- 1 Filing Your Tax Return for Free: Your Comprehensive Guide
- 2 where can i find my agi on my tax return
- 3 Where on my 1040 form do I report AGI (adjusted gross income)?
- 4 What is my AGI and where to I find it?
- 5 Can I Claim My Indian Parents on My US Tax Return?
Filing Your Tax Return for Free: Your Comprehensive Guide
More than 60 million people are eligible to file their taxes for free. Here, we’ll provide you all the necessary information in our guide to free filing.
You’d think that filing your taxes for free would be pretty simple.
But with 14 different websites offering free tax filing and, on top of that, many websites offering upgraded versions of their products, it can be a lot more complex than you think.
And that can lead you to wonder exactly how easy it really is to submit tax returns on your own. Can anyone do free filing? Also, what if you make a mistake?
Finally, where can you go to get solid information that will give you the tools you need to do your taxes?
We’ve tackled each of these issues by doing research on our own and talking with some industry experts about free filing. Over the next few minutes we’ll walk you through each of these topics and give you great information you can use as the April 15 tax deadline approaches.
How easy is it to file a free tax return on your own?
We want to start off by saying that if you’re deciding to file on your own this year, you aren’t alone. More than 60 million people are eligible for no-cost returns this year, and, according to TurboTax expert and CPA Lisa Greene-Lewis, the number of DIY filers increased 5% last year.
Because of the sheer number of people who are eligible to free returns, online tax software companies like TurboTax, TaxAct, TaxSlayer and H & R Block have put a lot of effort into making the process as easy as possible.
But is it really as easy as they say it is? To answer this question, we talked with Chad Shultz, a Jacksonville CPA who works with startups all over the world.
“It9rsquo;s actually as easy as it seems. The online platforms are like tutorials. You follow a series of screens asking you for your personal information and then the software tells you if you can file for free,” he said. “I find it almost amazing when people who can file for free pay someone to do their taxes. Facebook is harder than filing a free tax return.”
“Facebook is harder than filing a free tax return.”
Chad went on to describe the basic process of a free file. Basically, once the software determines you can file for free, you enter the Employer Identification Number on your W-2 and the software will, in most cases, automatically fill out the rest of the information.
Within just a few minutes, your refund is calculated and you’re ready to file. In this case, the online tax software or app takes your information and fills out what’s known as a 1040, 1040A or 1040EZ. These are tax forms for someone who isn’t self-employed and doesn’t have a lot of assets like stocks, homes and other things like dividends and capital gains.
But not everyone falls into the 1040 category, and because of that, not everyone is able to file for free.
Is Free Filing Available for Everyone, Or Just Certain Taxpayers?
As Chad pointed out, most tax software will walk you through a series of questions that will determine whether or not you can file free.
At some point during these questions, you’ll be asked if you own a home, business or rental property. If you answer “Yes9rdquo; to any off these, you’ll most likely be informed that you’ll have to upgrade from a free version to a paid version.
But this isn’t the only factor that could push you out of free filing territory.
Each year the IRS publishes a list of tax agencies who offer taxpayers free filing. There are 14 of these agencies in 2016, featuring some of the more well-known companies like TaxSlayer, TaxAct, TurboTax and H & R Block.
Each of the 14 companies have certain qualifications you need to meet so that you can file for free. The common qualifications are:
- Income: All but one require that your adjusted gross income (what you made after deductions) is under $62,000. TurboTax is the exception … their limit is $31,000 for civilians and $62,000 for active military.
- Age: The age requirements are all over the place, with the oldest ages being 49, 50, 52, 54, 56, 60, 65, 70 and74. Only TurboTax, ezTaxReturn.com and OLT.com don’t have any age restrictions.
- State: In some cases, tax websites will charge you a fee for filing state taxes depending on which state you live in. It’s best to check with the website you choose to find out if you can do free state taxes.
So how do you know which service will actually let you file for free? Great question. The IRS has a simple solution: fill out their quick “Help Me Find Free File Software” form and they’ll give you a list of services you can use.
Now, it’s important to remember that these tax software solutions automate all the calculations you need to make to determine whether you owe taxes or are getting a refund. If you make more than $62,000, you can still file for free, but you’ll need to fill out the forms yourself.
