How to Prepare and File IRS Taxes for Free Form 1040?

How to Prepare and File IRS Taxes for Free Form 1040?

This article is a basic text about how to prepare and file income tax Form 1040 for free with the Internal Revenue Service (IRS). It is suitable for individuals who are interested in filing their own taxes to save money. Readers will learn how to start with the preliminary documents and then submit their tax return electronically to the Internal Revenue Service. 

Tax planning is easy when you have the time. Seventy percent of American taxpayers are eligible for the Internal Revenue Service (IRS) Free File program. This is about 235,736,000 Americans that can file their taxes for free. The Internal Revenue Service is using partnerships with tax software companies to help taxpayers file their taxes electronically for free. Taxpayers will qualify for the Free Guided Tax Preparation option if their Adjusted Gross Income (AGI) is less than $79,000. If their AGI is more than $79,000, they will qualify for the Free File Fillable Forms option. 

To help you get started, you will need to obtain several documents. Please set aside time to collect all your tax documents before you start the process. Please keep in mind that these are the basic documents that are required to file an individual tax return Form 1040. 

Things You’ll Need: 

Previous Year Tax Returns 

Previous IRS Notices 

Personal Information 

Proof of Gross Income 

Proof of Other Income 

IRS Free File Tax Software 

 Previous Years Tax Returns 

 Locate the previous year’s tax returns so that they can be compared to this year’s tax return. This will help the taxpayer avoid math errors and identify changes that affect the tax return. If the taxpayer does not have any major changes, this year's return should be like the previous year’s returns. A lifestyle change such as a divorce or marriage can have an impact on a tax return. Also, your wage and income will affect the return numbers. For example, someone might start or stop working. The taxable income might not be subject to withholding during the tax year. For instance, interest income, dividends and capital gains are taxable.  

Previous IRS Notices 

Your itemized deductions and tax credits can also have an impact on the tax return. Find out if you have any letters or notices from the IRS because this will give you more information about your tax status. As you gather your documents, this is some of the preliminary work to file and prepare your tax return. 

Personal Information 

Next, you will need a valid social security number for yourself, your spouse and your dependents. In this section of the return, you will enter your date of birth, marital status, age and dependent information. Obtain an ITIN if you do not have a SSN. This will help the IRS verify your identity. If you are 65 or older, you may qualify for more deductions. When you use married filing jointly status, the deductions and credits increase. Your immigration status will be citizen, resident alien or nonresident alien. To file a basic income tax, you will need Form 1040. Taxes are due by the 15th day of the fourth month of each year.  

Proof of Gross Income 

Obtain proof of all your gross income. Gross income is all the money that you make that is not excluded by tax law. The IRS definition of gross income is very broad, but some income is excluded from gross income. Your taxable income will include salaries, business income, property income, interest income, tip income, dividends, royalties and much more. On the other hand, child support, municipal bonds, life insurance benefits are a few items not included in gross income. Most of the income we receive is taxable. 

Proof of Other Income  

Your other income will be listed on various forms from companies. Keep in mind that it is your responsibility to report income even if a company does not send you a form. The most common forms are W2-Wages, which are all the funds you receive from employers. The Form 1099-INT list interest you received from banks and other financial institutions. Form 1099-G document the unemployment compensation received from local and state governments. Form 1099-R shows income from retirement plans and Form 1099-DIV includes dividends you received. Form 1095-A is the Health Insurance Marketplace Statement issued to report information to the IRS and individuals may qualify for the Premium Tax Credit. 

File Your Taxes Guided Tax 

Visit IRS.gov and type “Free File” in the search engine box and hit enter. Click on the link “Free File: Do Your Federal Taxes for Free.” Select the “Use Free Guided Tax Preparation” button and hit the “Browse All” tab. Review the IRS Free File offers. 

Select the best Free File option for your situation and create an account with the IRS partner website. Use the tax software program to guide you and help you finish preparing and filing your tax return. Do not forget to print a copy of your tax return. When your return is accepted by the IRS, you will receive an email. 

File Your Taxes Fillable Forms 

If your income is above $79,000, you can still file your taxes for free by using a fillable form. Visit IRS.gov and type “Free File” in the search engine box and hit enter. Click on the link “Free File: Do Your Federal Taxes for Free.” Select the “Use Free Fillable Forms” button. Read all the IRS instructions on this page before you click the “Start Free File Fillable Forms” button. 

Please remember that this option is for taxpayers who are comfortable doing their own taxes without the software program. Click the “Start Free File Fillable Forms” button and create an account. Select the IRS tax form that you need. Type in your tax information from your W-2 forms, W-2G and 1099s forms or other documents. Make sure you print and keep a copy of your tax return. Use IRS publication 5274 “IRS Free File Forms User’s Guide” as a reference. 

PROS:

• IRS does not save your free file information
• Option to select forms to file taxes
• Print copies of the tax return
• No bank fees or refund anticipation loans

CONS:

• File only the tax return for the current year
• No option to file state tax returns on free file
• No changes after the form is submitted
• Program operates mid-January to mid-October each year

TIPS:

• Create an IRS online account and access your tax records
• Make sure your employer is collecting the correct amount of taxes
• Contact the IRS if you do not qualify for the free fill option - they can help you
• Set up a payment plan or make arrangements by using the online account

REFERENCES

Internal Revenue Service