Twelve national tax software firms have joined the IRS Free File Program. On
the "Free File Now Open" link takes taxpayers to the Free File
page. People with 2016 adjusted gross income (AGI) of $64,000 or less
may use Free File.
If you have income greater than $64,000, you may still use the Free File
Fillable Forms. These are the IRS electronic version of the paper tax forms.
IRS Commissioner Koskinen encouraged taxpayers to use the Free File program.
He stated, "You do not have to be an expert on taxes. Free File software
can help walk you through the steps and help you get it right. For fourteen
years, this partnership between the IRS and the Free File Alliance has
helped taxpayers prepare and file their federal taxes for free."
The Executive Director of the Free File Alliance is Tim Hugo. He commented,
"We are proud to once again offer the industry's most innovative
and secure tax software at no cost to 70% of American taxpayers. Tax time
can be stressful, but Free File makes step-by-step help accessible to
everyone making $64,000 or less."
The twelve companies in the Free File Alliance offer the federal and,
in some cases, state tax returns. Some companies have no fee for state
returns and others charge a fee. If you are a resident of Alaska, Florida,
South Dakota, Texas, Washington or Wyoming, there is no state income tax
and therefore no filing is required.
Taxpayers may go to
and select the Free File link. The page is available in either English
or Spanish. After reading the explanation, you may click on the link to
and use the Free File software.
The Free File tax software includes the full range of IRS Forms 1040,
1040A or 1040EZ. On the Free File page, select the "Below $64,000"
link and view the page with the twelve types of software. You also may
choose to use the Free File Software Look Up Tool. If you enter basic
information on the secure site, it will help you select one of the programs.
The secure site uses encryption for data sent from your computer to the
Active duty military may use any of the twelve software programs if their
income is $64,000 or less. Other taxpayers should view the requirements,
which are different for each software program.
Free File may also help you with your health care coverage. Taxpayers
must either have qualifying Affordable Care Act coverage, claim an exemption
or make a Shared Responsibility Payment.
The Free File Alliance works with the IRS Security Summit to make appropriate
use of secure websites, encryption for information transferred over the
internet and other methods to protect the security of taxpayers.
Ryan and Brady Promote Tax Reform
As the new administration moves into the White House, Speaker of the House
Paul Ryan (R-WI) affirmed the plan to reform taxes by broadening the base
and lowering the rates.
In a national media town hall, he stated, "Number one, we are going
to get those tax rates down, but number two, with all these other countries,
almost all our competitors do is they have a tax system where they border-adjust
their taxes. When they make something to sell overseas into America, they
take the tax off of it and then it comes into America and its tax free.
If we make something we tax it and send it to those countries and as it
goes into their country they tax it." Ryan claimed that it is time
to "level the playing field" with a border adjustable tax.
Chairman of the House Ways and Means Committee Kevin Brady (R-TX) published
an article with the title "To Compete and Win Worldwide We Must End
the Made in America Export Tax."
In the article, Brady noted that America's "major international
competitors in Europe, Asia and even here in North America with Canada
and Mexico" all use a "border-adjustable" tax. He suggested,
"It is time for our nation to do the same by ending the 'Made
in America' export tax. That is exactly what House Republicans are
proposing as part of our bold plan for pro-growth tax reform."
President Trump recently stated that the border adjustable tax was very
"complicated." Speaker Ryan and Chairman Brady are continuing
their vocal support of this tax. It appears that the tax bill planned
for markup by the House Ways and Means Committee in March or April will
include this tax. The House continues to hope to complete action on a
comprehensive tax reform bill before mid-year. With the structure and
rules of the Senate, action could take place mid-year or in the fall of 2017.
Mnuchin Supports Revenue-Neutral Tax Reform
At a January 19 Senate Finance Committee confirmation hearing for Treasury
Secretary Nominee Steven Mnuchin, the primary topic was tax reform. Mnuchin
has a background in private business, banking and hedge fund management.
He also headed the Trump campaign finance and tax group.
Mnuchin indicated his primary goals are to "unleash that power to
generate jobs and create abundance for Americans of all backgrounds. We
will work diligently to limit regulations, lower taxes on hardworking
Americans and small businesses, and get the engine of economic growth
firing on all cylinders once again." Mnuchin also indicated that
he will focus on cyber security for the IRS and the Department of Treasury.
Senate Finance Committee Orrin Hatch (R-UT) pointed out that the Treasury
Secretary "will be tasked with advancing policies that will improve
our nation's economic and fiscal outlook." In addition to the
significant changes in tax reform, Hatch expressed a hope that Mnuchin
would assist in "the advancement of pro-growth trade policies."
The Ranking Member of the Senate Finance Committee is Sen. Ron Wyden (D-OR).
He expressed great concern over inequality of the tax system. Wyden stated,
"The person who leads the Treasury Department has influence over
Americans' paychecks and mortgages, the caliber of job opportunities
they face, the safety and stability of the financial system that holds
and invests their hard-earned dollars, and much more. They have the power
to help reduce decades of yawning inequality that have hollowed out the
middle class, dimmed the hopes of younger generations and left millions
buried in debt."
Mnuchin is still waiting for votes by the Senate Finance Committee and
the full Senate before he can be confirmed. It is significant that Ryan,
Brady and Mnuchin all are supporting revenue-neutral tax reform. They
will be helped by the use of dynamic scoring by the Joint Committee on
Taxation (JCT). It still will be a challenge when there is an actual bill
scored by JCT. They will have to reduce or eliminate substantial deductions
in order to lower rates and still be revenue neutral. Charities are rallying
to a call by the Charitable Giving Coalition to protect the charitable
deduction. The Coalition is sponsoring a Washington DC fly-in on February
16. There is information on the fly-in on the Association of Fundraising
Professionals website at
Applicable Federal Rate of 2.6% for February -- Rev. Rul. 2017-4; 2017-6
IRB 1 (19 Jan 2017)
The IRS has announced the Applicable Federal Rate (AFR) for February of
2017. The AFR under Section 7520 for the month of February will be 2.6%.
The rates for January of 2.4% or December of 1.8% also may be used. The
highest AFR is beneficial for charitable deductions of remainder interests.
The lowest AFR is best for lead trusts and life estate reserved agreements.
With a gift annuity, if the annuitant desires greater tax-free payments
the lowest AFR is preferable. During 2017, pooled income funds in existence
less than three tax years must use a 1.2% deemed rate of return. Federal
rates are available by