E-File Taxes Online, Online Tax Return, Taxes: It's Easy to E-File

EITC – Don’t Overlook It - Earned Income Tax Credit

2011-02-22T12:09:00.000-08:00

The Earned Income Tax Credit is a financial boost for workers earning $48,362 or less a year. Four of five eligible taxpayers filed for and received their EITC last year. The IRS wants you to get what you earned also, if you are eligible.

Taxhead.com calculates the EITC for you!

Here are the top 10 things the IRS wants you to know about this valuable credit, which has been making the lives of working people a little easier for 36 years.

As your financial, marital or parental situations change from year to year, you should review the EITC eligibility rules to determine whether you qualify. Just because you didn’t qualify last year, doesn’t mean you won’t this year.
If you qualify, the credit could be worth up to $5,666. EITC not only reduces the federal tax you owe, but could result in a refund. The amount of your EITC is based on your earned income and whether or not there are qualifying children in your household. The average credit was around $2,100 last year.
If you eligible for EITC, you must file a federal income tax return and specifically claim the credit – even if you are not otherwise required to file.Remember to include Schedule EIC, Earned Income Credit when you file your Form 1040 or, if you file Form 1040A, use and retain the EIC worksheet.
You do not qualify for EITC if your filing status is Married Filing Separately.
You must have a valid Social Security Number. You, your spouse – if filing a joint return – and any qualifying child listed on Schedule EIC must have a valid SSN issued by the Social Security Administration.
You must have earned income. You have earned income if you work for someone who pays you wages, you are self-employed, you have income from farming, or – in some cases – you receive disability income.
Married couples and single people without children may qualify. If you do not have qualifying children, you must also meet the age and residency requirements as well as dependency rules.
Special rules apply to members of the U.S. Armed Forces in combat zones. Members of the military can elect to include their nontaxable combat pay in earned income for the EITC. If you make this election, the combat pay remains nontaxable.
It’s easy to determine whether you qualify. The EITC Assistant, an interactive tool available on the IRS website, removes the guesswork from eligibility rules. Just answer a few simple questions to find out if you qualify and estimate the amount of your EITC.
Free help is available at Volunteer Income Tax Assistance sites and IRS Taxpayer Assistance Centers to help you prepare and claim your EITC. If you are preparing your taxes electronically, the software program you use will figure the credit for you. Taxhead.com supports EITC.

For more information about the EITC, see IRS Publication 596, Earned Income Credit. This publication – available in both English and Spanish – can be downloaded from the IRS website or ordered by calling 800-TAX-FORM (800-829-3676).

Do I have to File a Tax Return?

2011-01-06T10:18:00.000-08:00

You must file a federal income tax return if your income is above a certain level; which varies depending on your filing status, age and the type of income you receive.

Taxhead.com offers free tax preparation software

There are some instances when you may want to file a tax return even though you are not required to do so. Even if you don’t have to file, here are seven reasons why you may want to:

Federal Income Tax Withheld You should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.
Making Work Pay Credit You may be able to take this credit if you had earned income from work. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.
Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money.EITC is a refundable tax credit; which means you could qualify for a tax refund.
Additional Child Tax Credit This refundable credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
American Opportunity Credit The maximum credit per student is $2,500 and the first four years of postsecondary education qualify.
First-Time Homebuyer Credit The credit is a maximum of $8,000 or $4,000 if your filing status is married filing separately. To qualify for the credit, taxpayers must have bought – or entered into a binding contract to buy – a principal residence located in the United States on or before April 30, 2010. If you entered into a binding contract by April 30, 2010, you must have closed on the home on or before September 30, 2010. If you bought a home as your principle residence in 2010, you may be able to qualify and claim the credit even if you already owned a home. In this case, the maximum credit for long-time residents is $6,500, or $3,250 if your filing status is married filing separately.
Health Coverage Tax Credit Certain individuals, who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit worth 80 percent of monthly health insurance premiums when you file your 2010 tax return.

ix Facts on How to Get Credit for Retirement Savings Contributions

2010-02-23T09:13:00.000-08:00

If you make eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement, you may be eligible for a tax credit. Here are six things you need to know about the Retirement Savings Contributions Credit:

Taxhead.com supports retirement savings contributions.

1. Income Limits The Savers Credit, formally known as the Retirement Savings Contributions Credit, applies to individuals with a filing status and income of:

Single, married filing separately, or qualifying widow(er), with income up to $27,750
Head of Household, with income up to $41,625
Married Filing Jointly, with income up to $55,500

2. Eligibility requirements To be eligible for the credit you must have been born before January 2, 1992, you cannot have been a full-time student during the calendar year and cannot be claimed as a dependent on another person’s return.

3. Credit amount If you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans, you may be able to take a credit of up to $1,000 or up to $2,000 if filing jointly. The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income.

4. Distributions When figuring this credit, you generally must subtract the amount of distributions you have received from your retirement plans from the contributions you have made. This rule applies to distributions received in the two years before the year the credit is claimed, the year the credit is claimed, and the period after the end of the credit year but before the due date - including extensions - for filing the return for the credit year.

5. Other tax benefits The Retirement Savings Contributions Credit is in addition to other tax benefits which may result from the retirement contributions. For example, most workers at these income levels may deduct all or part of their contributions to a traditional IRA. Contributions to a regular 401(k) plan are not subject to income tax until withdrawn from the plan.

6. Forms to use To claim the credit use Form 8880, Credit for Qualified Retirement Savings Contributions.

For more information, review IRS Publication 590, Individual Retirement Arrangements (IRAs), Publication 4703, Retirement Savings Contributions Credit, and Form 8880. Publications and forms can be downloaded at IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Links:

Form 8880, Credit for Qualified Retirement Savings Contributions (PDF 46K)
Form 1040, U.S. Individual Income Tax Return (PDF 176K)
Form 1040A, U.S. Individual Income Tax Return (PDF 136K)
Publication 590, Individual Retirement Arrangements (IRAs) (PDF 449K)
Tax Topic 610

Five Important Tax Facts About Your Unemployment Benefits

2010-02-11T12:26:00.000-08:00

Taxpayers who received unemployment benefits in 2009 are entitled to a special tax break when they file their 2009 federal tax returns. This tax break is part of the American Recovery and Reinvestment Act of 2009.

Taxhead.com supports unemployment reporting on your tax return.

Here are five important facts the Internal Revenue Service wants you to know about your unemployment benefits.

