The annual ritual of filing income tax returns is often complicated, time-consuming, and costly. Enlisting a tax preparer can cost hundreds of dollars. Instead, many taxpayers can prepare and e-file a federal tax return for free and a state return for less than $30 using free online software (although prices may increase as the April 15 deadline approaches). Cheapism.com has surveyed the offerings and selected four top providers of free tax software. These companies are members of the Free File Alliance, a government program that promises free federal tax prep to people who meet certain income, age, and/or residency requirements, which vary by provider. About 100 million American taxpayers (70 percent) are eligible for the program and can access the software through the IRS Free File site. Others can avoid the restrictions by using similar free software offered on the companies' websites. These free editions still include free e-filing for federal returns, but they may have higher fees for state filing, support only simple returns, and push paid upgrades and features.
4 Best Sites for Free Online Tax Prep in 2015
If you are the sole proprietor of a business, itemize deductions, worked as a freelancer, or earned investment income in 2014, free software from TaxAct supports the forms and schedules you need. Many other providers require an upgrade, or set strict requirements for Free File software that can handle these scenarios. Residents of 20 states and the District of Columbia can prepare and e-file state returns for free if they fall within TaxAct's Free File parameters: adjusted gross income of $52,000 or less and ages 18 to 58. Otherwise state e-filing costs $14.99. The entry-level package comes with audit assistance and email support; phone support costs an extra $7.99. Users uneasy transmitting personal information online appreciate the option to download TaxAct Free Edition.
A big player in the tax-prep industry offline as well as on, H and R Block is charging $27.99 for state returns filed with its Free Edition, but eligible taxpayers who access H and R Block Free File software through the IRS website can file for free in 21 states and Washington, D.C., or $14.99 elsewhere. To qualify, you must be 53 or younger and have adjusted gross income of $53,500 or less, or be eligible for the Earned Income Tax Credit. H and R Block provides in-person audit assistance and free tax advice by phone, via chat, and in online forums.
TurboTax presents significant pluses and minuses. Angry consumers warn of filling out all the necessary information only to get socked with extra fees at the end (to e-file a state return or federal forms required for certain types of income). Although the software and guidance are top-notch, according to reviews, TurboTax Federal Free Edition supports only simple returns (i.e., Form 1040EZ or 1040A) and charges $27.99 for state returns. If you make no more than $31,000 ($60,000 for active military) or qualify for the Earned Income Tax Credit, you can use TurboTax All Free, aka the Freedom Edition, which is accessible only through the IRS Free File site. It supports all common forms and schedules and includes free state filing.
This lesser-known provider doesn't bother with fancy graphics, but the software is user-friendly and fully equipped to handle returns with complications such as investment and small business income. Repeat customers can also import tax data from previous years. The costs are fairly low with FreeTaxUSA, which charges $12.95 for state e-filing. Guidance comes via email, so taxpayers who prefer live support should consider other software.