[TAXES] Online Tax Filing For Free

Category: Finance

The good news is: about 70% of U. S. taxpayers can get free online tax preparation and e-filing this year. The bad news is: you have to pick your online tax service very carefully. Here's what you need to know...

Options for Free Tax Return Preparation

Dozens of firms now offer free online tax preparation and e-filing. It’s not just for simple, wage-only taxpayers anymore; full 1040 returns with all schedules and worksheets can be prepared and filed online for free. But there are a few caveats.

Most people with an adjusted gross income of $62,000 or less can get free online tax preparation software and e-filing, through a participating IRS Free File provider. However, the multitude of offers has more rules, exceptions, and confusions than cellular phone service contracts.

For example, here are qualifications for TurboTax’s Freedom Edition that offers both Federal and State tax prep for free:

Free Tax Software

  • Adjusted Gross Income: $31,000 or less, or
  • $62,000 or less for Active military, or
  • Eligible for the Earned Income Tax Credit

Don't confuse the "TurboTax Freedom Edition" product with "TurboTax Federal Free Edition". They have similar names but are quite different. Freedom Edition is geared towards lower-income filers (regardless of tax return complexity) and is offered through the IRS Free File Alliance (FFA) program. State returns are free and no upgrades are available.

TurboTax Federal Free Edition (which you've probably seen advertised on TV lately) has no income limits, and also offers free State returns, but is intended only for very simple returns that can be filed on form 1040EZ or 1040A. This version lets you take a picture of your W-2 with a smartphone, and will automatically import that info into your return. Various paid upgrades are available for those who itemize deductions, have investments or rental property, and for business owners.

Other services have wildly different qualifications. For H&R Block's Free Edition, you qualify if your Adjusted Gross Income is $62,000 or less, and you're age 50 or younger. State returns cost $9.95 extra.

FreeTaxUSA Free Edition has no income or age restrictions, and supports even complex returns. If you own a home, are self-employed, or have investment income, FreeTaxUSA has you covered for the Federal return. State returns cost $12.95 extra.

Choosing a Free Online Tax Service: The IRS Wants to Help!

Is your tax situation simple or complex? Should you file Form 1040 (the long form) or use the short form 1040-EZ or 1040A? It depends on your marital status, dependents, income, deductions, and a few other factors. The IRS has a guide to figuring out which form suits your needs.

The IRS devoutly prays that you will file electronically (much easier to audit your return that way), so it makes a pretty good effort to help taxpayers find a compatible online tax preparation and filing service. Just hop over to the agency’s Help Me Find Free File Software page and answer six simple questions.

Beyond finding a service that will do the Federal and State returns you need for as little money as possible (ideally, free), it’s impossible to say whether one online tax service will save you more money than another. Each has a unique approach to “interviewing” filers, asking different questions in different ways to elicit data about deductions, credits, and so on. A taxpayer’s answers may differ depending on how a qualifying question is asked. So you may get different results from TurboTax than you will get from H&R Block.

Thanks to the power of “free,” you could try multiple online tax services and actually e-file with the one that yields the most favorable answer. But that would be like having multiple teeth drilled for free and filling the one that hurts the most. If your tax situation isn’t very complicated, then any variance between online services should be negligible. Look for one that offers free Federal and State returns and e-filing.

The Do-It-Yourself Option

If your income or age disqualifies you from using one of the free online tax prep services, you can still get free tax software in the form of FreeFile Fillable Forms. These online versions of every IRS form won’t give you advice or hold your hand; you need to know what forms you need. On the other hand, if you know your tax situation well then you don’t need to waste time on all the hand-holding that novice-oriented tax programs provide.

These forms are “intelligent” in that they can perform basic math, e. g., totaling all of the lines of data you enter in a form, multiplying dependents by exemption amount, etc. But they don’t offer advice and explanations as the pricey programs do. This seems like a good option if your job and financial situation hasn't changed since last year. Just look at last year's tax return, see which forms you filed, and you should be good to go.

There are still many taxpayers who haul shoeboxes full of receipts to a tax preparer’s office, and there may be a handful who still struggle with paper and pencil five minutes before the April 15 tax return filing deadline. But the majority of Americans now do their own taxes using software, and for the savvy ones there is no need to pay for tax software.

How will you get your taxes done this year? Post your comment or question below...

 
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Most recent comments on "[TAXES] Online Tax Filing For Free"

(See all 21 comments for this article.)

Posted by:

Rebecca
23 Feb 2016

I need just the simplest of returns (W2 filer) and have used the HR Block free software for a few years. It offers the option of completing the return and then printing and mailing it, rather than on-line filing. Good Luck! Thank You Bob Rankin!!


Posted by:

Art
23 Feb 2016

I have used FreeFile Fillable Forms for several years, and I am entirely satisfied. Most, if not all, schedules are there. If you previously did your own taxes on paper, this is for you.