Unemployment compensation generally includes any amounts received under the unemployment compensation laws of the United States or of a specific state. It includes state unemployment insurance benefits, railroad unemployment compensation benefits and benefits paid to you by a state or the District of Columbia from the Federal Unemployment Trust Fund. It does not include worker's compensation.
Normally, unemployment benefits are taxable; however, under the Recovery Act, every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits when they file their federal tax return.
For a married couple, if each spouse received unemployment compensation then each is eligible to exclude the first $2,400 of benefits.
You should receive a Form 1099-G, Certain Government Payments, which shows the total unemployment compensation paid to you in 2009 in box 1.
You must subtract $2,400 from the amount in box 1 of Form 1099-G to figure how much of your unemployment compensation is taxable and must be reported on your federal tax return. Do not enter less than zero.

Eight Facts about the New Vehicle Sales and Excise Tax Deduction

2010-02-10T22:04:00.000-08:00

If you bought a new vehicle in 2009, you may be entitled to a special tax deduction for the sales and excise taxes on your purchase.

Taxhead.com supports this deduction.

Here are eight important facts the Internal Revenue Service wants you to know about this deduction:

State and local sales and excise taxes paid on up to $49,500 of the purchase price of each qualifying vehicle are deductible.
Qualified motor vehicles generally include new cars, light trucks, motor homes and motorcycles.
To qualify for the deduction, the new cars, light trucks and motorcycles must weigh 8,500 pounds or less. New motor homes are not subject to the weight limit.
Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
Purchases made in states without a sales tax — such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon — may also qualify for the deduction. Taxpayers in these states may be entitled to deduct other qualifying fees or taxes imposed by the state or local government. The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee.
This deduction can be taken regardless of whether the buyers itemize their deductions or choose the standard deduction. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
Taxpayers who do not itemize must complete Schedule L, Standard Deduction for Certain Filers to claim the deduction.

Three Reasons to Prepare and File Your Taxes Electronically

2010-02-07T18:06:00.000-08:00

Last year, 2 out of 3 tax returns were filed electronically. Was yours? If not, here are three important reasons to e-file your return.

It’s fast Your tax return will get processed more quickly if you use e-file. If there is an error on your return, it will typically be identified and can be corrected right away. If you file electronically and choose to have your tax refund deposited directly into your bank account, you will have your money in as few as 10 days.
It’s safe When you file a tax return electronically, the IRS is fully committed to protecting your information on our tax processing systems.
It’s time Don’t miss out on the benefits of e-file, 2 out of 3 taxpayers, 95 million, already get the benefits of e-file.

E-file software, like Taxhead.com, reduces the chance of making errors when you prepare your return. However, some people still print the computer generated return and mail it to the IRS instead of hitting the “Send” button. By mailing the return, taxpayers miss out on some important benefits of IRS e-file.

With e-file, you get the peace of mind that comes with the electronic receipt you’ll receive notifying you that the IRS received your tax return.
Virtually everyone can prepare a return and file it for free. For the second year, the IRS and its partners are offering the option of Free File Fillable Forms. Another option is Traditional Free File. About 98 million taxpayers – 70% of all taxpayers – are eligible for the IRS Traditional Free File. Traditional Free File is a service offered by software companies and the IRS in partnership to provide free tax preparation software and free filing.
E-file is available 24 hours a day, seven days a week, from the convenience of your own home.
If you owe money to the IRS, e-file also allows you to file your tax return early and delay payment up until the due date.
In 37 states and the District of Columbia, you can simultaneously e-file your federal and state tax returns.

Find out more about E-file at Taxhead.com

Five Facts about IRS Publication 17

2010-01-27T13:47:00.000-08:00

While the Internal Revenue Service provides publications about a wide range of topics, there is one publication every taxpayer should have with them when they are preparing their federal tax return. Publication 17, Your Federal Income Tax is available at IRS.gov and contains a wealth of information for individual taxpayers.

Here are the top five things the IRS wants you to know about Publication 17 and how it will come in handy when you prepare your taxes.

The online version of Publication 17 contains electronic links that make finding your answer simple. Both the downloadable PDF and online 2009 Publication 17 have more than 6,000 hyperlinks.
Publication 17 features details on recent tax law changes and legislation that can help you save money at tax time. You’ll find lots of helpful information about the American Recovery and Reinvestment Act of 2009, including the Making Work Pay Credit and the First-time Homebuyer Credit.
This publication is packed with basic tax-filing information and tips on what income to report and how to report it. Publication 17 also includes information on figuring capital gains and losses, claiming dependents, choosing the standard deduction versus itemizing deductions, and using IRAs to save for retirement.
Publication 17 is also available in Spanish.
You can get a hard copy of Publication 17 for free. To get a copy, visit IRS.gov or call 800-TAX-FORM (800-829-3676).

Links:

Publication 17, Your Federal Income Tax
Publication 17, Your Federal Income Tax (PDF 2085K)
Taxhead.com Online tax software

Do I have to File a Tax Return?

2010-01-26T11:31:00.000-08:00

You must file a tax return if your income is above a certain level. The amount varies depending on filing status, age and the type of income you receive.

Check the Individuals section of IRS.gov or consult the instructions for Form 1040, 1040A, or 1040EZ for specific details that may affect your need to file a tax return with the IRS this year.

Even if you don’t have to file, here are eight reasons why you may want to file:

Federal Income Tax Withheld If you are not required to file, you should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year's tax.
Making Work Pay Credit You may be able to take this credit if you have earned income from work. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.
Government Retiree Credit You may be eligible for this credit if you received a government pension or annuity payment in 2009. However, the amount of this credit reduces any making work pay credit you receive.
Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund.
Additional Child Tax Credit This credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
Refundable American Opportunity Credit This education tax credit is available for 2009 and 2010. The maximum credit per student is $2,500 and the first four years of postsecondary education qualify.
First-Time Homebuyer Credit The credit is a maximum of $8,000 or $4,000 if your filing status is married filing separately. The credit applies to homes bought anytime in 2009 and on or before April 30, 2010. However, you have until on or before June 30, 2010, if you entered into a written binding contract before May 1, 2010. If you bought a home after November 6, 2009, you may be able to qualify and claim the credit even if you already owned a home. In this case, the maximum credit for long-time residents is $6,500, or $3,250 if your filing status is married filing separately.
Health Coverage Tax Credit Certain individuals, who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit worth 80 percent of monthly health insurance premiums when you file your 2009 tax return.

