARP Tax-Aide website or call the IRS for a TCE location: 1-800-829-1040.
These programs welcome volunteers. You don’t need a tax background or education to participate. It’s easy to get hooked.
2) In the Markets today:
Blue chips closed at a fresh multiyear high as investors saw progress in Greece over austerity measures to address its debt crisis.
Blue Chips Hit a Yearly High-From The Wall Street Journal
Blue chips closed at a fresh multiyear high as investors saw progress in Greece over austerity measures to address its debt crisis.
The Dow Jones Industrial Average added 33.07 points, or 0.3%, to 12878.20, reversing early losses.
The Standard & Poor's 500-stock index was up 2.72 points, or 0.2%, to 1347.05, and the Nasdaq Composite was up 2.09 points, or 0.1%, to 2904.08. The Dow finished at its highest close since May 2008.
Seven of the S&P 500's 10 sectors were higher, led by utilities and consumer-discretionary stocks. McDonald's was the largest gainer on the Dow, up 1.4%.
Talks between Greece and its creditors on a loan deal appeared to be nearing a conclusion Tuesday, though political leaders postponed a meeting later in the day to discuss the plans. A new fiscal pact is necessary for Greece to receive its next round of bailout funds.
Also Tuesday, Federal Reserve Chairman Ben Bernanke told the U.S. Senate budget committee there has been a "modest increase" in the long-term normal rate of U.S. unemployment, noting it was a cause of concern to monetary-policy makers.
"These pretty-normal markets show that investors are reacting favorably to what's happening in Europe, that there's optimism and certainly not as much fear," said Brad Thompson, chief investment officer at Stadion Money Management in Watkinsville, Ga.
Meanwhile, the Bureau of Labor Statistics reported the number of U.S. job openings jumped 8.3% in December, to 3.4 million, as employers continued to increase the number of positions they are looking to fill. Other data showed credit-card debt in the U.S. surged for a second-straight month, as Americans increased borrowing in order to spend for the holiday season.
In corporate news, Coca-Cola Co. rose 0.8% after the soft-drink company reported fourth-quarter earnings and revenue that exceeded estimates.
MasterCard said Tuesday it will double its quarterly dividend. The credit-card processor is coming off a strong year in which it increased profit and revenue despite new regulations and economic pressures.
Shares rose 0.4%.
Coinstar climbed 14% after the company reported fourth-quarter results that were well above expectations and provided a first-quarter revenue outlook that was above current projections. In addition, the company said its wholly owned subsidiary Redbox Automated Retail has agreed to buy the assets of NCR's entertainment business for as much as $100 million. NCR rose 11%.
3) Top financial story of the day:
Employers had 3.4 million job openings at the end of December, up 258,000 since November
Job openings jump to near a 3-year high-From USA Today
Progress in the job market is real but has yet to grow strong enough to encourage workers whose skills don't fit jobs now being created, a new government report suggests.
Employers had 3.4 million job openings at the end of December, up 258,000 since November for the biggest gain since February 2011, the Labor Department reported Tuesday. The figures fuel the perception of momentum after last week's news that the economy added 243,000 net jobs in January, and that the unemployment rate fell two-tenths of a point to 8.3%.
Trouble is, more-obscure statistics show the recovery is still not as strong or broadly based as past upturns, IHS Global Insight economist Michelle Valverde said.
The number of workers who have given up looking for jobs is 1.1 million, about the same as last year; 43% of jobless people have been out of work for more than six months vs. 44% a year ago; and the raw amount of hiring dipped slightly in December from November, as 4.0 million people accepted new jobs.
"It's a good news, bad news story," said Troy Davig, senior U.S. economist at Barclays Capital in New York. "If you have the skills, fine, opportunities are growing. The labor market is obviously not exploding, but there are plenty of indicators that point to momentum."
The unemployment rate has dropped from 10% as recently as October 2009 and 9.1% last August, driven by slow growth in the workforce as much as an uptick in jobs. There are 3.9 unemployed workers for every available job, down from nearly 7-to-1 in late 2009 but still more than twice as many as before the recession.
December's figure is "a good number, but we should take it with a grain of salt," Valverde said.
Some industries hit hard by post-2007 job losses are still hiring much more slowly than employers as a whole. Construction companies have only 1.3 jobs available for every 100 people who work in the industry, about half as many as in the broader economy.
That's a sign that damage from the housing bust is far from repaired, even though construction has added 50,000 jobs in the last two months. Job openings in manufacturing and government are also less plentiful than the national averages, according to Tuesday's report.
There are lots of jobs available in professional and business services, an area that includes about 17 million of the 132.4 million working Americans. Employers there are looking for about 3.6 workers for every 100 they have now and hired 787,000 people in December, down from 845,000 in November.
In sectors such as services, the gap between slow growth in hiring and a more brisk upturn in job openings points to a mismatch between workers who are looking and the jobs that are available, Davig said. In a January survey of small businesses by the National Federation of Independent Business, more than a third of entrepreneurs said they had tried to hire someone in the last several months but had been unable to find candidates with the appropriate skills.
The next report on the jobs market is Thursday's on new unemployment insurance claims.
That number has generally been falling for several months, Davig said.
In the week ended Jan. 28, the government reported 367,000 new claims, a decrease of 12,000 from the previous week. The four-week moving average, a measure economists watch to prevent overreactions to unusual one-week swings, was 375,750: 2,000 fewer than the previous week's number.
4) Quote of the Day from Dave Ramsey.com:
A man can be as great as he wants to be. If you believe in yourself and have the courage, the determination, the dedication, the competitive drive and if you are willing to sacrifice the little things in life and pay the price for the things that are worthwhile, it can be done. — Vince Lombardi
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