On March 18, 2020, the Franchise Tax Board (FTB) announced that the state tax filing and payment deadlines have been postponed from April 15 to July 15 to bring some relief to taxpayers in light of the COVID-19 pandemic. https://www.ftb.ca.gov/about-ftb/newsroom/news-releases/2020-3-state-postpones-tax-deadlines-until-july-15-due-to-the-covid-19-pandemic.html
On March 20, the U.S. Treasury Secretary Steve Mnuchin announced that federal tax deadlines are now pushed back to July 15 as well.
Whew. Still, you still have to file and pay.
But you don’t have to have the added expense of paying someone to file your federal taxes—not if you are part of the 70 percent of the U.S. population—100 million people—who qualify to file your federal taxes for free.
Haven’t heard of it? Not many people have. If your total adjusted gross income is $69,000 or less, the Internal Revenue Service’s (IRS) Free File program allows you to file your federal return at no cost to you. The IRS has partnered with 10 different providers, including H&R Block, Turbo Tax, and others; just go to the IRS site, pick the provider that matches you the best, and go.
You knew there was going to be a catch, right? It’s this: Be careful where you click.
A number of ProPublica articles were published in 2019; ProPublica research findings showed that the companies in the Free File program were steering eligible filers to paid services instead of free ones. In December 2019, the IRS updated the agreement with the tax companies and revamped the program; now, the companies are prohibited from hiding their Free File web pages from Google searches. Plus, the IRS created its own online tax filing system, which is the safest place to find a tax provider.
But a loophole still remains.
The IRS/tax company agreement doesn’t apply to advertising. So, when you search for “free tax filing” on a search engine, ads—just like when you search for anything on the Internet—are the listings that pop up first. Right at the top. Some legitimate free file offers don’t show up until the second page of listings.
Confusing? That’s the idea. How confusing? An audit released on February 3 by the Treasury Inspector General for Tax Administration found that 14 million people who qualified for Free File last year paid what ProPublica estimated could amount to about $1 billion in tax prep services.
The moral of the story: If you qualify for free federal tax filing, don’t download an app, don’t click on an ad. Go directly to the IRS Free File page and start your journey there.
Once you have the numbers from your federal return, you need to file your state return. If you qualify, the FTB also allows you to file your state taxes online for free via the CalFile program.
If you don’t qualify for these programs and need to pay to have your taxes done by a professional, make sure he or she is licensed by the California Board of Accountancy first.
And start gathering your papers and receipts now. July 15 will be here before you know it.