To prepare and e-file your 1040A or 1040EZ taxes visit Taxhead.com

IRS TAX TIP: Choose the Tax Form that Best Fits Your Needs

2010-01-17T15:39:00.000-08:00

To file your 2009 individual tax return, you’ll have to decide which form to use…unless you e-file. If you file electronically, the software automatically selects the simplest and best form for you. Whether you use e-file or prepare on paper, using the simplest form will help avoid costly errors or processing delays. And remember, if you file electronically, it speeds up the processing of your tax return and the delivery of your refund.

Taxhead.com specializes in tax form 1040-A and 1040-EZ. They have a free tool to help you choose the correct tax form.

Here are things to consider when deciding which IRS form to file.

Use the 1040EZ if:

Your taxable income is below $100,000
Your filing status is Single or Married Filing Jointly
You and your spouse – if married -- are under age 65 and not blind
You are not claiming any dependents
Your interest income is$1,500 or less
You are not claiming the additional standard deduction for real estate taxes, taxes on the purchase of a new motor vehicle, or disaster losses

Use the 1040A if:

Your taxable income is below $100,000
You have capital gain distributions
You claim certain tax credits
You claim deductions for IRA contributions, student loan interest, educator expenses or higher education tuition and fees

If you cannot use the 1040EZ or the 1040A, you’ll probably need to file using the 1040. You must use the 1040 if:

Your taxable income is $100,000 or more
You claim itemized deductions
You are reporting self-employment income
You are reporting income from sale of property

All IRS forms, instructions and information about e-file can be found on IRS.gov.

Links:

Form 1040EZ, Individual Income Tax Return (PDF 105K )
Form 1040A, Individual Income Tax Return (PDF 138K)
Form 1040, Individual Income Tax Return (PDF 181K)
Publication 17, Your Federal Income Tax
Publication 17, Your Federal Income Tax (PDF 2.3MB)
1040 Central

How to Correctly Claim the Recovery Rebate Credit on your 2008 Return

2009-02-15T11:02:00.000-08:00

The IRS sent taxpayers nearly 119 million economic stimulus payments last year. When filing a 2008 federal tax return, taxpayers will need to know the amount of their stimulus payment to properly determine if they are eligible for a recovery rebate credit.

Taxhead.com online tax software is free and easy to use, offers IRS eFile and supports the Recovery Rebate Credit

Here are six tips for finding how much you received and correctly claiming the credit on your return:

1. Get your notice. Check the amount listed on Notice 1378, which the IRS mailed last year to individuals who received the economic stimulus payment.

2. Visit IRS.gov to find the amount. If you don’t have your Notice 1378, go to the “How Much Was My 2008 Stimulus Payment?” tool that is available on the IRS Web site, IRS.gov. This tool can provide the correct amount in a matter of a few seconds.

3. Call the IRS at 1-866-234-2942. If you don’t have Internet access, call the IRS. After a brief recorded announcement, select option one to find out the amount of your economic stimulus payment. You will need to provide your 2007 filing status, Social Security Number and the number of exemptions claimed on the tax return.

4. Keep the amount handy. With the amount of last year’s economic stimulus payment in hand, you will be able to enter the figure on the recovery rebate credit worksheet or in the appropriate location when your tax preparation software requests it. This number will not appear on your actual tax return but is vital to ensure the accurate determination of the recovery rebate credit amount.

5. Trust the software or the worksheet to get it right. Tax preparation software will automatically and correctly calculate the amount of the rebate recovery credit for you. The software will also properly report the credit on your tax return. If you are filing a paper return, the worksheet will guide you in calculating the proper amount of the credit. The recovery rebate credit should be reported on Line 70 of Form 1040, Line 42 of Form 1040A or Line 9 of Form 1040EZ. In order to avoid an error, use extra care when responding to the software questions or when completing the worksheet. Do not enter the stimulus payment directly on your return.

6. Most taxpayers won’t qualify for more. For most taxpayers, the correct entry for the recovery rebate credit will either be blank or zero because they have already received the money as a stimulus payment. If you complete the worksheet, and there is any question about the amount that should be reported for the recovery rebate credit, you or your preparer should enter a zero on the appropriate line above. For most people this will be the correct amount, and for the others the IRS will determine whether a recovery rebate credit is due and, if so, how much. If the IRS calculates a different credit amount than is reflected on your return, you will receive a notice that alerts you to the change.

E-File Opens for 2009, IRS eFile means Fast Tax Refunds

2009-01-16T13:44:00.000-08:00

The Internal Revenue Service today announced the Jan. 16 opening of an expanded IRS e-file program for 2008 federal tax returns, highlighted by new features that will allow expanded access to electronic filing and help people looking for faster refunds.

IRS Commissioner Doug Shulman encouraged taxpayers to explore e-file this year as the best option to file accurate tax returns and get fast refunds during the current economic downturn.

"These are tough times, and e-file is the best way for people to get cash in their pocket quickly," said IRS Commissioner Doug Shulman. "Filing electronically with direct deposit can get refunds to taxpayers in as few as 10 days. "

Last year the average refund was $2,429. The IRS realizes people need their refunds quickly. Shulman urged people who haven't e-filed before to consider the e-file option this year.

IRS e-file totaled nearly 90 million tax returns in 2008. Almost 58 percent of all returns were filed electronically. Last year, there was a surge in e-file from home computers. Nearly 27 million people prepared their own e-file return. That's an increase of more than 19 percent from the previous year.

IRS e-file meets the needs of nearly all taxpayers, no matter how complicated or simple their returns are. E-file helps taxpayers take advantage of the tax credits available to them to maximize their refunds during these tough economic times.

A variety of tax software products are available commercially that offer e-file. This year, several of them will not charge additional fees for e-filing for the first time.

Taxhead.com offers free tax preparation software and free e-file for any person qualifying for the Earned Income Credit.

Benefits of e-File

Taxpayers who use e-file and who choose direct deposit can receive their refund in as few as 10 days. That's because with e-file, there's no paper return going to the IRS. And with direct deposit, there's no paper refund going to the taxpayer. So it’s all electronic and much faster than paper.

IRS e-file allows taxpayers to file their returns now and pay later if they owe taxes.

Taxpayers may use IRS e-file with a computer using tax preparation software like Taxhead.com. This software is available on the Internet for online use.

