IRS Offers Online Tax Filing for Free

Feb. 18, 2005 — -- In this week's Cybershake, we take a look at how the Internal Revenue Service is helping to reduce the amount of paper and money American taxpayers spend on preparing their annual income tax report. Plus, we note what one tech pundit says about the new Mac Mini from Apple.

Filing Taxes Free of Paper and Fees

With Valentine's Day over and the impending change of seasons, millions of Americans will soon be facing that much dreaded annual event: Filing their taxes. But this year, the IRS is offering to take some of the sting out of preparing complex paper-based forms.

For the last several years, the government agency has been working with software and technology companies to develop and run its Free File service. It was designed to allow taxpayers in lower income brackets to prepare and file their annual returns for free online.

Now, for the first time, the Free File service is open to anyone who needs to file a return with the IRS.

Taxpayers who go to the IRS Web site to use Free File can browse among the 20 different online options.

Some of the participating companies offer their free filing services only to those who meet certain eligibility requirements -- age, military service and income level, for example. Others -- such as H&R Block, a national tax preparation service that also sells the popular TaxCut software -- provide their services without restrictions.

H&R Block spokesman Tom Linafelt said its free online preparation and filing service offers similar benefits as those found in its TaxCut program, which is sold online and at software retail outlets.

"They really simplify taxes, they cut the time it takes to prepare your return, and they dramatically cut the time it takes to get your refund," said Linafelt.

So why would anyone pay as much as $30 for a tax preparation program when they can get it free online? Providers believe it's a matter of advanced options.

TaxCut and its chief rival, TurboTax from Intuit, can pull electronic data from money management programs such as Intuit's Quicken software. And fee-based tax prep programs and filing services often make it easier to electronically file state income tax reports too.

The IRS expects about half of the returns filed this year will arrive electronically. And if the thought of filing a paperless return online scares you, IRS director of electronic tax administration Burt DuMars said, take a deep breath.

"We make sure it's fast and accurate," said DuMars."We make sure your privacy is protected."

He also adds that your odds of being audited are no greater or worse than if you file a paper return.

For more information on Free File, visit www.irs.gov and enter "Free File" in the Web site's Search box.

-- Andrew Colton, ABC News

Make the Move to Mac Mini?

There's no doubt that Apple has scored a big hit among digital music fans with its Apple iPod. It's simple but elegant design and ability to hold thousands of digital files -- not just music -- has enamored millions of owners.

Will the Apple Mac Mini computer be the next big hit? Maybe.

The $499 computer, introduced last month, is Apple's latest attempt to woo the millions hooked on Windows PCs over to the Mac camp. Like the iPod, the Mac Mini is simple to use and in an elegantly designed box no larger than a cigar box.

But Rob Pegararo, the technology editor for The Washington Post, says the Mac Mini might be a concept -- an a la carte computer -- taht is too new for PC users.

"It's cheap, but it's also really, really tiny," says Pegararo. And "it doesn't include a monitor, a keyboard or a mouse. Apple expects you to bring your own."

Apple says the Mac Mini can plug into almost any standard computer monitor. And Apple believes that most PC users should be able to use their old PC keyboard and mouse -- provided they feature a USB connection.

And that, says Pegararo, could be a small sticking point for making the switch.

Windows PCs still "use an old technology called PS2 to connect keyboards and often mice as well," says Pegararo. "In that case you need to buy an adapter which is a $5 or $10 product."

Another small hitch: Upgrading the Mac Mini to more powerful parts shoots the price up dramatically.

The Mac Mini contains just 256 megabytes of memory, a 20 gigabyte hard drive, and a single optical drive that plays DVDs and records on blank CDs.

That, says Pegararo, may be fine for just surfing the Net and sending e-mail. But upgrade to the maximum amount of memory, double the hard drive space and add a drive that can record onto blank DVDs and the price nearly doubles to $974.

-- Cheri Preston, ABC News

Cybershake is produced for ABC News Radio by Andrea J. Smith.