By: Laura Walton AFC®
According to Benjamin Franklin, death and taxes are the only two things that are sure in this world. As you work on your taxes for the April 15th deadline, did you know that several firms have an agreement with the IRS to provide tax filing for free to certain taxpayers? The catch is that some firms do a great job of hiding this free service on their websites.
That led me to the definition of ‘dark patterns’ – internet design tactics that get users to pay for products they don’t necessarily want. For an interesting tour through the TurboTax website, read ProPublica’s article, “Here’s How TurboTax Just Tricked You Into Paying to File Your Taxes” Here’s How TurboTax Just Tricked You Into Paying to File Your Taxes”.
Local providers offer free tax filing for those who have adjusted gross incomes (AGI) of $66,000 or less (Note: Local contacts tell me they are flexible on the AGI limit). Remember that your AGI is the sum of all income less your above the line deductions, for example pre-tax contributions to retirement accounts, HSA/FSA contributions, student loan interest, etc.
And when you’ve completed your Federal tax return, take a minute to calculate your effective tax rate by comparing what you paid the Federal government (including withholding) to your income. We typically think about taxes in terms of the marginal tax rates – the rate we would pay on our next dollar of income. However, our effective tax rate is typically lower and, therefore, is the number to focus on.
Here’s hoping this blog saves on your tax filing fees this year!