To get all the benefits of electronic filing, taxpayers must make sure that when they are done with their returns, they take the final step of e-filing them. In addition to error checks contained in the return-preparation software, additional checks are done during the e-file transmission process. That's why the error rate is so low for e-filed returns. In fact, the error rate is significantly reduced from 20 percent with paper returns to about 1 percent with e-filed returns.

E-filed tax return information is protected through encryption. Also, taxpayers receive an acknowledgement within 48 hours that the IRS has accepted their return.

See Benefits of e-file

History of IRS e-File

The IRS began the e-file program in 1986 as a pilot project in three cities: Cincinnati, Phoenix and Raleigh-Durham, N.C. That year, there were 25,000 tax returns filed electronically. The e-file program expanded nationwide in 1990 and 4.2 million tax returns were filed. IRS e-file has undergone tremendous growth each year, with nearly 90 million tax returns e-filed last year.

Do You Need to File a Federal Income Tax Return?

2008-12-26T12:58:00.000-08:00

The questions below will help you determine if you need to file a 2008 Federal Income Tax return (normally filed in 2009)..

Even if you do not have to file a return, you should file one to get a refund of any Federal Income Tax withheld, and/or to qualify for any economic stimulus payments you may be due.

Taxhead.com offers free tax software to help you prepare and file a tax return easily, online

You generally must file a tax return if:

Filing Status: Single, under age 65 and your gross income was > $8,950

Filing Status: Single, age 65 or older and your gross income was > $10,300

Filing Status: Married-Joint , under age 65 (you and spouse) and your gross income was > $17,900

Filing Status: Married-Joint , age 65 or older (one spouse) and your gross income was > $18,950

Filing Status: Married-Joint , age 65 or older (both spouses) and your gross income was > $20,000

Filing Status: Married-Separately and your gross income was > $3,500

Filing Status: Head-of-Household , under age 65 and your gross income was > $11,500

Filing Status: Head-of-Household , age 65 or older and your gross income was > $12,850

Filing Status: Widower , under age 65 or older and your gross income was > $14,400

Filing Status: Widower , age 65 or older and your gross income was > $15,450

If you are a dependent, see page 9 of the 1040A instructions

For other situations when yiou must file see page 10 of the 1040A instructions

How do I file taxes?

2008-12-12T19:41:00.000-08:00

IRS e-file: Filing your taxes online was never easier!

Authorized IRS e-File Partners like Taxhead.com offer free tax software and IRS eFile.

eFile is the way to file your taxes directly with the IRS. It's the quick, easy, smart way to get your taxes where you want them to be -- Done!

See Why eFile?

IRS Offers Tips for Year-End Donations (2008 taxes)

2008-12-09T11:57:00.000-08:00

Individuals and businesses making contributions to charity should keep in mind several important tax law provisions that have taken effect in recent years.

One provision offers older owners of individual retirement arrangements (IRAs) a different way to give to charity. There are also rules designed to provide both taxpayers and the government greater certainty in determining what may be deducted as a charitable contribution. Some of these changes include the following.

Special Charitable Contributions for Certain IRA Owners

An IRA owner, age 70 ½ or over, can directly transfer tax-free up to $100,000 per year to an eligible charitable organization. This option, created in 2006 and recently extended through 2009, is available to eligible IRA owners, regardless of whether they itemize their deductions. Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans, are not eligible.

To qualify, the funds must be contributed directly by the IRA trustee to the eligible charity. Amounts so transferred are not taxable and no deduction is available for the amount given to the charity.

Not all charities are eligible. For example, donor-advised funds and supporting organizations are not eligible recipients.

Transferred amounts are counted in determining whether the owner has met the IRA’s required minimum distribution rules. Where individuals have made nondeductible contributions to their traditional IRAs, a special rule treats transferred amounts as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions. See Publication 590, Individual Retirement Arrangements (IRAs), for more information on qualified charitable distributions.

Rules for Clothing and Household Items

To be deductible, clothing and household items donated to charity must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to be in good used condition or better if the taxpayer includes a qualified appraisal of the item with the return. Household items include furniture, furnishings, electronics, appliances, and linens.

Guidelines for Monetary Donations

To deduct any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card, and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements for monetary donations do not change or alter the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet the requirements of both provisions.

To help taxpayers plan their holiday-season and year-end giving, the IRS offers the following additional reminders:

Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of the year count for 2008. This is true even if the credit card bill isn’t paid until next year. Also, checks count for 2008 as long as they are mailed this year.
Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. IRS Publication 78, available online and at many public libraries, lists most organizations that are qualified to receive deductible contributions. The searchable online version can be found at IRS.gov under “ Search for Charities.” In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even though they often are not listed in Publication 78.
For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to people who choose the standard deduction, including anyone who files a short form (Form 1040A or 1040EZ). A taxpayer will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceeds the standard deduction. Use the 2008 Form 1040 Schedule A, available now on IRS.gov, to determine whether itemizing is better than claiming the standard deduction.
For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value.Additional rules apply for a contribution of $250 or more.
The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value of the vehicle is more than $500. Form 1098-C, or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.
If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.

More Taxpayers E-filing than Ever Before

2006-03-13T08:11:00.000-08:00

In a article published earlier this year by Entrepreneur Magazine (Why not e-file your tax return this year?) executives from online tax software company Taxhead.com suggested people are rapidly moving away from paid tax prepareers, and are deciding to prepare their own taxes instead. This is being driven by new, powerful, easy to use online tax preparation software, coupled with increased Internet use and the IRS e-File program. Well, it looks like Taxhead.com was right ... here's an excerpt from an IRS press release made publicly available today:

In the first release of tax filing statistics this year, the Internal Revenue Service announced that electronically filed returns have increased, led by a big increase in home computer use.

Through early March, more than 39.5 million taxpayers have e-filed this year. Home computer use is up 16.5 percent, with e-file by tax professionals up nearly 4 percent.

Out of 54 million tax returns filed so far this year, e-file represents 73 percent of the total returns. By comparison, 72 percent of returns were filed electronically for the comparable period last year.

“The home computer is increasingly replacing the paper tax form,” said IRS Commissioner Mark W. Everson. “Both individual taxpayers and tax professionals are turning to e-file more and more because it’s fast and accurate.”

