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Top 5 Options for Free Online Tax Preparation Software & Services

By Brian Martucci

tax timeBank account promotions aren’t the only way to get your hands on free money. If you have a relatively simple tax situation – for example, if you work for a single employer and don’t qualify for many itemized deductions – you can take advantage of numerous free online tax preparation software and services for your federal tax return. That’s great news if you don’t want to eat into your federal refund or fork over your credit card number before sending your tax return off to the IRS.

Several services also offer free state tax returns, raising the possibility of a completely fee-free tax season. With the exception of some members of the Free File Alliance, an IRS-sponsored consortium of online tax preparation companies that don’t always provide free returns in every state, these services are available to residents of all 50 states, the District of Columbia, and U.S. nationals serving abroad.

IRS Free File Alliance

If your adjusted gross income (AGI) was less than $60,000 last year and you have a relatively straightforward tax situation, you may be eligible to file your taxes for free through the IRS’s Free File Alliance. The Free File Alliance is a listing service offering direct access to 14 free filing services from a consortium of participating tax preparation companies, all of which have to meet strict quality and security standards set by the IRS.

Participants include well-known online and offline tax preparation firms, including Jackson Hewitt and H&R Block, as well as lesser-known options like OLT.com and ezTaxReturn.com. Aside from the $60,000 AGI hard cap, each participating company has specific eligibility criteria, including stricter income limits, age limits, residency restrictions (some are only available to residents of certain states), and citizenship status requirements.

Three critical notes: First, to qualify for a free return with any of the participating companies, you need to access their filing platform through the Free File website. It’s like an affiliate promotion – you don’t get the deal unless you click the affiliate link on the partner site.

Secondly, some Free File Alliance companies only offer free filing to people with simple tax situations. If you’re an independent contractor, business owner, investor, or have a complicated situation for other reasons, you may still need to pay a filing fee with certain providers. Therefore, it’s important to evaluate your options carefully and choose from those that do offer free preparation for people who need to file Schedules C, D, E, or other forms common to complex tax situations.

Finally, functionality may vary from program to program. For instance, some limit whether you can import prior-year returns and forms into your current-year tax return. TurboTax’s free version doesn’t allow importing from other platforms, while H&R Block allows three (TurboTax, TaxACT, and H&R Block itself). It’s best to read the fine print on each service’s features before making a choice.

why freefile

The IRS also maintains links with about two dozen state-level Free File programs (indicated in deep blue on the map below), which also leverage relationships with name-brand tax filing services that meet states’ security and quality criteria. As with the federal Free File program, filer eligibility requirements may vary by company and state.

freefile states

Free Online Tax Prep Services

1. TurboTax Federal Free Filing Option

turbotax logoFederal Free Filing option from TurboTax is ideal for simple tax situations. It includes most of the features and functionality of TurboTax’s paid options, including a best/fastest refund guarantee, support via live chat, W-2 importing, and your choice of e-filing or print-and-mail filing.

Furthermore, from the 2014 tax year onward, the Federal Free option actually lets you file your first state return for free. (Previously, each state return cost $36.99.) And the system is extremely intuitive, with simple, straightforward questions that guide you through every step of the filing process and reduce the likelihood of a preventable error. It’s also available to residents of all 50 states.

That said, this option has some drawbacks. It doesn’t allow you to file most common schedules (including schedules C, D, E, and F), doesn’t support itemized deductions, and doesn’t save (or let you import) tax returns and forms from previous years. Also, you can’t take advantage of TurboTax’s refund bonus, which adds 5% to your refund if you opt to receive it as an Amazon gift card.

Phone support isn’t available at this price point, either. And if you want to pay your tax prep fees with your federal refund, you must pay a $34.99 refund payment processing fee.

That said, TurboTax has several plans at multiple price points. If you feel like the free version is no longer suitable for your needs, it’s easy to upgrade to a paid plan at any time without losing already-entered information.

See our TurboTax Review for more information.

2. TaxSlayer.com Free Basic

taxslayer logoTaxSlayer.com recently underwent a major redesign and revamp that has loosened or eliminated many of its past restrictions. Its Free Basic plan lets you file your federal taxes for free with no age, income, residency, or citizenship restrictions. It offers access to what TaxSlayer calls “all major forms,” including Schedules A, B, C, D, E, H, and K, which makes it suitable for tax situations of any complexity. (The complete list is available on TaxSlayer.com’s supported forms page.)

This is a departure from filing services such as eSmart Tax, whose free versions don’t support many forms and schedules, and thus aren’t suitable for complex tax situations. TaxSlayer’s website is also super mobile-friendly, making it an ideal choice if your primary computing device is a smartphone or tablet.

However, TaxSlayer.com Free Basic does have some drawbacks. You can’t import past years’ tax returns or any associated data, nor can you speak with a tax professional if you get stuck. You cannot take advantage of TaxSlayer.com’s audit assistance services, and you can’t use the website’s live chat feature. And though phone support is available from TaxSlayer.com’s nonprofessional customer service team, TaxSlayer.com pushes paying clients – those using the Classic and Premium editions – to the front of the line when they call. So if you call at a busy time, you could wait a very long while for assistance.

