While it certainly can be worth the money to hire a professional to prepare your taxes, you may be able to avoid paying any money at all if your personal finances aren’t too terribly complicated. There’s no need to pay more than your fair share in taxes – and similarly, there’s no need to pay extra when preparing them.
There are many excellent tax preparation services available online, many of which charge very little, and others which charge nothing. Keep in mind that many services only file your federal taxes for free, requiring that you either complete your state forms using another method or pay a fee to have them filed along with the federal taxes. Still, you can save a ton of money by doing taxes with the assistance of these five great programs:
Best Free Online Tax Prep Services
1. Free File
Free File is the most popular service that provides referrals for no-cost tax preparation. The listings, provided by the IRS, display companies and services that meet the IRS’s standards for filing.
To use Free File, you must have an adjusted gross income of $57,000 or less. Additionally, some companies may only offer their services to those with lower incomes, in specific age ranges, or in specific states. Most of the free services only cover basic tax returns – if you have a small business or otherwise need to file a more complicated return, you may be responsible for an additional fee. However, if you qualify for free service, you will receive the same quality treatment as those who are paying customers.
It’s important to note that 21 states (plus Washington, D.C.) participate in Free File. Check this list to see if your state is among them. If so, you can prepare and e-file your state taxes for free as well.
2. Free File Fillable PDF Forms
If you have simple taxes and some confidence – or if your annual income was more than $57,000 – you can fill out your own tax forms using Free File’s Fillable PDF versions of standard forms.
Many forms have calculations already entered, and can carry numbers from one line to another or perform addition and subtraction for you. Once you complete these forms, you can e-file your federal taxes for free. This is a great option if you have experience doing taxes and have previously completed your taxes yourself, or if you have a very simple return. There are no income, age, or state restrictions.
3. H&R Block at Home
You can complete basic online tax prep through H&R Block at Home for free, and in the case of an audit, you can also receive free help from one of its tax professionals. The free online version includes e-filing at the federal level; however, state e-filing costs $29.95. The free version also doesn’t include as much step-by-step instruction to maximize your refund as the paid versions.
If you have additional items beyond a couple of W-2 forms, you may be required to use the paid version. For instance, if you need to file a schedule C for a small business, you’ll need to purchase H&R Block’s “Premium” version. Read our H&R Block review for more details on the versions of H&R Block at Home.
Participating H&R Block offices may also offer free in-person 1040EZ federal tax filing for those who have very simple taxes (no dependents, mortgage, or other deductions; income less than $100,000; filing as single or married filing jointly). However, it costs $39 to file state taxes in person.
The free version of TurboTax covers most basic tax situations, and offers the same error-checking, access to live chat, and guaranteed biggest refund as paid versions. If your taxes are complicated enough to warrant the use of a paid version, you can upgrade and your information will transfer over and you can pick up right where you left off.
TurboTax offers a library of help documents in the event that you’re contacted by the IRS, but does not offer support if you’re actually audited. Only your federal taxes and filing are included in the free edition – state tax filing costs $27.99. TurboTax also explicitly notes that the free version doesn’t include schedules C, D, E, or F, so you will be prompted to upgrade if you tell the program you need to file those items. Read our TurboTax review for more information.
TaxACT offers free online federal tax preparation and e-filing, and adds several neat side benefits. These benefits include a worksheet to help you fill out the FAFSA if you have a child going to college, or an option to receive your refund in savings bonds in increments of $50. You can also receive your refund on a prepaid Visa debit card. TaxACT can also import data from prior returns, even if they were prepared with other software.
TaxACT includes all tax forms that the IRS has provided as a fillable PDF. If you want to complete your return on a non-Internet enabled computer, you can buy a copy of the software on CD for $5.95 to cover shipping and handling. Read our TaxACT review to learn more.
While these free and low-cost tax preparation options can be great for many people, others may benefit more from investing in the help of a professional. If you have a more complicated financial situation, own a business, or are not confident in your ability to prepare your own taxes, make a point to enlist the assistance of a certified tax preparer. Saving money on your tax preparation is not worth it if you commit an error and subject yourself to a potential IRS audit.
Have you tried any of these services in the past? Which online tax prep services do you suggest?
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