I live in Ohio, and Ohio I-File works similarly and is free.


Posted by:

PeteFior
23 Feb 2016

Hi Bob: Thanks for the tips on using free online tax software - but I am very concerned about the security aspects of filing online. All tax forms have my Social Security number imprinted - can't these free sites be hacked to get that all-important piece of information that could ruin my life?

EDITOR'S NOTE: Possibly, but not likely. Your doctor, dentist and a dozen other places have your SSN. How secure are they? Could the IRS itself be breached?


Posted by:

Charles
23 Feb 2016

I have been using FreetaxUSA now for several years and feel the cost for the State forms are worth paying, saves paper, printing, and postage. Help has been great and given quickly.


Posted by:

MmeMoxie
23 Feb 2016

I am old enough, that I don't have to file anymore. However, when I did file, I used Turbo Tax software, for years. I really liked it and I could get anything done on my filing, like a 401K that was not turned over. It really was not that hard to do, when you have the right software.

My daughter used Tax Act online and really liked it. I started using it, when my hubby retired. I found that their online software was just as good, as purchasing Turbo Tax or H.R. Block's software.

My Federal filing was free and the State was $9.95. A savings for when you are on a fixed income. Yes, our filing was a simple 1040 or 1040A. I would keep my tax return in my files, like I always did. I still have my tax returns in my file. Learned that from my mother. You never know when you might need them. :)

I felt safe using Tax Act online. I know that vital information is encrypt when uploading online. The software was also safe, no malware. For some reason, I have always felt safe doing online things. Yes, I am careful at all times, when doing online financial or personal information.

I may be wrong - But, I think today's tax filing online service keeps your information in a cloud, not on their servers like they use to do. I would think their cloud is safe and secure. At least, I haven't heard of any online Tax Service being hacked. :)



Posted by:

Mike
23 Feb 2016

I've used TaxAct online for years and it's worked very well for us. The federal filing is free and they try to sell you the state filing for $9.95. I always decline because here in Colorado you can file your state forms online free at the Dept. of Revenue's website.


Posted by:

Butch
23 Feb 2016

As an AARP member, I use the AARP free tax services here. The volunteers do all the work of entering data, but I am given a chance to review/edit any/all of the data prior to its being submitted to the IRS. Very knowledgeable folks and helpful.


Posted by:

Steven Bulger
23 Feb 2016

I still do my taxes by hand and mail to the IRS for a refund. Online tax services charge for getting your refund. Do you know of any way to file taxes online and not have to pay to get the refund?


Posted by:

JP
23 Feb 2016

For the first few decades I used a calculator, pencil and paper and did everything myself. (What a headache!) I then used TaxAct online for a few years, but when things got complex (dividends, capital gains, etc.), it suddenly became clear I needed a person to help me. That person, a CPA, refiled for me and got back many thousands of dollars I had already paid to the state and federal government. The same CPA has been doing it for the past several years and I firmly believe the average cost of $185 each year is well worth it to me. Thankfully, the tax prep fee is deductible each year.


Posted by:

Gerald Nuckols
23 Feb 2016

I have filed tax returns for over 50 years and for most of those years did my own and mailed them to IRS. As my deductions got more complicated a few years ago I decided to use one of the online services and am glad I did. I still do my returns by hand but then enter everything into the online system as a way of double checking myself. I have found deductions that I missed a few times. More importantly, I have found that a couple of things I thought were deductible were not.

I always pay the small fee to do the state returns also because all of the information from the federal is automatically entered for me and it saves a lot of time and typing.


Posted by:

John
23 Feb 2016

Lots of information here, but nothing on Canadian tax return services. We do taxes too. I am sure you have many Canadian subscribers who would appreciate some tax return content relevant to us.


Posted by:

Daniel Wiener
23 Feb 2016

I've been using H&R Block Deluxe + State tax program for several years now, and am quite happy with it. It's not free, but you can get it pretty cheap if you look for deals. I use CamelCamelCamel.com to alert me to price drops on Amazon. Typically there will be a special sale on or around January 1st each year. This year I was able to buy it for $21.95, which is a sharp discount from the $44.99 list price. Also, I like having the tax program for each year installed on my computer. That way if I have to go back to an earlier year and submit a corrected filing, or just review something, the program is readily available.


Posted by:

Gord Shunk
23 Feb 2016

Hi Bob,
In reference to John's post re: Canadian Taxes.
I would refer him to StudioTax - it is free and a person can process more than one return with them if need be.

I have been using this tax program for about 7 years with no problem and it sure beats doing it with pen in hand and forms all over!!


