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Free Tax Preparation for Low-Income Taxpayers


If you are a low-income taxpayer, there are many ways to get your tax return prepared at no cost to you.

Once the holidays are over, tax season officially starts. All 2009 tax returns must be filed on or before April 15, 2010. Here are some tips that will help you save money when you get your tax returns prepared.

Free File

The IRS Free File program makes tax software programs available to eligible taxpayers for free. The Free File software programs will help you complete your income tax return and will then file the return with the IRS for you at no cost. The software programs given to eligible taxpayers are the same tax programs that are sold in stores. For 2009, taxpayers who earn $57,000 or less will be able to find a Free File offer for which they are eligible.

To use Free File (after January 10, 2010), you must use a computer and go to the IRS website, From the IRS website, click on the Free File link. When you have reached the “Free File Home—Your link to Free Online Filing” page, you will find information to help you file your federal return online. Click the “Start Now” button to review the list of tax software companies and select one that best suits your needs. Once you select a company link from the list, you will be notified you are leaving the website and you will be taken directly to that company’s site to begin preparation of your federal income tax return. Remember, you must access the company through the website in order to use Free File.

As you start using the program, you will be asked a series of questions. Your answers to these questions will allow the program to prepare your return and calculate your taxes and refund. When you are finished answering the questions and your return has been prepared by the program, your return will be automatically filed electronically. Most people receive their refund within 10 days of using the Free File program.

The Free File program will only help you with your federal income taxes. Thus, you should consider one of the options below for preparing your state income tax return.

Volunteer Income Tax Assistance (VITA)

There are hundreds of Volunteer Income Tax Assistance (VITA) sites around the state. The VITA sites are staffed with people who can help prepare your income tax return for free if your income is $49,000 or lower. There are usually VITA sites at local libraries, churches, senior centers, and other neighborhood locations. AARP always sponsors VITA sites. To locate the site closest to you, call 1-800-TAX-1040 or go to the IRS website. In the search box, type the words volunteer income tax assistance or vita. You can find an AARP volunteer site by calling 1-888-227-7669 or going to the AARP Tax-Aide Web page. The sites also have different types of tax returns (1040, 1040EZ, etc.) and other forms you may need to prepare your return. You may also contact the Tax Legal Assistance Program at Legal Services of New Jersey at 1-888-576-5529 to locate a VITA site.

Your Local IRS Office

Your local IRS office will also prepare your tax return for you at no charge, if your income is at or below $49,000. You may find a list of local IRS offices on the IRS website.

Tax Counseling for the Elderly (TCE)

Tax Counseling for the Elderly (TCE) is another program that provides free tax preparation to people age 60 and older. For more information on the TCE program and to find TCE sites, call the IRS toll-free at 1-800-829-1040.

Armed Forces Tax Council (AFTC)

The military also has a strong Volunteer Income Tax Assistance (VITA) Program. The Armed Forces Tax Council (AFTC) consists of the tax program coordinators for the Army, Air Force, Navy, Marine Corps, and Coast Guard. The AFTC oversees the operation of the military tax programs worldwide and serves as the main conduit for outreach by the IRS to military personnel and their families.

Marines, airmen, soldiers, sailors, and guardsmen and their families worldwide receive free tax preparation assistance at offices within their installations. These VITA sites provide free tax advice, tax preparation, and assistance to military members and their families. They are trained and equipped to address military-specific tax issues, such as combat zone tax benefits and the effect of the new Earned Income Tax Credit (EITC) guidelines.

Commanders support the program by detailing service members to prepare returns and by providing space and equipment for tax centers. The IRS supports these efforts by providing tax software and by training service members to prepare taxes at the military sites.

Most service members file their tax returns electronically at their tax centers and, by selecting direct deposit, receive their refunds in as little as one week. This combined effort ensures that service members receive free tax assistance from well-trained and equipped military tax preparers.

Bring the following to the VITA/TCE/IRS sites to have your tax returns prepared:

  • Proof of identification
  • Social Security cards for you, your spouse, and dependents and/or a Social Security number verification letter issued by the Social Security Administration
  • Birth dates for you, your spouse, and dependents on the tax return
  • Current year’s tax package if you received one
  • Wage and earning statement(s) Form W-2, W-2G, 1099-R, from all employers
  • Interest and dividend statements from banks (Forms 1099)
  • A copy of last year’s federal and state returns, if available
  • Bank routing numbers and account numbers for direct deposit
  • Total amount paid to a day care provider and the day care provider’s tax identifying number (the provider’s Social Security number or the provider’s business Employer Identification Number).

