When tax preparation seems daunting, there’s help
By Julie Filby
The Internal Revenue Service opened the tax filing season Jan. 30, following passage by Congress of the American Taxpayer Relief Act of 2012 on Jan. 1.
“The vast majority of taxpayers can file now,” according to Karen Connelly, spokesperson for the IRS in Colorado, since the majority of forms have been updated and programming changes implemented and tested. “But the IRS is continuing to update its systems for some tax filers … (including) people claiming education credits, depreciation deductions, energy credits and many business credits.”
While tax preparation can seem daunting, Connelly said there are many resources that can help, and several of them are free.
“Many people feel intimidated when it comes to preparing their taxes,” she said “You have to be comfortable with whatever you choose.”
There are four primary choices for tax preparation, depending on how simple or complex one’s situation is.
Do-it-yourself: For a tax situation that is not too complicated, one may choose to “do-it-yourself.” The IRS has all the forms and instructions on their website, www.IRS.gov; and forms are available at many libraries.
Tax preparation software: This option, chosen by millions, is generally inexpensive, user-friendly and includes an option to file electronically.
“If you’ve never tried one of the software packages, you might consider it” Connelly said. “The program walks you all the way through.”
On the IRS website taxpayers can use Free File, which provides access to free tax software or online Fillable Forms. Taxpayers with an adjusted gross income of $57,000 or less—which is 70 percent of the American population according to Connelly—can choose from 15 commercial software providers. There is no income limit for free Fillable Forms, the electronic version of IRS paper forms.
Tax accountant: For taxes that are more complex, one may need an accountant. Trusted professional advisors, friends, relatives or colleagues may provide referrals. According to data from the National Society of Accountants, hiring a tax preparer costs an average of $246 to prepare an itemized Form 1040 with Schedule A and a state return.
Tax preparation service: Similar to choosing an accountant, thoroughly check out a tax preparation service before contracting with them. Many firms offer prospective clients a free consultation.
More than 80 percent of taxpayers filed electronically last year, according to the IRS. E-filers receive a receipt from the IRS within 48 hours of filing to confirm it was received.
“E-filing is safe and easy,” Connelly said. “There are also more payment options than people might realize, such as setting up a future payment date ... say, April 15?”
Electronic filing, when combined with direct deposit, is the fastest way to get a refund. Last year, about three out of four refund filers selected direct deposit—and nine of 10 refunds were processed in less than 21 days.
For a list of free services provided by the IRS, as well as Denver’s Centro San Juan Diego, the Hispanic institute for family and pastoral care for the Archdiocese of Denver, see the accompanying box.
“Last year (Centro) helped nearly 200 people receive over $200,000 in returns,” said Jennie Marquez, assistant director.
Taxpayers have until April 15 to file 2012 tax returns and pay any tax due. The IRS expects to receive more than 147 million individual returns this year, with about 75 percent projected to receive a refund.
FREE HELP: Tax preparation
Web: The newly expanded IRS site, www.IRS.gov, contains forms, instructions, as well as video-conferencing and social media tools. Last year, the site received 340 million visits.
Phone: Call the IRS at 800-829-1040, 7 a.m. to 7 p.m. local time
App: Download the Apple or Android smartphone application, IRS2Go, for information or to check the status of a refund. The app has been downloaded more than 800,000 times.
In person: Call 311 to find an area taxpayer assistance center, or walk in to the Denver center at 1999 Broadway Blvd., Monday-Friday 8:30 a.m. to 4:30 p.m. Call the Denver office at 303-446-1675.
Volunteer Income Tax Assistance: Taxpayers making $51,000 or less usually qualify for VITA, a free tax preparation program. For more information call 800-906-9887 or visit www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers.
Tax Counseling for the Elderly: This program is similar to VITA, and offers free tax help to people 60 and older, specializing in questions about pensions and retirement. Call 888-227-7669 for the nearest site.
Centro’s free tax preparation: Beginning Feb. 7, Centro San Juan Diego will provide free tax preparation for low-to-medium income taxpayers every Thursday 4 p.m. to 7 p.m. at 2830 Lawrence St. in Denver. Appointments are required and can be made by calling 303-295-9470, ext. 110.