So, instead of online software crunching the numbers, you do. But don’t worry; since you’re filing for free, the calculations won’t be that difficult. If you are having trouble deciding which 1040 is right for you, the IRS has a great page that helps you pick the right 1040.
Is there one website that works better than others, or that gives you a bigger refund? That’s a good question. You may prefer one site’s functionality better than another, but they’ll all give you the same refund.
“Can one tax software get a bigger refund than the other,” Chad asked. “No. They use the same calculations.”
Whether you’re filling out your forms on your own or you’re using online software, mistakes can happen, and that’s what we’re covering next.
What Happens if You Make a Mistake?
Mistakes are bound to pop up no matter how easy it is to file your free tax return. But an error here or there isn’t the end of the world. In cases where mistakes are minor and you’ve already sent in your tax return, the IRS makes the changes automatically, said Shaunna Morgan, TaxAct’s director of public relations and communications.
“If a filer notices a mistake after their e-filed return has been accepted by the IRS, they should wait until they receive their refund before doing anything,” she said. “The IRS will often catch simple omissions and minor mistakes.”
If the error influences how much you’d get back on your refund, then the IRS will notify you of the mistake, Chad Shultz said.
“If you forget to report a tax document or income on your personal return, you’ll be notified by the IRS saying, for example, ‘Hey, you have a 1099 you owe additional money on,’9rdquo; he said. “They ask you if you agree with the mistake, and then you pay the tax if you owe something, or you can go back to your tax software and do an amended tax return and file again.”
The form you’ll most likely use to file an amended return is the 1040X (instructions). I had to do this a few years ago. The process is pretty simple, with the only drawback being that you have to wait a little longer to receive your refund.
Now, you might be thinking, “Is there one mistake people make a lot, or a new form I need to include in my tax return?”
The answer is yes. This year, many taxpayers have to file a 1095-A, a form you get when you purchase a health plan through the federal Health Insurance Marketplace. It shows how much your monthly premiums were before your tax credit and how much you received in tax credits each month.
“It9rsquo;s very typical that people forget things,” Chad said. “The big thing this year is receiving the 1095-A health insurance form, so make sure you don’t forget to report that form.”
As I’m Doing My Taxes, Where Can I Go for Free Advice?
As more and more taxpayers choose to file their taxes on their own, experts have responded by making all kinds of information available online.
The IRS has their own information page with dozens of links that cover just about any situation you find yourself in as you file your free tax return. If you choose to file free on your own, some of your most helpful resources will be instructions for the 1040, 1040A and 1040EZ.
All of the most popular tax websites have their own advice sections that you can access without being a client: H & R Block, TaxAct, TaxSlayer and TurboTax.
If you’re over 50 and you’re looking for one-on-one advice and help with your tax filing, check out AARP’s Tax-Aide program. They offer more than 5,000 locations across the country every tax season where you can work with professionals to file your taxes for free. You can use their Site Location tool to find a center near you.
You may also want to check with CPA’s in your area. Many times, Chad Shultz said, they’ll offer you a free consultation in hopes they can do business with you in the future when your returns get more complex.
“A lot of CPA’s will give free consults because they want the right to earn your business,” he said.
Also, check out your local government websites for information about free tax help. AARP’s Tax-Aide program often has locations in local libraries.
“A lot of CPA’s will give free consults because they want the right to earn your business.”
With so many options out there, you might get to the point where you’re stuck between several different choices and you don’t know what’s best. You might even find yourself in this situation when you’re trying to pick a website to do your free filing.
If you’re trying to decide which free tax software to use, don’t be afraid to compare them. Since you’re going to file an easy return, it won’t cost you much time (and absolutely no money) to start tax returns on several different sites.
“You can start a return on one site and then go to another site and have two going at once. Compare and contrast,” Chad said. “You aren’t being charged for it, so which one makes you feel more comfortable?”
Our Final Thoughts on Filing Your Taxes for Free
We live in a great time to do taxes. The major websites have created software that allows you to file from just about anywhere: your phone, your laptop, your tablet and your desktop.
And this is a good thing for the average taxpayer. Access is nearly unlimited and the process, in our opinion, is easier and cheaper than it’s ever been. No tedious paperwork; just a few clicks and taps, said Eric Roebuck, senior product manager at H & R Block.
