Q: What are the advantages of filing your federal taxes electronically?
A: If you’re expecting a refund on your taxes, e-filing is the way to go. The IRS says those who file electronically can expect their refund within ten days, especially when using direct deposit. The turnaround time with the traditional paper return can take weeks. Apparently a lot of Iowans figured that out already last year. Out of 1.3 million federal tax filers last year in Iowa, 700,000 filed their returns electronically. That makes Iowa a leading e-filer in the country according to the Internal Revenue Service. And the federal tax collection agency expects those numbers to climb even higher this year. That’s because the IRS is launching a no-fee preparation and electronic filing program called Free File. In a private-public partnership, the IRS has teamed up with the tax software industry to offer free electronic filing services to eligible taxpayers. The initiative is part of an effort to improve the federal government’s electronic capabilities with the citizens it serves. I encourage Iowans to check out Free File and take advantage of the no-fee service if you qualify. As one of the leading architects of the IRS Restructuring and Reform Act of 1998, I advocated policies that would improve customer service and enhance performance by the IRS. Free File should meet these goals by providing better access for taxpayers, helping to increase electronic filing to 80 percent by 2007, reducing burdens on individual tax filers and making tax preparation easier. By partnering with the private sector for this new service, the IRS is able to offer taxpayers more choices and keep costs low by opening the door to innovation and competition in the marketplace. As chairman of the Senate Finance Committee, which has legislative and oversight jurisdiction over the IRS, I’ll keep tabs on Free File and other initiatives by the IRS as it seeks to comply with the reforms I worked to put in place five years ago.
Q: Who is eligible for Free File?
A: Each participating member of the tax software alliance sets their own eligibility guidelines. According to the IRS, at least 60 percent of U.S. taxpayers, 78 million people, will qualify. In general, the following criteria will be used to determine if you qualify for free on-line tax preparation and electronic filing services: Age; Tax Year 2002 Adjusted Gross Income; Eligibility to file form 1040EZ; Eligibility to claim Earned Income Tax Credit; State residency; and Active duty military status. Go to http://www.irs.gov and browse the available service providers or use its "Free File Wizard" questionnaire to help identify a free service for which you may qualify. Once your eligibility is determined, you may link directly to that software company’s free on-line tax preparation service. Free File is available now through April 15, 2003. Some participating members will offer services through October 15 for those who may need an extension.