2012 marks the tenth anniversary of the Free File program. This program allows millions of taxpayers to file their taxes and returns online electronically and at no cost. The tax filing form is accessible via the Internal Revenue Service (IRS) website, but the service or program is a partnership between the tax software industry, Uncles Sam, and the Internal Revenue Service. IRS and the Free File Alliance had set the original objective of the program as making e-filing available to as many taxpayers as possible. This is especially for those who might not be able to make payments for tax preparation and electronic filing services. The aim has evolved to making software that makes tax preparation free and making e-filing available for free to 70 percent of taxpayers. This number is determined by calculating the number of taxpayers making less than or equal to a predetermined income level. In 2005, when the Free File started commanding the income eligibility limit, the e-filing level stood at 50,000 dollars.
To attain the 70 percent threshold, the IRS and Free File administrators have pushed up the number of taxpayers who can use the free online filing services by jolting up the income level every year. The system is comparable to other tax-related figures, such as standard deduction and personal exemption amounts. The Free File amount does not enlist an inflation adjustment technique such as one where the dollar value rises causing the tax to go up each year. The income level that makes a taxpayer eligible slowly and steadily increases every year, but this year has seen the income threshold go down a bit.
In 2011, the IRS attained the 70 percent mark by allowing taxpayers with adjusted gross income of 57,000 dollars, or less, to use the Free File. This is 500 dollars less than the previous year’s threshold. This has been due to several speculations, such as a weak economy that made people earn less money. The trend has been under observation since 2005, where the income eligibility threshold has increased by a very little margin or at least stayed at the same level year after year.
More people are, however, filing their taxes online at no cost. In fact, according to the IRS, 2011 taxes will record more refunds.