Other new figures reflect that taxpayers are using other electronic options at record paces:

• Since January, the IRS web site had 70.4 million visits, up almost 6 percent from last year. Last week alone, the site had more than 7.2 million visits, up nearly 9 percent from last year.
• So far this year, 33.9 million individual income tax refunds have been directly deposited into bank accounts. These deposits represent about 76 percent of all tax refunds, up from 73 percent for the same period last year.
• So far this year, 629,251 credit card payments have been made by individual taxpayers, up 41 percent compared to 448,547 for the same period last year. These payments represent $355 million, a 48 percent increase from $240 million during the same period last year.

Read to full IRS news release

Form 8863 - Education Tax Credits

2006-02-02T21:24:00.000-08:00

As of February 1st, 2006 the IRS started accepting Form 8863 - Education Credits - for e-file. This form was delayed due to late legislative changes enacted by Congress in response to Hurricanes Katrina and Rita.

In other Hurricane relief news, Form 8914 - Exemption Amount for Taxpayers Housing Individuals Displaced by Hurricane Katrina - has been accepted for eFile since e-file started on January 13th, 2006 -- yeah, IRS eFile started in a Friday, the 13th, but so far so good ... eFile continues to grow and be THE way to do your taxes accurately, easy, safe and fast.

Taxhead.com reports a 500% growth in their eFile business this year. And, they said two-thirds (67%) of their customers completed their taxes in under 30 minutes. Wow. Go Taxhead !

Taxhead.com Proves it's 2005 Tax Software and EFile Service is even Faster and Easier.

2006-01-16T21:14:00.000-08:00

Based upon early 2006 tax filer results, online tax software and e-file company www.Taxhead.com demonstrates it's tax software and efile service is faster and easier than ever.

Taxhead.com has analyzed tax filers using its 2005 tax software to prepare tax returns in 2006, to date. This information confirms its online tax software and efile service is faster and easier than ever. Based upon actual results, 61% of Taxhead.com customers completed their tax return in less than 30 minutes. This compares to 49% who finished in under 30 minutes using their 2004 tax software. This represents a 12% increase in speed and ease.

Data is based on an analysis of tax year 2005 customers who completed entering their tax information in a single sitting (more than 80% of customers), and whose tax returns were accepted by the IRS on their first attempt (about 98% of customers).

IRS Releases a New Website to Help Tax Filers

2005-12-02T21:34:00.000-08:00

In November 2005, the IRS.gov web site was redesigned!

The IRS says, "We’ve reviewed your customer feedback and in addition to designing a more usable `look and feel` for the site, we have improved overall site navigation and enhanced our search engine to increase search result accuracy and usability."

American are Reaping the Benefits of E-File

2005-11-14T11:54:00.000-08:00

We have a sense that tax preparation has become increasingly confusing and complicated over recent years. But, standing in stark contrast to this is the dramatic rise in self-prepared taxes over the past four years. Today, many people are finding they can prepare and file their own tax return in minutes. The rise in the rate of self-prepared taxes can be attributed to two primary factors: The growth in Internet usage in general, and new web-based tools that help make preparing and filing your own taxes easier than ever.

E-File (or "electronic filing") is the way to file your taxes directly with the IRS. For more and more Americans it has become the quick, easy, smart way to get your taxes where you want them to be -- Done!

The IRS leads the way in influencing “e-behavior” – working electronically with consumers, businesses, and other groups. For example, between 30 and 40 percent of Americans do their banking online, and more than 50 percent of Americans e-file their taxes.

According to recent statistics the Interent is currently used by 68.7% of the American public (about 224 million people). About 67% of the American population is aged 15–64 . If we assume this is the main age-based demographic of tax filers, then about 150 million Internet users file taxes. According to the IRS, for the first time ever, more than 50 percent (68.5 million) of federal tax returns were e-filed in 2005. Of these, 17 million people filed their own taxes (“self-prepared”) using tax software and e-file. This equates to about 11% of all Internet users.

Internet-Based, Self-Prepared Tax Filing Growing Fastest
The phrase “tipping point” is a sociology term that refers to that dramatic moment when something unique becomes common. And it seems that web-based taxes have reached a tipping point. E-file usage is accelerating. Over the past four tax years, e-file grew at an average rate of 12%, and is now accelerating with a grow rate of 15% a year. Web-based, self-prepared, online tax e-filing is growing even faster. The average rate of growth in self-prepared taxes using e-file is now over 17% a year.

Tax Filing Made Easy
About 70% of all individual tax returns use “short” tax forms (1040A or 1040EZ). Studies conducted by the IRS suggest that over ten hours are needed to prepare a 1040A tax return using paper forms. Meanwhile, several online tax software companies report that people using online tax software prepare and file their tax returns in well under an hour. In fact, about 50% of actual online tax software users completed their tax return, in one sitting, in under 30 minutes.

Online tax software makes preparing taxes easy. The computer software leads you step-by-step and verifies the math. Using a personal computer with an Internet connection, online filers just answer the simple questions in tax preparation software, and the software will does the rest for you. No more last minute trips to the Post Office - just hit Send! IRS provides an official acknowledgement that your return was received. Owe money? You can authorize an electronic funds withdrawal from your savings or checking account or use a credit card. You can’t get these features with paper tax forms.

Fast Tax Refunds: With IRS e-file, you can receive your tax refunds in about half the time as paper filers, or even faster with Direct Deposit. With e-file, you can get your refund in 9-15 days. With paper forms, hope to get your refund in 3 to 6 weeks.

Greater Accuracy, Fewer Errors: E-File tax software greatly reduces the chance for errors. You’re less likely to hear from the IRS down the road because e-filed returns are automatically checked for accuracy (99 percent accurate). If errors are detected, you or your tax preparer will receive an electronic message indicating the error and will allow the mistake to be corrected and resubmitted without penalty. Conversely, the IRS reports up to a 20% error rate in paper tax returns. Also, those using paper forms are more likely to receive an IRS penalty or have their payments misapplied.

Peace of Mind: After e-filing your tax return the IRS provides an official acknowledgment of your tax return. You’ll get confirmation within 48 hours that the IRS received your return. This is something you do not get with paper form tax returns. And e-file is secure. The IRS reports that e-file transmissions are absolutely secure. IRS e file meets or exceeds all government security standards. And, according to the IRS taxpayers who use IRS e-file have no greater chance of being audited than those who file paper returns. If you owe money, you can file early in the season and delay electronic funds withdrawal payments to as late as April 15, 2005.

Research shows that more than 80 percent of taxpayers who have tried e-file are “very satisfied” with the benefits of IRS e-file. 83 percent of individual taxpayers who use IRS e-file remained loyal and e-filed the following year.

