news-record.com

DURHAM –There are several free online tax filing options out there for taxpayers who meet certain income and other requirements, but consumers should keep on the look--out for "hitches," said the president of a Morrisville--based company offering a free filing option for the unemployed.

There are online options for filing federal returns listed on an Internal Revenue Service Web site, and the N.C. Department of Revenue also has a list of free online state tax return filing options for taxpayers who meet certain income requirements.

Mark Hanson, a spokesman for the Internal Revenue Service, said taxpayers with household incomes of less than $57,000 last year can file their federal returns for free using one of several private software providers listed on the website www.freefile.irs.gov.

The IRS has a partnership with the private tax software providers listed there, Hanson said. Filing using the software is like "sitting down with a digital tax preparer," he added.

"You're not worrying about entering numbers on certain lines of a form, it's taking care of all that for you," he said, "making sure the right number ends up in the right place."

There's also a program through which taxpayers, regardless of income, can self--prepare and file their federal returns for free. However, Hanson said that in the program, called Free File Fillable Forms, taxpayers have to type in their own information into an online form before filing it electronically.

There are also several free online options for filing North Carolina tax returns for people who meet certain income requirements.

The N.C. Department of Revenue has a list of private tax preparation companies that are offering free options for certain taxpayers on the website http://www.dornc.com/electronic/individual/software.html, said Beth Stevenson, a spokeswoman for the department.

For example, one of the options listed on the site is for H&R Block Free File, an offer for North Carolina full--year, part--year or nonresidents aged 52 years and younger with an adjusted gross income of $57,000 or less.

In addition, the website also has a list of low--cost online tax preparation software providers. Stevenson said the list includes private vendors that are approved to file North Carolina tax returns.

One of the vendors on the N.C. Department of Revenue's list of low--cost options accepted by the state is Morrisville--based OnePriceTaxes. The company is relatively new, e--filing its first return to the Internal Revenue Service in 2007, said Robbie Edwards, CEO and president.

The company, which now employs eight people, has an offer this year for unemployed households who meet certain income requirements.

According to a news release, the offer is limited to one per household, and it's available only to taxpayers with an adjusted gross income of less than $50,000.

The taxpayer must file one or more 1099--G forms showing unemployment compensation from the 2011 calendar year.

The company's tax filing system will automatically detect the 1099--G at checkout prior to filing, the release states, so the taxpayer will not be charged. Normally, the company charges $14.95 to file federal and state taxes.

Edwards warned that there "are always hitches when something is free," and said there are several items that taxpayers should look at to see whether they qualify for a free offer.

"Free filing is sort of a tricky subject in our industry," he said, adding in an email that some companies will disqualify a taxpayer for a free offer based on age, and others can be disqualified if they need to file certain forms.

Taxpayers should also check on adjusted gross income requirements, Edwards said, because if their adjusted gross income is too high, the taxpayer may not qualify.

"Most people won't know the answer to this until they start entering their information into the software," he said.

Beyond that, he said that one of the drawbacks to filing with one of the companies listed on the IRS free file program is that most people will also need to file a state return.

"When it comes to doing a state tax return, you have to deal with a lot of the same hitches that apply to filing a federal return for free," he said. "But what compounds doing the state filing for free is that you'll have to enter in your information twice -- once on the federal side, and once on the state side. Having to enter the information in twice increases the chance of error on your federal or state return."

He said that with the OnePriceTaxes offer for the unemployed who make below a certain income, the taxpayer enter his or her information in once for both state and federal tax returns.

And for those who want face--to--face tax preparation assistance, there are two programs offering help by IRS--trained volunteers, Hanson said.

One of those programs is the Volunteer Income Tax Assistance program, also called VITA, which offers tax preparation help for people who make $50,000 or less and need assistance in preparing their own returns.

The other is the Tax Counseling for the Elderly program, or TCE, which provides tax preparation assistance for people who are 60 years of age or older.