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ABA
Provides Tips for Online Tax Filing, Cautions Against Loans and
Services
Since January, more than one million taxpayers
have taken advantage of the IRS's new "Free File" service, which
allows individuals to link to commercial tax preparers through the
IRS website (www.irs.gov)
and file their federal income taxes online free of charge.
While the program has its advantages, including fewer mistakes and
the prospect of speedier refunds, the American Bar Association Section
of Taxation cautions taxpayers to understand the terms, conditions
and costs associated with the various commercial services and loans
offered online.
"Some of the commercial tax preparers in the Free File program would
be more than happy to sell taxpayers a refund anticipation loan,
or RAL," according to Herbert Beller, chair of the ABA Section of
Taxation. "But the fees and the interest charges associated with
RAL are quite high, and the longer a taxpayer waits to pay off the
loan the more it will cost. Taxpayers should resist the temptation."
Beller says taxpayers who are expecting a refund and use Free File
should get their refund in as little as a week to 10 days, according
to the IRS. But not everyone can participate in Free File, so they
will need to do their homework before they begin.
"More than 60 percent of U.S. taxpayers qualify for Free File,"
Beller says. "Taxpayers need to go to the IRS website to determine
if they qualify, which depends on income, age, state residency,
and other factors."
To assist taxpayers, the Section of Taxation has put together a
list of 10 tips to consider before filing federal taxes online,
including:
- Watch out for "hidden fees." Companies
may charge for consultations once your tax return is filed;
- Keep your paperwork. Don't rely
on your computer to store data; and
- Don't procrastinate. Free File is
only available through April 15th
A complete list of tips for filing your taxes online
is available on the Tax
Section website at www.taxtips4u.org.
The American Bar Association Section of Taxation has more than 20,000
tax lawyer members nationwide. Its goals include helping taxpayers
better understand their rights and obligations under the tax laws
and working to make the tax system fairer, simpler and easier to administer.
The American Bar Association is the largest voluntary
professional membership organization in the world. With more than
410,000 members, the ABA provides law school accreditation, continuing
legal education, information about the law, programs to assist lawyers
and judges in their work, and initiatives to improve the legal system
for the public.
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