The Best eFile & Online Tax Software

2005-11-04T10:17:00.000-08:00

The IRS has designated about 30 online tax software companies as part of their IRS E-File Partnership. Here is a summary of what we think are the best online tax software offerings:

Tax Software Company	Specializes In	Price
Taxhead.com	1040A (EZ)	Free Software, eFile for $12.95
TaxCut by H&R Block	1040, A, EZ	$34.95 - $99.99

About Authorized e-file Partners

The IRS is committed to enabling all taxpayers to comply with their tax filing obligations. Whether you choose to file a tax return electronically or on paper, you should rest assured that the IRS is fully committed to protecting your information on our tax processing systems and by working with our industry partners.

Tax Advisory Panel - Short Tax Forms for All Anmerican's?

2005-11-02T09:52:00.000-08:00

New tax law changes planned by President Bush's tax advisory commission, may result in more Americans filing short form (1040A and 1040EZ) tax forms, instead of the 1040 long form tax return. This may be welcome news for many Americans, but perhaps not for paid tax preparers.

President Bush's panel chairman, Connie Mack, said if the recommendations were adopted, "the plethora of tax forms that many individuals now cope with could be replaced by a streamlined Form 1040 that would fit on the front of a 4-by-6-inch card."

With short forms, many Americans are finding they can do their own taxes ("self prepare"). Several new online tax software programs, together with the IRS e-file tax system are allowing most people to easily, and quickly prepare and efile their own tax returns. Rather than paying tax accountants and professional tax preparers hundreds of dollars, many people can use online tax software and file for $10-$40. Some online tax software is even offered for free. And, with e-file tax refunds are issued by the IRS in as few as nine days. Self-prepared taxes, using online tax software and e-file make the whole tax preparation process more efficient and streamlined.

In recent years, the IRS's e-file system has resulted in a growing number of online tax software programs. Currently the IRS E-File Partnership lists twenty seven (27) IRS-approved efile services (http://www.irs.gov/efile/lists/0,,id=101223,00.html). Some of these efile services, such as www.Taxhead.com, specialize in short form tax returns. This online tax software allows most people to easily, and quickly prepare and efile their own tax returns.

According to a Taxhead.com official, "We welcome any move that helps simplify the tax code and the tax return process for Americans. We think all Americans should be able to prepare and efile their own taxes. Some of the changes to be proposed by the Bush Tax Advisory Commission may help with this desire for tax simplification. People should be empowered to take control of their own tax returns. Tax simplification, combined with the power of online taxes and eFile, is a step in that direction."

He added, "We find that when people prepare their own taxes, these people learn and grow and come to more fully understand their personal financial situation. They are becoming accountable to themselves, more independent, better organized, and liberating themselves from unknowns. Preparing your own taxes can be fun and a rewarding experience for many people."

According to IRS statistics, almost 70% of all individual federal income tax returns are short form returns (1040-A or 1040-EZ). And in 2005, for the first time, the IRS reported that more than half of all tax returns were electronically filed (e-file).

A graphic of the tax proposal released this week by the Panel is on the New York Times website at: http://www.nytimes.com/washington.

Online Tax Software and EFile Service is Fast and Easy

2005-10-26T13:25:00.000-07:00

Taxhead.com has released information confirming the ease and speed of online tax software and efile services. Based upon actual results, half (49%) of Taxhead.com customers completed their tax return in less than 30 minutes. Three-quarters (76%) of customers were able to complete and efile their taxes in under 60 minutes.

Data is based on an analysis of tax year 2004 customers who completed entering their tax information in a single sitting (84% of customers), and whose tax returns were accepted by the IRS on their first attempt (about 90% of customers). For more information please go to www.Taxhead.com?page=speed

For comparison purposes, the IRS reports that the average completion time for tax form 1040 is over 13 hours, and over 10 hours for form 1040A. Online tax preparation together with e-file has proven itself to be a more accurate, less time-consuming method for preparing and filing income tax returns. IRS statistics show that in 2003, over 54 million tax returns were filed electronically (e-File) versus mailed paper forms. In 2004, for the first time, more than 50% of individual tax returns used efile.

Using online software, such as that offered by Taxhead.com, allows most people to complete their tax return in less than 30 minutes. And, according to the IRS, the error rate for e-file returns is only about 1%, as compared to more than 20% errors with paper returns.

Taxhead.com offers free online tax software for tax form 1040-A, which also covers tax form 1040-EZ filers. This tax software covers approximately 70% of all income tax returns in the United States. The company is an authorized authorized IRS E-File Partner.

Get ready to file your 2005 taxes

2005-10-18T12:21:00.000-07:00

The IRS is now starting to release the new tax forms and instructions for 2005 income taxes (to be filed in 2006). To get the latest, please go to: http://www.irs.gov/formspubs/article/0,,id=109876,00.html

For people planning to file a short form (1040A or 1040EZ), here are some highlights for 2005 taxes:

Uniform Definition of a Qualifying Child

Beginning in 2005, one definition of a qualifying child will apply for each of the following tax benefits.

* Dependency exemption.
* Head of household filing status.
* Earned income credit (EIC).
* Child tax credit.
* Credit for child and dependent care expenses.

Tests To Meet

In general, all four of the following tests must be met to claim someone as a qualifying child.

Relationship test: The child must be your child (including an adopted child, stepchild, or eligible foster child), brother, sister, stepbrother, stepsister, or a descendent of one of these relatives. An adopted child includes a child lawfully placed with you for legal adoption even if the adoption is not final. An eligible foster child is any child who is placed with you by an authorized placement agency or by judgement, decree, or other order of any court of competent jurisdiction.

Residency test: A child must live with you for more than half of the year. Temporary absences for special circumstances, such as for school, vacation, medical care, military service, or detention in a juvenile facility count as time lived at home. A child who was born or died during the year is considered to have lived with you for the entire year if your home was the child's home for the entire time he or she was alive during the year. Also, exceptions apply, in certain cases, for children of divorced or separated parents and parents of kidnapped children.

Age test: A child must be under a certain age (depending on the tax benefit) to be your qualifying child.

Dependency exemption, head of household filing status, and EIC.
For purposes of these tax benefits, a child must be under the age of 19 at the end of the year, or under age 24 at the end of 2005 if a student, or any age if permanently and totally disabled.

A student is any child who, during any 5 months of the year:

1. Was enrolled as a full-time student at a school, or
2. Took a full-time, on-farm training course given by a school or a state, county, or local government agency.

