Bank 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 $64,000 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 12 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. According to the Free File Alliance, roughly 70% of the U.S. taxpaying population is eligible for free filing. More than 49 million returns have been filed since the Alliance’s inception in the early 2000s.
Participants include well-known online and offline tax preparation firms, including Jackson Hewitt and H&R Block, as well as lesser-known options like Online Taxes at OLT.com and ezTaxReturn.com. Aside from the $64,000 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.
Four 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. Therefore, it’s important to evaluate your options carefully and choose from those that offer free preparation for people who need to file Schedules C, D, E, or other forms common to complex tax situations.
Thirdly, some Free File Alliance companies decline to serve filers in certain states. For instance, Free1040TaxReturn.com is off-limits to residents of Florida, Nevada, Tennessee, Texas, and Washington State. Before you sign up for a service, make sure it’s available in your area.
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. Others have limited customer support resources. It’s best to read the fine print on each service’s features before making a choice.
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.
Free Online Tax Prep Services
1. TurboTax Federal Free Filing Option (Absolute Zero)
Federal 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 lets you file your first state return for free. (Previously, each state return cost $36.99.) And the system is incredibly intuitive, with simple, straightforward questions that guide you through every step of the filing process, reducing the likelihood of a preventable error. It’s also available to residents of all 50 states.
That said, this option has some drawbacks. Most notably, 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. And phone support isn’t available at this price point, either. Plus, 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 any information.
See our full TurboTax Review for a complete analysis.
2. TaxSlayer.com Free Federal (American Pledge)
TaxSlayer.com recently underwent a major redesign that has loosened or eliminated many of its past restrictions. Its Free Federal plan, also known as the American Pledge 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’s free filing option 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 or 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’s free filing option 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. That compares with processing fees as high as $34.99 at major competitors such as TaxAct and TurboTax. However, TaxSlayer.com’s state returns are a bit pricey: $19.99 apiece with the free file version.
See our full TaxSlayer Review for a complete analysis.
3. eSmart Tax Free Plan
eSmart Tax is an online arm of Liberty Tax, one of North America’s largest tax preparation franchisors. (Liberty Tax Online, another Liberty Tax subsidiary, is similar but distinct.) 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 ten other prep services, including TurboTax and H&R Block. And there are no income, age, or other restrictions.
eSmart Tax also offers an attractive Price Lock guarantee, securing the current pricing 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 cases 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.
If you need to file your state taxes, eSmart charges $19.95 per state under the Free plan, which is roughly on par with the competition. However, you can’t pay your filing fees with your refund.
See our full eSmart Tax Review for a complete analysis.
4. H&R Block Free Edition
H&R Block is one of the United States’ best-known tax preparation firms. It has thousands of storefront tax prep outlets scattered about the United States, along with a powerful, user-friendly online tax prep option for at-home filers.
The latter is 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. 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.
See our full H&R Block Review for a complete analysis.
5. TaxAct Free Edition
TaxAct claims to offer “the most complete tax filing solution for everyone.” If your AGI is under $52,000 and you’re under the age of 56 or qualify for the Earned Income Tax Credit, you are eligible for this Free Edition under the Free File Alliance framework. 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. You can only import past-year tax returns from H&R Block and TurboTax and only in PDF format. You also can’t import other relevant data sets such as your brokerage’s securities sales reports.
On the bright side, you do get unlimited customer support for technical and tax-related issues. Plus there’s no fee for state returns. If you want to pay your federal filing fees with your refund, it will set you back about $20.
See our full TaxAct Review for a complete analysis.
6. FreeTaxUSA Free Edition
Though it’s not as well-known, 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 tax professionals doesn’t measure up to bigger competitors like TurboTax and H&R Block. And 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, though state returns are only free in about 20 states – otherwise, they’re $12.95 each.
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 utilizing 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. Free File Fillable Forms
If your AGI is more than $64,000 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 its entire database of tax forms and schedules available in PDF format at FreeFileFillableForms.com. To complete your tax return, fill out the appropriate forms through the online system and submit them through the IRS’s e-filing system. You’ll 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 form and schedule on your own, or at least 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 impossible 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 isn’t 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.
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 effort, and even the best software programs can’t totally protect you against mistakes. 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.
Still, free filing options aren’t 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 likely not worth the small upfront savings. A mistake could easily offset the money you saved on your return. And you might set yourself up for a stressful, potentially costly IRS audit. There’s no shame in 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? Share your thoughts in the comments section below.