Life doesn't offer many free lunches, but certain free tax-return preparation services almost do. Despite this, these services appear to be significantly underused.
The first option is the free VITA or Volunteer Income Tax Assistance program, through which numerous Arizonans may be eligible. The second choice is the recently launched Direct File initiative provided by the IRS, now available in Arizona along with 11 other trial states. These options should be considered by middle-income filers who have not yet submitted their 2023 tax returns.
Bob Schmidt, a VITA volunteer who offers free tax preparations, mentioned that he had to distribute pamphlets last year to generate more enthusiasm for the initiative.
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In an email, he stated, "Last year, I processed the least number of tax returns throughout my 24-year career." He added that his supervisor would send him an email the previous evening instructing him not to come into work due to insufficient client volume.
Information regarding the initiative, along with details of the return-preparation locations in Arizona like libraries, community colleges, and places of worship, can be accessed online. irs.treasury.gov/freetaxprep The website also features information about a connected initiative called Tax Counseling for the Elderly.
Schmidt urges business proprietors, managers, and supervisors to inform their lower-to-middle income workers about these initiatives. He hypothesizes that numerous qualifying people aren't utilizing the available assistance, perhaps due to not perusing newspapers.
$250 for standard Form 1040 filings? The excitement of offering assistance at no cost!
Rea Abel is another volunteer who prepares tax returns. She serves at one location in Fountain Hills and two locations in Scottsdale. Similar to Schmidt, she joins through a local financial literacy organization named Masters of Coin. However, like all volunteers, she receives training and certification from the IRS.
"My main joy comes from helping individuals within our community who are unable to file their taxes themselves and would otherwise have to spend a considerable sum to get it done elsewhere," she stated via email.
Certain straightforward Form 1040 filings might incur preparation costs of approximately $250 when handled by for-profit entities.
numerous individuals who visit our VITA locations can't afford those costs," she stated. "It brings me great joy to notify low-income elderly residents about their qualification for the Arizona Property Tax Credit, which could amount to up to $502.
Abel, with her education in computer engineering, mentioned that she finds joy in connecting with new individuals through volunteering. She also appreciates the intellectual stimulation involved in assisting others with their tax returns, comparing the process to "solving a jigsaw puzzle where every piece must be placed correctly."
Free tax help: What's involved
On average, returns take about an hour to prepare. “During that time, a volunteer does a thorough intake interview with the taxpayer to ensure that we have all the required information, a volunteer then prepares the tax return, and a different volunteer then thoroughly reviews the return,” Abel said.
The VITA/TCE volunteers can manage numerous scenarios; however, they cannot assist with tax returns for landlords due to the requirement of claiming depreciation. Additionally, these services do not support filings for married couples who file their taxes separately, as mentioned by her. Moreover, these programs primarily serve low-to-moderate-income taxpayers whose earnings fall under $64,000 annually. Nonetheless, certain VITA locations extend assistance up to higher income thresholds specifically for senior citizens and people with disabilities, according to Jim Simpson, a certified public accountant.
Simpson, the founder of Masters of Coin, mentioned that during the initial three weeks of the tax-filing period starting January 29th, the VITA locations across metro Phoenix processed only about 5,000 tax returns. He added that according to Internal Revenue Service data, the returns handled by VITA boast an impressive 97% accuracy rate.
Abel mentioned that taxpayers should provide essential paperwork such as Social Security cards or Individual Taxpayer Identification Numbers (ITIN) for every individual included in the tax filing—this includes the taxpayer, their spouse, and all dependents—as well as photo IDs for both the taxpayer and their spouse. Additionally, they must include relevant forms like W-2 wage statements and 1099 forms among others.
It's prudent for taxpayers to bring a copy of their previous year's tax returns, as these may contain important details like capital-loss carryforwards that could potentially be reused, she mentioned. Individuals anticipating a refund who wish to receive it via direct deposit or opt for direct debit should ensure they have all necessary banking information readily available.
She mentioned that two frequently overlooked elements are IRS Identity Protection PINs, should the individuals possess them, along with Form 1095-A for those who get their insurance via the healthcare marketplace.
“She mentioned that returns lacking these elements are instantly dismissed by the IRS and have to be amended prior to being approved.”
The Direct File service is growing in Arizona.
During this tax-filing season, the IRS introduced its Direct File pilot initiative as an additional method for preparing returns. This elective service is currently being implemented in Arizona along with 11 other states, which include nearby California and Nevada.
The IRS stated, “There’s no software to purchase or install, and it’s mobile-friendly, ensuring equal functionality across phones, tablets, and computers.” They assert that this free service is user-friendly, secure, and offered in both English and Spanish. Additionally, the IRS provides live online assistance from Monday through Friday.
After successful external testing and evaluation during which some taxpayers from Arizona and other pilot states filed their returns, Direct File has moved into a second test phase. Then, starting March 12, it will be fully open to eligible taxpayers in Arizona and the 11 other pilot states. The program allows taxpayers to transfer their federal tax information to the tax agencies of Arizona or the other pilot states, to complete state tax returns.
The IRS suggests that approximately one out of every three residents of Arizona were qualified to utilize the program during its trial run, with this eligibility set to broaden further. Additional information regarding this can be found in the Direct File portion of irs.gov. https://directfile.irs.gov/state .
Contact the author at russ.wiles@Wiseova.
The article initially appeared in the Arizona Republic. There are ways to get someone to do your taxes at no cost. Why then don’t we take advantage of these offers?
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