The Internal Revenue Service on Wednesday started Free File, its online tax-preparation and filing program, for 2005 tax returns.
Taxpayers with an adjusted gross income of less than $50,000 a year, about seven out of 10 taxpayers, can use the service at no cost. However, getting that freebie depends on which of the 19 tax-preparation providers a filer selects.
Congress has mandated that 80 percent of federal tax returns be filed electronically by 2007, said IRS spokesman Bill Brunson. The method cuts down on errors, speeds the payment of refunds and saves the agency money. By IRS estimates, however, only half of individual returns last year were filed that way.
Colorado lags the national average for electronic filers. Of the 2.13 million returns expected to be filed in the state this year, an estimated 1.04 million will be done digitally, Brunson said.
Free File has grown in popularity since its launch in 2003. More than 5.14 million taxpayers used Free File last year, a 47 percent increase over the 3.5 million users in 2004.
That number should get a boost this year because the IRS has discontinued Tele-file, a phone-based filing system. The 3 million Tele-file users can file at no charge on Free File.
The Colorado Department of Revenue offers a free online filing system for state tax returns regardless of income level called NetFile, said Ro Silva, a spokeswoman for the department.
Even those who don’t plan to file a state tax return should visit NetFile to collect a $15 Taxpayer’s Bill of Rights tax refund this year.
Staff writer Aldo Svaldi can be reached at 303-820-1410 or asvaldi@denverpost.com.
More online: Access NetFile. www.netfile.state.co.us
IRS website: See if you qualify for Free File. www.irs.gov
