About 70% of taxpayers are eligible for the IRS free file, but only 2% used it in 2022 – Stock Market News

Most Americans can file their taxes for free, but many don’t take this opportunity.

About 70% of taxpayers can use IRS Free Filebut only 2% used it during the 2022 filing season, according to the National Taxpayer Advocate’s Annual Report in Congress.

A public-private partnership between the IRS and the Free File Alliance, the service offers free online guided preparation of tax returns by partner companies for federal returns (and some state returns). You may qualify if your 2022 adjusted gross income was $73,000 or less.

For To get started with Free File, you’ll need last year’s adjusted gross income for verification, your social security number, and the necessary tax forms.

You can browse suppliers on the IRS website or use the agency’s website research tool to find the best matching tax software, based on your location, income, and other factors.

The second page of the finder estimates your adjusted gross income, which is your gross income less pre-tax 401(k) carryovers, student loan interest, certain Individual Retirement Account deposits before tax, health savings account contributions and more.

“It’s a good option for those with simple returns who don’t need tax planning advice and who could benefit financially from the free service,” said SC&H Group Certified Financial Planner Judy Brown in the Washington and Baltimore area. She is also a chartered accountant.

However, there have been several tax law changes in recent years, broadly affecting taxpayers – such as retirees, student borrowers and more – which can make reporting on your own more difficult, a- she declared.

“Tax planning isn’t just about filing a return every year, it’s about proactively implementing a tax savings strategy over many years,” Brown added.

If your adjusted gross income is greater than $73,000, you have the option of using Forms to fill out for freewith limited built-in calculations, but no guidance.

Although Free File isn’t widely used, some experts say it won’t work for more complicated returns.

“Some eligible taxpayers, due to their specific tax situation, may find that no free file offer contains the forms or schedules they need, and these taxpayers have no choice but to pay for the file. electronically, to redo their declarations in forms to be completed by free file or paper file”, National Taxpayer Advocate Erin Collins wrote in her recent report.

Tim Hugo, executive director of the Free File Alliance, said the partner companies offer a “basic list” of the most commonly used federal income tax forms and schedules, featured on the IRS website. . here. However, companies may not support some of the “less commonly used” forms, according to the website.

“Complicated yields are at the higher end,” he said. “For [filers earning] $73,000, we just don’t get any complaints.”