On the other hand, TaxSlayer.com Free Basic comes with a major perk: If you opt to pay for your tax preparation fees with your federal refund, you’re not charged a processing fee for the convenience. That compares with processing fees ranging from $17.99 to $34.99 at major competitors, such as TaxACT and TurboTax. However, TaxSlayer.com’s state returns are a bit pricey: Your first is $23.90, and each subsequent is $14.95.

See our TaxSlayer Review for more information.

3. eSmart Tax Free Plan

esmart tax logoeSmart Tax is the online/software arm of Liberty Tax, one of North America’s largest tax preparation franchisors. Its Free plan comes with many of the features available to paying eSmart customers and those who use Liberty’s in-person filing services, including audit preparation support, live access to tax professionals during business hours, W-2 and prior-year return importing, and access to prior-year tax returns for up to five years. You can import your prior year’s tax return from 10 other prep services, including TurboTax and H&R Block. And there are no income, age, or other restrictions.

eSmart Tax also offers a strong Price Lock guarantee: You’re assured of paying the price in effect at the time you created your account, even if you complete your return much later in the tax season and prices rise in the interim. Of course, if you use the Free plan, this guarantee won’t come into play – but it’s helpful to know about in case you have to upgrade to a paid plan.

eSmart’s Free plan is ideal for people with simple tax situations, including filers who qualify for the Earned Income Tax Credit and health insurance subsidies under the Affordable Care Act. However, its support for more complicated situations is limited or nonexistent. If you need to itemize your deductions, pay self-employment tax, or report capital gains or losses, you must upgrade to a paid plan.

The good news is that if you need to file your state taxes, eSmart charges $9.95 per state under the Free plan – less than competitors TaxSlayer.com and TurboTax. However, you can’t pay your filing fees with your refund.

See our eSmart Tax Review for more information.

4. H&R Block at Home Free Edition

h&r block logoH&R Block at Home is the online/software arm of H&R Block, one of the United States’ best-known tax preparation firms. It’s ideal for people with simple tax situations, including those who qualify for subsidies under the ACA (but not those who qualify for the Earned Income Tax Credit).

However, it’s not set up to support filers with capital gains or losses, self-employment income, interest and ordinary dividend income, and rental property income. It also doesn’t allow you to store or access past-year returns – you need to upgrade to a paid plan for that. You can import past-year returns from H&R Block, TurboTax, and TaxACT, but no other services. And there’s a stiff fee to pay your filing fees with your refund: $34.99 for your federal return, and $13 for each state return.

On the other hand, H&R Block’s free edition has some nice perks. For starters, it’s available to residents of all 50 states and comes with no other restrictions. All filers automatically qualify for free, in-person audit support, which includes hands-on advice and assistance with audit preparation. H&R Block also has a handy explainer tool called Refund Reveal, which updates your refund in real-time as you complete your return, and explains each event that results in a balance change.

Using H&R Block’s Free Edition automatically qualifies you for a 5% federal refund bonus, which you get if you agree to receive your refund as a gift card (or multiple gift cards) from several dozen popular retailers, including Target, Best Buy, and Kohl’s. If you’re filing your state taxes here, you must pay $9.99 per state.

See our H&R Block at Home Review for more information.

5. TaxACT

taxact logoTaxACT claims to offer “the most complete tax filing solution for everyone.” There aren’t any income, age, or other restrictions, and all IRS forms and schedules (including Schedules A, B, C, D, E, H, and K) are supported. You can itemize your deductions, report self-employment income, log capital gains and losses, handle tax issues related to real estate, and more here, so it’s ideal for situations of virtually any complexity.

TaxACT’s free version does have some frustrating drawbacks. If you get stuck, you have to pay a one-time fee of $7.99 to get live support from a TaxACT employee. There’s no way to import past years’ returns, meaning you need to enter all that information manually. You also can’t import other important data sets, such as your brokerage’s securities sales reports. TaxACT’s deluxe version, which costs $12.99, does support all these import functions.

Each state return costs $14.99 with the free version. If you want to pay your federal filing fees with your refund, it will set you back $17.99.

See our TaxACT Review for more information.

6. FreeTaxUSA Free Edition

freetaxusa logoThough it’s not as well-known as some of its competitors, FreeTaxUSA offers free federal tax filing for tax situations of all complexity levels. It supports all major forms and schedules, as well as useful features like prior-year return importing and storage. It also offers free live support from customer service professionals, though its roster of actual tax professionals doesn’t measure up to bigger competitors like TurboTax and H&R Block. And though it costs $12.99 to file each state return here, it’s free for filers under age 22 as of the last day of the current tax year. FreeTaxUSA is available to filers across the United States.

FreeTaxUSA has some noteworthy drawbacks, including a lack of audit assistance (which, with the Deluxe version, includes help interpreting IRS notices, drafting responses, and preparing the documents necessary to navigate your audit). You can only import past-year returns from FreeTaxUSA itself, not any other filing service. It’s also not very mobile-friendly, making it a poor choice for filers utlizing tablets or smartphones. You can’t pay your filing fees with your refund. And the site has been plagued by functionality issues in the past, including a pattern of state returns not being submitted on time.

