People have all kinds of pejoratives to express how they feel about filing their taxes. The process is stressful, time-consuming, and inconvenient. It’s also expensive… but it doesn’t have to be.
There are free tax filing services to offset the burden of tax season, but some of them aren’t as “free” as they sound. Let’s take a look at the available no-cost options so you can save money while filing your taxes.
IRS Free File
The IRS Free File Program is available in partnership with various tax software companies. Essentially, it offers taxpayers two online methods to prepare and file their income taxes: a Guided Tax Preparation and Free File Fillable Forms. Let’s explore these options.
The Guided Tax Preparation is a free online service provided at IRS partner sites. If your Adjusted Gross Income (AGI) is $73,000 or less, you qualify for a free federal tax return via this service. The Free File Fillable Forms, on the other hand, are electronic versions of the 1040 tax forms that you can fill out yourself. You qualify for this service if your AGI is greater than $73,000.
To use either of these services, you’ll need your income statements (W2s or 1099s) and any adjustments to your income. You’ll also need the AGI from your previous year or a self-select PIN, plus any applicable dependent and spouse information.
Which Option Is Best?
There are many free filing services aligned with the IRS, but they are not all equally up to the task of your particular situation. Some services don’t include free state returns; granted, some states offer their own free filing services.
It can be a challenge to weed through the fine print of each tax company, which is why the IRS promotes a Free File Online Lookup Tool. This tool can help you determine the ideal filing service, once you’ve answered some basic questions about yourself and your income. Alternatively, you can use the Lookup Tool to manually search through all of the available services.
Unaffiliated Tax Software Companies
Of course, there are tax filing services other than the ones featured on the IRS’ Free File. These direct-from-provider tax softwares (such as H&R Block and Tax Slayer) typically offer free online filings for simple tax returns.
In most cases, “simple” means the taxpayer in question only has income from one job and is taking the standard deduction. However, keep an eye out for unaffiliated filing services that are willing to help you claim common tax credits. Also, be aware that these companies may charge certain fees (on state tax returns, for example).
Which Unaffiliated Option Is Best?
All of these free services have limitations. However, most will gladly work with W2 incomes and common credits like the Child Tax Credit and the Earned Income Tax Credit. If you have a relatively simple tax situation and aren’t planning to itemize your deductions, these tax services are free (and cover state taxes):
Unfortunately, any charitable donations, student loan interest, or stocks and investments you have increases the likelihood that you’ll need to upgrade to a paid service.
Volunteer Income Tax Assistance
The Volunteer Income Tax Assistance (VITA) program is federally funded to help community groups offer filing services in their area. The aim is to assist taxpayers who are working with low to moderate incomes. They also help those beset by physical, cognitive, or linguistic obstacles.
These VITA sites are available throughout the country. In fact, the IRS has compiled a helpful list of where you can find one closest to you. However, this program is mostly oriented around providing quick filing for simple tax returns. This means that anyone with complicated losses or deductions to report – like investors, freelancers, and contractors – might want to try another method.
In partnership with H&R Block, MilTax offers free tax software to military members and their families. The program, which is operated by the Department of Defense, also provides face-to-face service through its affiliation with VITA.
If you’re part of a military family, MilTax has financial resources, contact numbers, and software links available. Not only that, but MilTax employs trained tax consultants who can guide you through your filing online or by phone.
Tax Counseling For The Elderly
Created in the spirit of VITA, Tax Counseling For the Elderly (TCE) provides free tax prep for seniors. These sites typically function out of the same areas as VITA. However, TCE volunteers are specifically trained in retirement and pension related issues.
Even though the program is designed to meet the needs of citizens 60 years and older, there is no minimum age requirement. While the IRS has a list of TCE sites, the majority of their locations are run by the AARP Foundation’s Tax-Aide program. Use the AARP Site Locator Tool to find the location nearest you.
Are These Services Secure?
All of the programs and services mentioned above are legally obligated to protect your information from unauthorized access. IRS Free File, its partnered providers, and affiliated programs cannot disclose or use tax return information for any purposes without your consent.
Likewise, all of the companies listed are subject to the Federal Trade Commission Privacy and Safeguard Rules, as well as IRS e-file regulations. So, whichever service provider you choose, these credentials will ensure your information is secure.
“Free” Isn’t Always Best
As you can see, there are many opportunities to file your taxes for free – if your financial situation is straightforward. It’s also encouraging to see federal grants working hard to support our most vulnerable taxpayers. These programs might not be for you, though.
The word “free” may be alluring, but a “free tax filing” option might not be in the best interest of your tax situation. In many cases, you can net a greater return by paying for a service that allows you to itemize your deductions and claim tax credits. Paying for tax software or access to a tax accountant may cost you more in the short term, but it can save you money in the long term.