Posted by:

Chet
24 Feb 2016

re: John,s & Gord's post...
my preferred service..

https://simpletax.ca/


Posted by:

Herb
24 Feb 2016

Hi Bib, I've used TaxAct for more years than I can remember and have been very pleased with their free service. This year - as a way of 'giving back' in retirement - I became a volunteer in the AARP 'army' of tax-preparation volunteers. We're very well trained and certified, and the software we use is virtually fool-proof. There are a few complex areas which are 'out-of-scope' for us, but the overwhelming majority of taxpayers can get their return done for free using AARP volunteers. Go here: http://www.aarp.org/applications/VMISLocator/searchTaxAideLocations.action , and enter your zip code to find the location nearest to you.


Posted by:

Stuart
24 Feb 2016

There is another free service. It is the AARP Tax Aide program. This program is run by volunteers who have passed a very intense test and is offered for free in many communities around the nation. While there are some tax issues that are out of scope the majority of taxpayers can get their taxes done for free. Many of the preparers have been doing tax returns for 10 or more years.


Posted by:

DBA Steve
24 Feb 2016

The TurboTax people have Canadian tax software, for those of you asking. Visit the Intuit Candanian web site.


Posted by:

intelligencia
24 Feb 2016

Hello Everyone!

I just did my taxes using www.olt.com (via the IRS website) as the Federal and State preparation is free. It was easy to use!
The website is also highly encrypted (using 256) which gives me a peace of mind that my transaction with the OLT site is safer and more secure than the others preparing our tax returns!
[REMEMBER to go through the IRS.gov website to access the Free OLT.com service]

i


Posted by:

Michael
26 Feb 2016

I have used the Free File Fillable Forms since it was first offered online for U.S. Residents living abroad.
Before that I made copies of the forms and worksheets that my wife and I need from the IRS website. filled them out, and sent them by DHL.
Now that we are able to file online, after the return is accepted I save it to a usb flash drive.
We tried the free Turbo tax years ago. It was a disaster! Probably because it asks a ton of questions that do not apply to our situation (this was in the U.S.A.) so instead of filling out a form I had to learn how the TurboTax program works and then navigate my way through as best as I could.
At least it was online, I would never download tax preparation software on my computer.


Posted by:

The 146%
08 Mar 2016

I have always filed my own taxes using paper forms and mailed them in since I was 18 years old. I am now...several years older. Using tax programs decreases the possibility of errors, but they make the system so automated that there is no human intervention when questions arise that cannot be answered by "the system". Therefore I will never use them.

2014 was the first tax year that I was unable to complete my Federal tax return because it required me to sign it in order to complete it. In the State of Ohio in which I reside, we passed a Constitutional amendment in 2011 that prohibits the levying of any penalty or fine for not participating in a health care system. Anyone can search for this information, but it is short enough for me to copy and paste here.

It states:
Article 1, §21 (A) No federal, state, or local law
or rule shall compel, directly or indirectly,
any person, employer, or health
care provider to participate in a health
care system.
(B) No federal, state, or local law or
rule shall prohibit the purchase or sale
of health care or health insurance.
(C) No federal, state, or local law or
rule shall impose a penalty or fine for
the sale or purchase of health care or
health insurance.
(D) This section does not affect laws
or rules in effect as of March 19, 2010;
affect which services a health care provider
or hospital is required to perform
or provide; affect terms and conditions
of government employment; or affect
any laws calculated to deter fraud or
punish wrongdoing in the health care
industry.
(E) As used in this Section,
(1) “Compel” includes the levying of
penalties or fines.
(2) “Health care system” means any
public or private entity or program
whose function or purpose includes the
management of, processing of, enrollment
of individuals for, or payment for,
in full or in part, health care services,
health care data, or health care information
for its participants.
(3) “Penalty or fine” means any civil or
criminal penalty or fine, tax, salary or
wage withholding or surcharge or any
named fee established by law or rule by
a government established, created, or
controlled agency that is used to punish
or discourage the exercise of rights
protected under this section.

Since I did not purchase health insurance at any time during that year, If I were to follow the instructions for forms 1040, 1040A, or 1040EZ, it would require that I make a "Shared Responsibility Payment" to the IRS when making a payment for that year's taxes. If I were to do that, and agree to it by signing the 1040 document, I effectively give up my State Constitutional right to not have to pay a fine.

Everyone in the State of Ohio has this right. Don't give it up by signing that 1040 form. 2015 will be the second year that I will be unable to sign my form 1040, and I will continue to refuse to sign them in the future until the rules have been rewritten to include an exemption for all Ohio residents or the fine has been removed from the filing requirements.

For everybody's own information, I fully paid what I figured would be legally due for that year, minus the fine. I sent the IRS a check along with a six-month extension to file in April of last year and have not heard back from anyone from the IRS...although, I invite them to.

They deposited the payment the same week.

Brian J. Strohmeyer
Citizen of the State of Ohio,
6th Congressional District


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