See our FreeTaxUSA Review for more information.

7. MyFreeTaxes

myfreetaxes logoMyFreeTaxes is a partnership between the Walmart Foundation, Goodwill Industries, the National Disability Institute, the United Way, and H&R Block. Like the IRS’s Free File Alliance, it’s only available to individuals and families who earned less than $60,000 in the previous tax year. This is the only eligibility criteria: MyFreeTaxes doesn’t have any of the more restrictive criteria imposed by some of the Free File Alliance’s members, such as age, state of residence, or citizenship status.

MyFreeTaxes only offers access to H&R Block’s Basic filing plan, so if your tax situation is too complex for it to handle (for instance, it can’t handle Schedule C filing), you may need to upgrade to a paid H&R Block plan. If you are able to continue with the Basic plan, there’s a big added perk: You don’t have to pay to file your first state return. And if you earn less than $53,000 per year or meet certain age criteria, you may qualify for free in-person filing through MyFree Taxes, thanks to the IRS’s Volunteer Income Tax Assistance (VITA) program. In-person assistance is available at thousands of outposts around the country, including high schools, credit unions, community centers, and nonprofit organizations.

8. Free File Fillable Forms

irs freefile logoIf your AGI is more than $60,000 and you don’t mind taking the DIY tax-filing route, you can still take advantage of an IRS-administered free electronic filing system. The IRS makes available its entire database of tax forms and schedules, in PDF format, at FreeFileFillableForms.com. To complete your tax return, simply fill out the applicable forms through the online system and submit them through the IRS’s e-filing system. You receive your refund (if eligible) on the same schedule as you would with a branded online tax preparation service.

With Free File Fillable Forms, your work is automatically saved as you go, so you don’t need to fill out your entire return in one sitting. And regardless of how complex your tax situation is, you can find the forms and schedules necessary to complete your tax return here, subject to some limitations outlined by the IRS. There aren’t any income, age, citizenship status, or other eligibility restrictions for Free File Fillable Forms.

Free File Fillable Forms might sound like the ultimate free filing option, but there’s a major catch: The IRS provides no support whatsoever for taxpayers who opt to use this resource. In other words, you have to know how to fill out each applicable form or schedule on your own, or be confident enough to navigate the IRS’s library of tax preparation resources to find out how. If you have a straightforward tax situation and have prepared your taxes on your own in the past, this might not be an insurmountable bar to clear.

However, if your situation is more complicated or you’re just not comfortable with the idea of preparing your tax return unaided, Free File Fillable Forms might not be a great option. Even a seemingly trivial preparation error could lead the IRS to reject your return and ask you to re-file, delaying your return in the process. In the worse case, you could be flagged for an audit. And note that functionality is severely constrained here: You can’t import prior-year returns, for example.

Final Word

I don’t know many people who love filing their taxes, even if they’re reasonably confident that they’ll get a juicy refund. Filing taxes takes time and mental effort, and even the best software programs can’t totally protect you against a mistake that reduces your refund. Filing for free can’t make up for the inconvenience, but at least it keeps more of your money where it belongs: in your wallet.

On the other hand, free filing options aren’t appropriate for everyone. If you have a complicated tax situation – particularly if you’re self-employed, own a business, or have investment income from multiple sources – it’s not worth it to try to force your tax return through the eye of the self-filing needle. You risk a mistake that could more than offset the money you saved on your return. And you might even set yourself up for a stressful, potentially costly IRS audit. There’s no shame in crying “uncle” and opting for a paid plan, or even hiring a certified public accountant who can provide hands-on attention.

Have you used any of these free online tax preparation services? Which do you recommend?

Brian Martucci
Brian Martucci is a freelance journalist and branding consultant who loves to provide practical personal finance advice for regular people. When he’s not writing about frugal living, long-term investing, or consumer-friendly financial products, he’s probably out exploring a new trail or sampling a novel cuisine.

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  • http://www.211info.org Matt Kinshella

    If you live in Oregon check out this useful blog about nonprofit free tax prep offerings from my organization 211info: http://211info.org/blog/all-you-wanted-know-about-free-tax-preparation

    If you don’t live in Oregon or SW Washington, you can dial 211 on your phone for free (it works the same way 911 does) and get connected with some great free tax prep resources.

    Thanks for this online overview Kira!

    • http://www.google.com/ lasdmalsm

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  • James Guilford

    Free tax filing is all well and good, but what happens when one of these services gets hacked and all of your information is suddenly being sold to the wrong people?!?! Usually it’s several weeks before this gets reported to the media — time enough to make a mess of your life. Be careful out there.

  • Adam M

    @Guilford, if you are someone that is really afraid that an online application can be hacked, which is a possibility, then that person best option is to use the online form Just for preparation then to print and send in via snail-mail. Otherwise prepare the whole thing by hand…

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