COVID Tax Tip 2021-27, March 2, 2021
Many people will be filing federal taxes for the first time this year. For these taxpayers, IRS Free File is a great option, especially if they are looking to save money on tax preparation. Filing electronically and choosing direct deposit is the safest and easiest way to file an accurate tax return and the fastest way to get a refund.
Here are some facts about Free File programs:
- IRS Free File is available on IRS.gov, and features brand-name tax software providers.
- First-time filers can browse the offers to find the product that’s right for them.
- Each Free File partner sets its own eligibility standards. These are generally based on income, age and state residency. All taxpayers whose adjusted gross income was $72,000 or less will find at least one free product to use.
- Some Free File products are available in Spanish.
- MilTax online software is also available to service members and their families, regardless of income, and is offered through the Department of Defense.
- Free File is a great option for those who don’t normally file but are filing this year to claim the recovery rebate credit. If someone is eligible for a recovery rebate credit – and either didn’t receive Economic Impact Payments or received less than the full amounts – they must file a 2020 tax return to claim the credit even if they don’t usually file.
- People filing only to claim the recovery rebate credit should use the browse feature to find a product that requires no minimum income. Taxpayers should review the recovery rebate credit FAQs for more information.
- Free File providers also offer state tax return preparation, some for free and some for a fee.
- Taxpayers can use their computer, smartphone or tablet to do their taxes. They just need to go to the Free File page of IRS.gov on their device. All Free File products can be used on mobile devices.
People using Free File software will need:
- Their Social Security number or Individual Taxpayer Identification Number.
- Their wage and income information. This is usually found on forms from their employer such as Form W-2 and Form 1099.
- To make sure their parents are not claiming them as a dependent. Taxpayers whose parents are claiming them as a dependent may still file a separate tax return, but they cannot claim themselves as a dependent.
- Documentation for all tax credits and deductions. Taxpayer should remember that the standard deduction has been greatly increased so that itemizing deductions may not be necessary.
- Prior-year adjusted gross income. This is required for all electronic tax returns as part of the user’s electronic signature.
- First-time filers over the age of 16 can simply enter 0 as their prior-year income for signature purposes.
- For taxpayers who have filed before, their 2019 tax return will show their adjusted gross income. If their 2019 return has not yet been processed, they may enter “0” as their prior-year adjusted gross income.
- People who used the Non-Filers: Enter Payment Info Here tool last year to register for an Economic Impact Payment, should enter $1 as their prior year AGI. People can visit IRS.gov, for details on, claiming the recovery rebate credit if they aren’t required to file a tax return.
- Their bank account and routing number. Most people receive a tax refund. The fastest way to get this money is through direct deposit.