“Traditionally, people used to wait until they got all of their documents and then sat down and, in one fell swoop, knocked their taxes out,” he said. “What we see now is that people start one device, add information through another device and then finish on yet another device.”
But with all the advancements surrounding free filing, it never hurts to check reliable sources like the IRS, local tax experts and some of the bigger online tax firms for information.
If you make mistakes before you send in your return, remember that you can go back to your in-progress tax return and make changes. Most online tax software will automatically recalculate the numbers based on the new information.
And, above all, don’t procrastinate! The sooner you get your taxes done, the less stress you’ll feel and the quicker you can get that refund.
where can i find my agi on my tax return
All taxpayers filing electronically must use the Self-Select PIN method. The IRS no longer accepts Form 8453 as a signature document. The only other option is to paper file your return.
To e-file using the Self-Select PIN method, you will create a 5-digit PIN of your choice to sign your return. This "signature9quot; must be authenticated using one of the following three numbers:
- Prior year adjusted gross income (AGI)
- Prior year Self-Select PIN (the 5-digit Self-Select PIN you created to file last year)
The IRS requires one of these numbers to verify your identity. You will be asked to create your Self-Select PIN and provide one of the authentication numbers during the final steps in filing your return.
Most taxpayers will be able to file electronically using the Self-Select PIN method. If you (or the secondary taxpayer on the return) are under the age of 16, you must file a paper return.
What is the Self-Select PIN method?
The Self-Select PIN (Personal Identification Number) method allows taxpayers to electronically sign their e-filed return by using a 5-digit PIN as their signature.
You create your own PIN. You do not register the PIN with the IRS before filing or need to contact the IRS to get it. The five-digit PIN can be any five digits except all zeros.
What is the original Adjusted Gross Income (AGI)?
The original AGI is the amount from your prior year originally filed return as accepted by IRS. The amount can be located on:
- Form 1040 - Line 37
- Form 1040A - Line 21
- Form 1040EZ - Line 4
Do not enter a corrected amount or the amount from an amended tax return.
How do I get my original AGI or PIN if I cannot locate last year's return?
If you do not have a copy of your 2015 tax return, you may use the IRS Get Transcript self-help tool to get a "Tax Return Transcript" showing your AGI.
- Use IRS's Get Transcript Online to immediately view your AGI. You must pass the Secure Access identity verification process. Select the "Tax Return Transcript" and use only the "Adjusted Gross Income" line entry.
What AGI should each spouse use if we filed jointly last year?
If the prior year's return was filed using the status of married filing jointly with the same spouse, use the same prior year amount for both spouses. Do not split this amount in half. Enter the whole, original AGI amount for both taxpayers even if one spouse did not have earned income.
What if I did not file a return with the IRS last year?
If you have never filed before, or if you filed last year using an ITIN and have an SSN this year, enter zero (0) for your prior year AGI. Do not leave the fields blank.
What do I use for the original AGI if my filing status has changed since last year?
If your filing status changed from the previous year to Married Filing Jointly, then each taxpayer will use their individual original AGI from their respective prior year return.
If the change is from Married Filing Jointly, then both taxpayers will use the same original AGI from last year's joint tax return.
What AGI or PIN do I use if I filed jointly with a different spouse last year?
If you filed jointly with a different spouse in the previous year, use the total AGI amount from the joint return filed with the ex-spouse.
Where on my 1040 form do I report AGI (adjusted gross income)?
On a standard IRS Form 1040, you add up and report adjusted gross income, or AGI, on line 37. Line 37 appears on the first page of your form, and the figure listed there is transferred to the top of successive pages. Many of the preceding lines on the first page, specifically lines 23 through 35, are used to calculate and list any normal tax deductions you might be eligible to take. These deductions serve to reduce the total taxable AGI.
Calculating Adjusted Gross Income
For most Americans, AGI is a relatively straightforward figure. Normal deductions, such as those for education expenses or contributions to a qualifying retirement account, are easy to figure out and deduct from total gross income, which is figured out earlier on Form 1040.
Form 1040 is the only IRS form that allows for every possible tax deduction. Other versions of this page, including Form 1040A and Form 1040EZ, have significantly reduced adjustment opportunities. All of these forms allow for the standard deduction.
