Tax WeekWith tax-filing season upon us, Two Cents is donning the green eyeshades and focusing on stories which will help you navigate tax preparation and make the most out of your return.Despite the fact that roughly 70% of Americans who file are eligible for free tax filing through the IRS, they still spend $1 billion a year in unnecessary filing fees. With that in mind, here are your best options for filing your taxes for free.
Start with IRS Free File
The good news is that most people already qualify for free tax filing through the IRS’ Free File program—the only requirement is that your adjusted gross income is less than $72,000.
This program is a partnership between the IRS and an alliance of tax preparation companies like TaxAct and H&R Block, and it offers free versions of the companies’ tax software. Using the IRS Free File lookup tool, you can input your income, state of residence, age, military status, and earned income tax credit eligibility and it will match you with offers that meet your tax-filing needs. Once your federal and state taxes are complete, you can e-file them for free, too.
If you make more than $72,000, however, the IRS doesn’t offer much, other than Free File Fillable Forms that you can use to prep your own taxes. A better option in that case might be commercial tax software.
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Commercial tax software
If you have what’s called a “simple return,” a lot of the tax preparation companies like TurboTax or H&R Block will allow you to file for free with no add-on fees (although they will try—gird yourself accordingly).
A simple return means that you’re taking the standard deduction, earn only W-2 or unemployment income, and have limited or no investments. Some tax products go further than that and allow you to make student loan deductions and include credits at no additional cost. If your finances are more complicated than that, expect to pay money.
CNBC Select’s choice for the best tax software that will file a simple tax return for free is Credit Karma Tax—although they rated TurboTax, H&R Block, and TaxSlayer as good options, too. These programs can still be a bit confusing, however, so you might want to check out YouTube walkthroughs to avoid missing out deductions or credits (this Credit Karma Tax review has a good walkthrough, for example).
Volunteer Income Tax Assistance
Another option is the Volunteer Income Tax Assistance (VITA) program, which offers IRS-certified volunteers that can help you file your taxes for free, providing that you make $57,000 or less, or are disabled.
These volunteers typically work at in-person locations around the country, although unfortunately there are fewer that are open this year due to the pandemic (though some might offer video calls or curbside service). You can find the closest one near you here.
