How to Do Your Taxes for Free

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11427_aPOGoing to college; getting your first job; moving into your own place. To these rites of passage add one more: doing your own taxes. And, it’s not as scary as you might think.

It’s not scary because there’s help available. It’s called Free File, and it’s offered exclusively from the IRS in partnership with nearly 15 leading tax software companies. About 3 million people use it every year.

Free File lets you choose brand-name software that does the hard work for you — all for free. And, it offers a fast, safe and free option for everyone. Brand-name tax software is available to those who made $57,000 or less in 2012 — which is about 70 percent of us. Earned more? Try Free File’s online fillable forms, the electronic alternative to IRS paper forms.

Checklist of materials to do your taxes

Keep this list as a checklist of the items you will need to do your taxes. The IRS recommends keeping all tax-related documents for three years, in case of an audit. Tracking income-related documents can help you take full advantage of deductions available to you.

  • A copy of last year’s tax return
  • Valid Social Security numbers for yourself, spouse and children
  • All income statements, i.e. W-2 forms, from all employers
  • Interest/dividend statements, i.e. 1099 forms
  • Form 1099-G showing any state refunds
  • Unemployment compensation amount
  • Social Security benefits
  • Expense receipts for deductions
  • Day care provider’s identifying number

Earned Income Tax Credit (EITC) helps you keep more of what you earned

No tax benefit offers a greater lifeline to working families than EITC. Yet, one out of every five eligible taxpayers fails to claim it, according to the IRS. Because of the economy, even more people may be eligible if they have had changes in their earned income. Here are a few things to keep in mind:

  • The maximum credit for 2012 tax returns is $5,891 for workers with three or more qualifying children.
  • Eligibility for the EITC is determined based on a number of factors including earnings, filing status and eligible children. Workers without qualifying children may be eligible for a smaller credit amount.

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