Line 37 is only the home of your AGI on Form 1040. It is different for each IRS form; for example, Form 1040A lists AGI on line 21.
Certain states require their residents to file annual income tax returns with the state tax authority. That means you also list AGI for these purposes, although it may be listed in a different part of the document. You can simply calculate AGI for federal taxes and transfer that number to any state filings.
Importance of Adjusted Gross Income
Your AGI determines which tax benefits you are eligible for, how the IRS processes your form and changes to the tax bracket you file under. Before you fill out your Form 1040, take the time to maximize your deductions and reduce your total taxable income.
What is my AGI and where to I find it?
AGI or Adjusted Gross Income is the figure which represents how much a tax payer earned and is responsible for paying taxes on with respect to the prior tax year. AGI includes all income sources, but is often smaller than the total gross income as a select number of adjustments (deductions, credits, certain expenses, etc) are made to this figure in accordance with the US tax code. These adjustments, which can include retirement accounts, work related expenses, education and other expenses, are often phased out for higher income earners.
Knowing what this figure is for you can be helpful when determining if you qualify for certain tax breaks and/or programs, for example the Earned Income Tax Credit. It is also very commonly used to sign or verify a tax payer’s identity when electronically filing with the IRS.
To identify your AGI on your prior year tax return, look to the following places;
If you filed Form 1040 it will be listed on line 37.
If you filed Form 1040A it will be listed on line 21.
If you filed Form 1040-EZ it will be listed on line 4.
Please note: If you did not file a return last year and did not create a PIN, or you filed AFTER Oct 15th, you can chose to enter "09quot; for your AGI and file without a prior year PIN.
Can I Claim My Indian Parents on My US Tax Return?
Make sure you meet all of the requirements before you try to claim your parents as dependents on your U.S. income tax return.
Claiming parents is difficult, but it can be done if you pass the “Qualifying Relative” tests. But first, here are the two biggies that tend to get in the way:
- You cannot claim a married person who files a joint return with his or her spouse. So if your parents file a joint tax return in the United States, then you won’t be able to claim them. (I’m guessing they don’t, but I wanted to make sure that I told you about that.)
- To claim someone as a dependent, the person must be a US citizen, US resident alien, US national or resident of Canada or Mexico. Where my clients have had trouble before is when their parents visit the US, but their visas are only for 6 months, no longer. Then they don’t qualify as US residents. I just wanted to make sure you knew about the 6 month rule because that’s the issue most likely to cause Indian families trouble with claiming their parents. After that, the rules are the same for anyone else in America who wants to claim their parents on their US income tax return. You need to pass the qualifying relative test.
The Qualifying Relative Test has 4 parts:
- They cannot be considered a qualifying child of anyone else. No problem! As your parents, I’m guessing they’re both over the age of 24. Easy pass.
- Member of household or relationship test. As your parents, they do not have to live with you. Also, since they are your parents, they automatically pass the relationship test. Easy pass.
- Gross income test. This one is harder. They cannot have more than than $3,650 in gross income for the year. If they are retired, they might qualify, but if they are receiving a taxable pension, that could kick them out of being a dependent. In the US, for example, my mother in law receives Social Security income which isn’t taxable and it doesn’t count as gross income. Her other income is less than $3,650 so she would pass the gross income test for me to claim her as a dependent. Remember, once your parents become US residents, they will be taxed on their “world wide income.”
- Support Test. In order to claim your parents as dependents, you must provide more than 1/2 of their support. Let’s say that your parents each earn $3,000 a year in some type of pension. For you to be able to claim them as dependents, you would have to pay more than $3,000 for support for each of them. For example, if they live with you, then you would consider part of your rent or mortgage to be towards their support. Also food, clothing, medical expenses, etc. If they don’t live with you, who is paying for their rent, food, clothing, etc.? Using my mother-in-law as an example again: although I pay some of her bills, I definitely don’t pay over 1/2 of her support. She pays for her food and rent with her Social Security money so I don’t come close to the 50% of her support.
If you do find that you qualify to claim your parents, then you would complete the W7 forms for them, so that they have an ITIN number, and submit them with your next tax return. I find that the best way to handle the W7 form is to take your tax return in to the nearest IRS office with your supporting documents (like passports) and submit them there. Although it might be inconvenient making the trip, it will save you a lot of hassle in the long run.