Terry Savage: Don’t procrastinate on tax filing this year

t’s income tax time again, and this year it’s time to make a big change in how you file if you’re one of the small minority (less than 10%) who still file a paper return and then trek down to your local post office to send that return by registered mail — return receipt requested.

It’s time to file electronically. And the IRS has made it easier and cheaper, even for non-techies who may also decide to print out and keep a paper copy of that important return.

Plus, even if you owe money or must make quarterly estimated tax payments, you can now transfer that payment securely, directly and easily to the IRS.

Ditch the paper return

Using paper these days is asking for trouble. So what follows is a short guide on how to file your return and pay electronically.

The vast majority of individual returns are filed online — even if you walk into a tax preparation service and watch them fill out your forms on paper. Your actual return — and your refund request — will be processed electronically. That’s why it’s important to know your bank routing number and account number, even if you use a tax preparation service. And make sure not to close that bank account before your refund is deposited!

You’ve seen the advertisements for popular tax preparation services such as TurboTax, TaxAct and H&RBlock. Each has software that will prepare your federal and state tax returns — for a fee. And each offers access in real time to either a chatbox or a tax professional to answer your questions as you go through the process.

IRS FreeFile tax prep

Many people are unaware that the most popular electronic tax filing services also offer FREE service — but only if you link directly to them via www.IRS.gov/freefile. This free service is generally limited to those with less than $84,000 in income.

This offering is from the FreeFile Alliance, a partnership between the government and private tax preparers. When you click on the IRS site, you can compare the offerings from various preparers. Some include a free state tax return, while others charge an extra fee.

Either click to go directly to a partner website, or the webpage will offer a search option to be “matched” with a trusted tax preparer based on your answers to a few simple questions about your filing status, income, state of residence and dependents (if any). All offer accuracy guarantees. And all send you an email when the IRS has accepted your return.

At the IRS.gov/freefile page you can also access blank tax forms, which you can fill out securely online.

IRS DirectFile

This marks the second year of a pilot program in 24 states that allows taxpayers to connect and file their tax returns directly with the IRS. (It has generated some controversy and pushback from tax prep services.) And it will also file state tax returns for participating states.

There is no cost for this service, and it does allow a “chat” function to help with tax preparation. One key caveat: It does not file returns with itemized deductions, only the standard deduction. DirectFile links directly with the IRS to capture income from W-2 forms, 1099s for retirement income, Social Security benefits, interest income and unemployment compensation. But you can’t use Direct File if you have other types of income, such as gig economy, rental or business income. For a link to Direct File instructions, go to www.IRS.gov/directfile.

Paying your taxes

Whenever you owe the government money — either as a result of a balance due on your tax return or a requirement to file quarterly estimated taxes, asking for an extension or even to fulfill a payment agreement with the IRS — it’s smarter and safer to pay that bill online.

You can do that easily directly from your bank account (even if you do not use online banking services regularly) by going to www.IRS.gov/DirectPay. It’s easy and doesn’t cost anything. Payments can be made for the current year or any year going back 20 years!

Finding a trusted preparer

Either go directly to a well-known and trusted tax prep service or file directly with the government online as described above. And don’t take a neighborhood recommendation if you want to find an individual tax preparer. The IRS has a directory of accredited Federal tax return preparers. You can find it at IRS.gov by inserting the words “find a tax preparer” in the search box.

You can’t escape tax filing — unless your 2024 income was below $14,600 for single filers or $29,200 for those married filing jointly. Even then, you might want to file to get a refundable credit. And remember, it doesn’t pay to procrastinate. That’s the Savage Truth.

(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)