A school includes a technical, trade, or mechanical school. It does not include an on-the-job training course, correspondence school, or night school.

Child tax credit.
For purposes of the child tax credit, a child must be under the age of 17.
Credit for child and dependent care expenses.

For purposes of the credit for child and dependent care expenses, a child must be under the age of 13 or any age if permanently and totally disabled.

Support test. A child cannot have provided over half of his or her own support during the year.

Exception: For purposes of the EIC only, the Support test does not apply.

Qualifying Child of More Than One Person

Sometimes a child meets the tests to be a qualifying child of more than one person. However, only one person can treat that child as a qualifying child. If you and someone else (other than your spouse if filing jointly) have the same qualifying child, you and the other person(s) can decide who will claim the child. If you cannot agree on who will claim the child and more than one person files a return using the same child, the IRS may disallow one or more of the claims using the tie-breaker rule explained in Table 1, next.

Table 1. When More Than One Person Files a Return Claiming the Same Qualifying Child (Tie-Breaker Rule).

IF . . .	THEN the child will be treated as the qualifying child of the. . .
only one of the persons is the child's parent,	parent.
both persons are the child's parent,	parent with whom the child lived for the longer period of time. If the child lived with each parent for the same amount of time, then the child will be treated as the qualifying child of the parent with the highest adjusted gross income (AGI).
none of the persons are the child's parent,	person with the highest adjusted gross income.

Dependency Exemption

To claim the dependency exemption for a qualifying child, all four tests listed earlier under Tests To Meet must be met. The child generally must also be a U.S. citizen, U.S. national, or a resident of the United States, Canada, or Mexico. An exception applies for certain adopted children. If married, he or she cannot file a joint return unless the return is filed only as a claim for refund and no tax liability would exist for either spouse if they had filed separate returns.

A person who used to qualify as your dependent but who is not your "qualifying child" may still qualify as your dependent as a "qualifying relative." To claim the dependency exemption for a qualifying relative, the child cannot be the qualifying child of any other person and all five dependency tests discussed under Dependency Tests in Publication 501 must be met.

Note: If you are a dependent of another person, you cannot claim any dependents on your return.

Head of Household Filing Status

In general, you can use head of household filing status only if, as of the end of the year, you were unmarried or " considered unmarried" and you paid over half the cost of keeping up a home:

1. That was the main home for all the entire year of your parent whom you can claim as a dependent (your parent did not have to live with you), or
2. In which you lived for more than half of the year with either of the following:
1. Your qualifying child (defined earlier, but without regard to the exception for children of divorced or separated parents). But, if your qualifying child is married at the end of the year, see Married child below.
2. Any other person whom you can claim as a dependent.

But you cannot use head of household filing status for a person who is your dependent only because:

* He or she lived with you for the entire year, or
* You are entitled to claim him or her as a dependent under a multiple support agreement.

Married child.
If your qualifying child is married at the end of the year, both of the following must apply for the child to be your qualifying child for purposes of head of household filing status.

1. The child cannot file a joint return unless the return is filed only as a claim for refund and no tax liability would exist for either spouse if they had filed separate returns.
2. The child must be a U.S. citizen, U.S. national, or a resident of the United States, Canada, or Mexico. An exception applies for certain adopted children.

Earned Income Credit (EIC)

You may be able to claim the earned income credit (EIC) in 2005 if you have:
1. 2 or more qualifying children and your earned income is less than $35,263 ($37,263 if married filing jointly for 2005),
2. 1 qualifying child and your earned income is less than $31,030 ($33,030 if married filing jointly for 2005), or
3. No qualifying children and your earned income is less than $11,750 ($13,750 if married filing jointly for 2005). For purposes of the EIC, a qualifying child must meet the Relationship test, Residency test (without regard to the exception for children of divorced or separated parents), and Age test, earlier. A qualifying child does not have to meet the Support test for purposes of the EIC. But, if your qualifying child is married at the end of the year, see Married child next.

Married child.
A child who is married at the end of the year is a qualifying child for purposes of the EIC only if you can claim him or her as your dependent (see Dependency Exemption, earlier) or this child's other parent claims him or her as a dependent under the rules for children of divorced or separated parents in Publication 501, Exemptions, Standard Deduction, and Filing Information.

Child Tax Credit

You may be able to take the child tax credit if you have a qualifying child that meets all four of the tests listed earlier under Tests To Meet. For additional rules that you must meet, see Publication 972, Child Tax Credit.

Credit for Child and Dependent Care Expenses

Generally, a qualifying person for purposes of the credit for child and dependent care expenses is:

* Your qualifying child (defined earlier, but without regard to the exception for parents of kidnapped children), or
* Your dependent or spouse who is physically or mentally incapable of caring for himself or herself and who lived with you for more than half of the year.

For purposes of the credit for child and dependent care expenses, a qualifying child and dependent are determined without regard to the exception for children of divorced or separated parents and the child is treated as a qualifying person only for the custodial parent.

For additional rules that you must meet, see Publication 503, Child and Dependent Care Expenses. However, you no longer need to meet the Keeping Up a Home test discussed in Publication 503.

Earned Income Credit Amounts Increase

Earned income amount: The maximum amount of income you can earn and still get the credit is higher for 2005 than it is for 2004. You may be able to take the credit for 2005 if:

* You have more than one qualifying child and you earn less than $35,263 ($37,263 if married filing jointly),
* You have one qualifying child and you earn less than $31,030 ($33,030 if married filing jointly), or
* You do not have a qualifying child and you earn less than $11,750 ($13,750 if married filing jointly).

The maximum amount of adjusted gross income (AGI) you can have and still get the credit has also increased. You may be able to take the credit if your AGI is less than the amount in the above list that applies to you.
Investment income amount.

The maximum amount of investment income you can have in 2005 and still get the credit increases to $2,700.

Standard Deduction Amount Increased

The standard deduction for taxpayers who do not itemize deductions on Schedule A of Form 1040 is, in most cases, higher for 2005 than it was for 2004. The amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer.

The basic standard deduction amounts for 2005 are:

* Head of household — $7,300
* Married taxpayers filing jointly and qualifying widow(er)s — $10,000
* Married taxpayers filing separately — $5,000
* Single — $5,000

The standard deduction amount for an individual who may be claimed as a dependent by another taxpayer may not exceed the greater of $800 or the sum of $250 and the individual's earned income.

