WASHINGTON — The Internal Revenue Service and the Free File Alliance, have signed a one-year extension for their partnership that makes free tax software available to the nation’s taxpayers.

Free File is the free federal tax preparation and e-file service offered through brand-name software or online fillable forms. The software is available for taxpayers who earn $58,000 or less, which is 70 percent of taxpayers. Free File Fillable Forms is available to taxpayers who earn more than $58,000 and who are comfortable preparing their own federal return.

More than 3 million taxpayers have used Free File so far this year — a nearly 10 percent increase and the first double-digit increase in program usage in several years. Much of this increase is attributable to a new look and feel for the IRS Free File website, redesigned to make it easier for taxpayers to find the information they need and route to the software they want.

“Free File has helped millions of taxpayers prepare their taxes, and we look forward to continuing this important program,” said IRS Commissioner John Koskinen. “The Free File program saw increased use this year, a reflection of the value of this innovative effort.”

The extension agreement includes specific language that a full renegotiation of the five-year Agreement/Memorandum of Understanding will begin in June. The IRS and the Free File Alliance currently intend to enter into a multi-year agreement prior to the expiration of this extension.

The current five year agreement expires in October. The one-year extension provides the IRS and FFA time to shape a longer term agreement to include innovations to the twelve-year-old Free File program in order to grow e-file, improve quality and reduce taxpayer burden.

Free File has played a key role in IRS’ strategy for growing e-file. Nearly 43 million taxpayers have used Free File since it debuted in 2003. Using a conservative $30 tax prep fee, this means Free File users have saved nearly $1.3 billion.

Free File is still available through October 15 for extension filers at www.irs.gov/freefile.

Many students take a job in the summer after school lets out. If it’s your first job it gives you a chance to learn about the working world. That includes taxes we pay to support the place where we live, our state and our nation. Here are eight things that students who take a summer job should know about taxes:

1. Don’t be surprised when your employer withholds taxes from your paychecks. That’s how you pay your taxes when you’re an employee. If you’re self-employed, you may have to pay estimated taxes directly to the IRS on certain dates during the year. This is how our pay-as-you-go tax system works.
2. As a new employee, you’ll need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Your employer will use it to figure how much federal income tax to withhold from your pay. The IRS Withholding Calculator tool on IRS.gov can help you fill out the form.
3. Keep in mind that all tip income is taxable. If you get tips, you must keep a daily log so you can report them. You must report $20 or more in cash tips in any one month to your employer. And you must report all of your yearly tips on your tax return.
4. Money you earn doing work for others is taxable. Some work you do may count as self-employment. This can include jobs like baby-sitting and lawn mowing. Keep good records of expenses related to your work. You may be able to deduct (subtract) those costs from your income on your tax return. A deduction may help lower your taxes.
5. If you’re in ROTC, your active duty pay, such as pay you get for summer camp, is taxable. A subsistence allowance you get while in advanced training isn’t taxable.
6. You may not earn enough from your summer job to owe income tax. But your employer usually must withhold Social Security and Medicare taxes from your pay. If you’re self-employed, you may have to pay them yourself. They count toward your coverage under the Social Security system.
7. If you’re a newspaper carrier or distributor, special rules apply. If you meet certain conditions, you’re considered self-employed. If you don’t meet those conditions and are under age 18, you are usually exempt from Social Security and Medicare taxes.
8. You may not earn enough money from your summer job to be required to file a tax return. Even if that’s true, you may still want to file. For example, if your employer withheld income tax from your pay, you’ll have to file a return to get your taxes refunded. You can prepare and e-file your tax return for free using IRS Free File. It’s available exclusively on IRS.gov.

Visit IRS.gov for more about the tax rules for students.

Additional IRS Resources:

• Student’s Page – High School
• Student’s Page – Higher Education