To file taxes electronically on a married filing jointly tax return, both spouses must be present to sign the required forms.

If you plan to prepare your own tax return and need tax forms, most post offices and libraries throughout the state offer IRS tax publications, forms, and instructions. You may also visit your local IRS office or go the IRS website and order the forms. It generally takes 10 days for the forms to be delivered to your address. The January-February Looking Out will provide you with tax information needed to prepare your own return.

IRS Publication 910 is an IRS comprehensive listing of free tax services. You can get this brochure by calling the IRS at 1-800-829-1040.

A variety of Braille materials may be ordered at no charge by calling the IRS at 1-800-TAX FORM (1-800-829-3676). The Braille print files are in .brf format and may be sent directly to an embosser for high quality Braille output.

There are so many options for free tax preparation that there is no reason you should ever pay for tax preparation. Further, if an issue arises with your tax return—for example, if the IRS denies you the Earned Income Tax Credit or informs you that someone already claimed one of your children on a different return—the Tax Legal Assistance Project at Legal Services of New Jersey may be able to help you with your tax problem for free. Just call 1-888-576-5529 to ask for help.

Paid Tax Preparers

While most preparers provide honest service to their clients, you should be careful when choosing a paid preparer. Too many paid preparers file false income tax returns for clients by claiming inflated personal or business expenses, false deductions, unallowable credits, or excessive exemptions. In many cases, the taxpayer does not know how the preparer manipulated the figures on the return.

You should know that, even if a paid preparer makes mistakes—unintentionally or intentionally—on a return, you are ultimately liable for any additional tax, interest, or penalties that are due.

Here are some helpful hints to keep in mind when choosing a tax preparer:

  • Be cautious of tax preparers who claim that they can obtain larger refunds for you.
  • Avoid preparers who base their fee on a percentage of the refund.
  • Use a reputable tax professional who signs the tax return and provides a copy for you.
  • Consider whether the individual will be around to answer questions about the tax return months, even years, after the return has been filed.
  • Check the person’s credentials.
  • Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.

Reputable preparers will ask to see receipts, birth certificates, and identification documents. They will ask questions to determine whether expenses, deductions, and credits qualify.

Refund Anticipation Loans

The IRS processes income tax returns quickly, especially if you file your return electronically. If you are due a tax refund, you can expect to receive the funds within two weeks of filing your return.

A refund anticipation loan is a loan, made to you by a paid tax preparer, in an amount equal to or less than the refund that you are entitled to receive from the IRS. Refund anticipation loans have very high interest rates. You not only have to pay the paid preparer the fee for the tax return preparation, but also a filing fee, the refund, and the interest charged on borrowing your own money. Instead of keeping your entire refund, you are turning over some of your money to the lender.

Further, the IRS may question you about items on your return and not send you the refund until it is satisfied with your answers. In that case, not only will you not get your refund, but interest will continue to accrue until you pay the lender the amount you borrowed.

Refund anticipation loans are costly and not that much quicker than waiting for the actual refund. Avoid these loans as much as possible. If you want to check the status of your refund, go the IRS website and follow the Where’s my refund? link.

Be smart this tax season and do not pay for tax preparation or to borrow your own money! For more tax information, remember to look for the next issue of Looking Out For Your Legal Rights. For answers to any tax questions, contact Legal Services of New Jersey's Tax Legal Assistance Project by calling LSNJ-LAW™, LSNJ’s statewide, toll-free legal hotline, at 1-888-LSNJ-LAW (1-888-576-5529) or 732-572-9100 if you are calling from outside New Jersey. Hotline hours are Monday through Friday, 8 a.m. to 5:30 p.m. If you are not eligible for assistance from Legal Services, the hotline will refer you to other possible resources.

This article is from the December 2009 issue of Looking Out for Your Legal Rights®.


This information last reviewed 11/2/11.


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Low-income New Jerseyans can get free legal help by phone: call our toll-free hotline at 1-888-LSNJ-LAW (1-888-576-5529), Monday through Friday, 8:00 a.m. to 5:30 p.m. Outside of New Jersey, please call 732-572-9100 and ask to be transferred to the hotline.