Exemption Amount Increased

The amount you can deduct for each exemption has increased from $3,100 in 2004 to $3,200 in 2005.

You lose all or part of the benefit of your exemptions if your adjusted gross income is above a certain amount. The amount at which the phaseout begins depends on your filing status. For 2005, the phaseout begins at:

* $109,475 for married persons filing separately,
* $145,950 for single individuals,
* $182,450 for heads of household, and
* $218,950 for married persons filing jointly or qualifying widow(er)s.

If your adjusted gross income is above the amount for your filing status, use the Deduction for Exemptions Worksheet in the Form 1040 instructions to figure the amount you can deduct for exemptions.

Retirement Savings Plans

Traditional IRA income limits: If you have a traditional individual retirement account (IRA) and are covered by a retirement plan at work, the amount of income you can have and not be affected by the deduction phaseout increases. The amounts vary depending on filing status.

Limit on elective deferrals: The maximum amount of elective deferrals under a salary reduction agreement that can be contributed to a qualified plan increases to $14,000 ($18,000 if you are age 50 or over). However, for a SIMPLE plan, the amount increases to $10,000 ($12,000 if you are age 50 or over).

IRA deduction expanded: The amount you, and your spouse if filing jointly, may be able to deduct as an IRA contribution will increase to $4,000 ($4,500 if age 50 or older at the end of 2005).

Taxhead.com specializes in short-form tax returns (forms 1040-A and 1040-EZ). They offer free tax software online, and will eFile your taxes for one low price.

Free File is not necessarily free, and it is confusing

2005-10-10T09:49:00.000-07:00

The IRS free file initiative was designed to help low income taxpayers efile their returns. But, if you are using Free File, read the fine print BEFORE you start work on your tax return. Free file can be confusing and many hidden fees can apply, Your privacy and security may also be at risk.

Watch out for Cross Marketing Programs

Read the Privacy policies. Often companies are offering free tax e-file only to get your personal information and sell it to others, or use it themselves to sell you other products.
This is a common tactic of the free e-file companies. For example, H&R Block requires all Free File taxpayers to consent to cross marketing, despite the protections of the Internal Revenue Code, 26 U.S.C. section 7216. If you are interested in the privacy and security of your personal taxpayer information, read the privacy policy carefully.

Watch out for any "hidden fees" in preparing your return.

While you may qualify to have your federal return electronically filed for free, other services offered by the commercial filers may not be free. Hidden costs are everywhere, so be alert and aware. Some companies participating in Free File may offer to "professionally review" your tax return after you file it, or they may offer an online interactive feature to answer your questions, all for a price.

Check to make sure what, if any, costs would be charged if you have questions about your tax return once it is filed. Make sure to understand if the company will charge to help you fix any problems you might later have with your tax return, if they even offer this service. Free Assistance my also be available. Call the Taxpayer Advocate's office at 877-777-4778.

Beware of pitches for costly refund anticipation loans.

If you Free File and arrange for direct deposit of your refund into a bank account, the IRS says you should have your money generally within ten days. The IRS does not charge any fees to do this and you receive your FULL refund amount. Nevertheless, participating companies in the Free File program offer refund anticipation loans (RALs). If you agree to an RAL, you will receive the dollar amount due you by the IRS as soon as you file your tax return. You should understand that RALs are NOT REFUNDS. RALs are loans with interest. RALs always include interest, usually very high, and many times an additional fee will be added. An RAL reduces the amount of your REFUND by the amount of the fees and interest charges. The longer it takes you to pay back your RAL the more it will cost you. Think carefully before you agree to an RAL. You are liable for the RAL (loan) even if your refund from the IRS is disallowed in whole or in part. This is because an RAL is a separate loan from a lender. It is not your refund.

The IRS does not encourage or endorse the use of RALs offered by commercial providers.

You have important rights as a taxpayer. If you are uncertain of your rights, contact:

the National Taxpayer Advocate at 1-877-777-4778, or on the web at http://www.irs.gov/advocate/index.html

your Local Bar Association, on the web at http://www.abanet.org/barserv/stlobar.html

your local Low Income Taxpayer Clinic, or Legal Aide Society office. The IRS provides a list of Low Income Taxpayer Clinics at http://www.irs.gov/pub/irs-utl/litc_nrp_2-3-03.pdf

There is no single way to determine who qualifies for Free File so you will need to do some homework. In order to qualify, you also must meet one or more eligibility conditions, including:

Filing Form 1040 EZ;

Claiming the Earned Income Tax Credit; or

Qualifying as a low income taxpayer.

Still, the process can be confusing. Seventeen companies are participating in the Free File alliance, and each has its own criteria for determining who can e-file for free. For example, one company offers free e-filing for those with an adjusted gross income of $30,000 or less. Another offers the service to someone with an adjusted gross income of $100,000 or above. Still other companies offer free services to anyone 50 or older, taxpayers on active military duty, or residents of specific states.

A Safer, Easier Way to File Your Taxes is to use Low-Cost E-File Companies

Reputable companies like Taxhead.com charge a small fee to efile your tax return, but honor and respect your privacy. According to their Privacy Policy, which is monitored by TRUSTe, your information will never be sold, disclosed, or used for cross marketing. Taxhead.com also offers a single fee, with no hidden charges, to e-file your federal income tax return.

Taxhead.com Offers a Fast, Easy Way to do your taxes online

2005-09-30T23:24:00.000-07:00

Taxhead.com has released results demonstrating they offer one of the fastest, easiest tax software and e-file services available.
According to the company "Based upon actual results, half (49%) of our customers completed their tax return in less than 30 minutes."

According to IRS reports, an average of about 10 hours is required to complete taxes on paper forms. So, the benefits of Taxhead's service are rather significant. Using Taxhead's e-file tax software is 20 times faster!

Taxhead, an IRS authorized e-file provider and IRS e-file Partner, reported that 77% of their customers filing income tax returns finished in under 60 minutes, 63% in under 40 minutes, 49% in under 30 minutes, and more than a quarter (26%) finiushed in under 20 minutes.

Their data was based on Tax Year 2004 customers who completed entering their tax information in a single sitting (84% of their customers), and whose tax returns were accepted by the IRS on their first attempt (about 90% of their customers).

The company's results can be viewed by clicking here.

Efile Taxes Online

2005-07-30T17:34:00.000-07:00

Taxhead.com offers one of the fastest, easiest ways to do your taxes online. Their software is offered for free. E-file for just one low price, and you can get your tax refund the next week.