Most Montanans haven't yet earned all the money they'll owe income taxes on for 2007, but the Montana Legal Services Association is already ramping up its efforts to promote a number of free income tax filng services available.

In partnership with the state's credit unions, the Department of Revenue and other organizations, MLSA is promoting www.Montana

FreeFile.org, a Web site clearinghouse of sorts, offering information on various filing opportunities available.

"The W-2s start coming out in January," said Kelly Hart, economic advocacy coordinator for MLSA. "So we'd like folks to know about their free file options before their W-2s show up so they'll know where to go."

Montanans are already fairly tuned into free electronic filing.

Last year, 1,391 Montanans filed using I-CAN, a program developed in Orange County, Calif., through which citizens can file both state and federal returns for free if they earn less than $50,000 and don't own their home.

"We're number one in the nation in the number of filers using I-CAN per capita," Hart said.

Those Montanans received some $1.6 million in refunds. Nearly half that amount was in the form of the earned income tax credit.

Hart said there are several reasons lower income citizens should look for free income tax assistance and filing.

In addition to paying fees for assistance, many tax preparation businesses offer "refund anticipation" loans, or loans based on a filer's expected refund.

"Those loans end up having a very high interest rate," Hart said. "There's a cycle that folks can get into if they're not aware of how to free file their taxes."

Unfortunately, she added, a number of people aren't in a position to wait for their refunds to arrive, so they take the loans.

But by planning ahead, she said, they might be able to make it until the refund check arrives (or more quickly, is deposited directly in a bank account) and can take advantage of the full amount.

Hart said I-CAN refunds can be received by direct deposit in less than two weeks.

MontanaFreeFile.org also has a "live help" option, through which people with tax question can send instant messages to the MLSA and get an instant answer from a real person.

According to Hart, a Brookings Institute study found that in 2003, more than 30,000 Montanans took out refund anticipation loans.

For more information on the I-CAN tax filing program, go to www.ican efile.org.

For more information on free tax preparation services and advice available, contact the MLSA at (800) 666-6899 or go to www.MontanaFreeFile.org.

Reporter John Harrington: 447-4080 or john.harrington@helenair.com.