Gearing up for tax-filing season? You might be able to prepare and file your federal income-tax return at no charge over the Internet.

Treasury Secretary John W. Snow kicked off Thursday the Internal Revenue Service’s FreeFile program on the IRS Web site: www.irs.gov.

“It’s an easy and a fast and a secure way for the citizens to file their taxes,” he said.

A link at the top of the IRS home page takes you to the FreeFile program.

There are two key hurdles:

Technical snags: FreeFile was supposed to be ready Thursday afternoon, when Snow and other government officials held a news conference in Washington, D.C., which was broadcast on the Internet.

The IRS posted a link to the FreeFile program on its Web site. But the program didn’t work because of a technical snafu.

Terence H. Lutes, the IRS’s head of e-filing nationwide, acknowledged in a telephone interview Thursday afternoon that the problem still hadn’t been fixed. But he said he expected it to be resolved by evening.

Eligibility: Whether you’re eligible for the free program depends on whether you meet the criteria.

Remember that the program isn’t offered directly by the IRS. Instead, it’s offered through the IRS by about 16 private companies, and each has its own rules. The IRS Web site acts as a kind of portal, giving you direct links to the companies taking part in the program. (Lutes said he expects two more companies will be making their offerings available shortly.)

As a result, many taxpayers will be eligible, but many will not.

For example, some companies base eligibility solely on a taxpayer’s income; others base it on which state you live in. (One company, eSmartTax, generally lets you qualify if your adjusted gross income was $54,000 or less last year and you lived in any of 17 states.) In other cases, you’re eligible if you’re able to claim the federal earned income tax credit.

The broadest offering appears to be from Intuit Inc., maker of TurboTax, the well-known tax-preparation software.

Under the Intuit program, you’re eligible for the free online tax preparation if:

n You were 22 or younger last year, or your spouse was, regardless of income.

n You were 62 or older last year, or your spouse was, regardless of income.

n You served on active military duty last year and have a Form W-2 to prove it (reservists and National Guard members are eligible).

n You qualify for the earned income tax credit.

H&R Block, the national tax-preparation firm that also makes the TaxCut software, allows free preparation and filing online to anyone with adjusted gross income of $34,000 or less.

Overall, “A substantial majority” of taxpayers will be eligible for FreeFile, Snow said. The IRS estimates that about 78 million of the nation’s 130 million taxpayers will be eligible – about 60 percent of all taxpayers.

Last year, the first time FreeFile was offered, about 2.78 million taxpayers participated.

Neil Downing writes for the Proividence Journal.

Last fall, Lutes estimated that more than 4 million taxpayers would take part this year, an increase of more than 43 percent. (Thursday, Lutes declined to provide projections, except to say, “We know we’re going to grow.”)

Mike Cavanagh, head of the FreeFile alliance of companies, said 83 percent of taxpayers had adjusted gross income of $32,000 or less last year, most or all of whom will be eligible for FreeFile this year, if they meet the requirements.

TODAY’S TIP: At least some of the companies offering services under the FreeFile program also let you prepare and file your state return electronically at no charge, Lutes said. To find out, check the rules set up by each company.

Also keep in mind that, despite criticism by some consumer advocates last year, some companies in the FreeFile program continue to offer refund anticipation loans, which essentially let you borrow money before you get your refund, using your refund as collateral. The consumer advocates have decried these short-term loans mainly because of the high rates of interest they typically charge.

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(Neil Downing is a Journal staff writer and author of “The New IRAs and How to Make Them Work for You.” If you have questions about your money matters, call us at 1-401-277-7484 or 1-888-697-7656 and leave a message. (When calling toll-free, please ask for ext. 7484.) We can’t reply personally; as many questions and issues as possible will be addressed in this column.)

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(c) 2004, The Providence Journal.

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AP-NY-01-26-04 0624EST