3 Ways Retirees on a Budget Can Get Help Filing Their Taxes
Written by
Kerra Bolton
Edited by
Rebekah Evans
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Free and low-cost tax preparation services can ease the stress for retirees living on a fixed income during tax season.
Offered by trusted online software, volunteer organizations and affordable tax preparers, retirees can file their taxes accurately without breaking the bank. Here are threeways retirees on a budget can get help filing their taxes.
Also here’s how much an average retiree pays in taxes each year.
Free Tax Software
There are several free IRS online tax filing tools available for taxpayers, including IRS Direct File and IRS Free File.
IRS Direct File is a free online government platform that allows taxpayers to prepare and file federal returns directly with the IRS. While Direct File supports most income types, credits and deductions, it might not accommodate all tax situations. However, it doesn’t prepare state returns.
IRS Free File is a public-private partnership between the IRS and tax software providers that offers free online tax preparation and filing for individuals with an Adjusted Gross Income (AGI) of less than $79,000.
Taxpayers can choose from several software options to guide their tax preparation. Some software options offer free state tax preparation, while others don’t.
Companies like H&R Block and Turbo Tax also offer free editions for filing simple federal and state returns, making it affordable for retirees with a straightforward tax situation.
“If you are not comfortable with technology or have a more complex return, free file is probably not for you,” said Rob Burnette, investment advisor representative at Outlook Financial Center. “Engaging a professional tax preparer would probably be in the taxpayer’s best interest.”
Volunteer Tax Preparers
The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free tax services to individuals, including retirees on a fixed income or tight budget, those with disabilities and taxpayers who speak English as a second language.
“Services include income tax preparation and electronic filing,” said Hector Castaneda, certified public accountant (CPA) and principal at Castaneda CPA & Associates. “Additionally, IRS-certified volunteers help retirees understand the implications of the deductions and credits they may be eligible for, such as the Earned Income Tax Credit (EITC).”
VITA and TCE have qualification guidelines that sometimes overlap. While VITA serves people earning below the poverty line, TCE focuses on offering free tax assistance to taxpayers over 60, focusing on pension and retirement-related issues, Castaneda said.
AARP Tax Foundation Tax-Aide also provides free tax assistance to anyone. The program focuses on taxpayers over 50 who have a low to moderate income. Taxpayers don’t have to be an AARP member to use the service.
“These services are appropriate for handling typical retirement, tax situations, such as basic investments or part-time employment, as well as Social Security income, pensions and required minimum distributions (RMDs),” Castaneda said. “They also help find typical deductions and credits for seniors, like medical expenses and the Credit for the Elderly or Disabled.”
Inexpensive Tax Preparers
Despite free services, retirees with more complex tax situations should hire an affordable tax preparer.
Expect to pay an average of $180 per hour for a CPA filing federal and state tax returns, according to C. E. Thorn CPA. The fee will depend on the complexity of the tax situation, major life events occurring during the tax year and fees.
“Retirees should look for qualifications such as IRS certifications, upfront and affordable pricing and an understanding of retirement-related tax matters,” Castaneda said. “Check that the preparer provides e-filing, is clear in the explanation of tax results and avoids any unnecessary service upselling.”
In addition, Burnette said retirees should look for tax preparers who have experience and training in the type of tax return scenarios they have.
“Some tax preparers will get very busy, so be sure the one you choose has time to get your return filed in a timeframe you are comfortable with,” he said.
Retirees should also ask for referrals from people they trust if they are unsure about which tax preparer to hire and be alert for scams and hidden costs.
“Preparers who refuse to sign the return, ask for compensation as part of the refund or promise abnormally large refunds are warning indicators,” Castaneda said. “In addition, retirees should avoid services that push them into making pointless purchases or fail to provide a copy of the completed return.”
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