Many tax filers breathed a sigh of relief when Tax Day was pushed back to July 15 this year. Of course, the delay came from the onset of COVID-19, so it’s not as if the world was in a great place.
But the postponement also meant more procrastinating for plenty, and July 15 is nearly here. If you’re scrambling to file your taxes last-minute, do yourself a favor: Don’t overpay to file simple returns.
There are so many online filing services now that the majority of people can file their federal tax returns for free. And as Bloomberg reported a few years back, most tax-filing services charge inflated rates as Tax Day draws closer.
Don’t wait until the last minute. And don’t get overcharged, either. While heaps of websites advertise “free” online tax software, they also upcharge for common deductions, additional income and filing state returns. Fortunately, you can avoid most of those fees if you know where to look.
Free tax filing online
If you have a simple federal tax return, i.e. a 1040, you have a multitude of options. The IRS offers two free options: online filing for anyone making under $69,000, and free file fillable forms for anyone making more than $69,000.
Of course, those government offerings lack many of the bells and whistles, like a “MEGA REFUND CHECKER” or whatever other premium features for-profit services advertise. How much those bells and whistles are worth entirely depends on how complex your taxes are.
To give you an idea of options, here are some of the most popular free services with varying degrees of what’s free:
Almost every service will offer something for free; it’s a matter of whether it upsells you on “premium” services, like checking for missed credits, adding itemized deductions, or filing your state return. Yes, filing your state return is frequently considered a premium service. Even something as simple has having student loan interest deductions (form 1098-E) might kick you out of free status.
What is a “simple tax return”?
Most tax-filing sites advertise free “simple tax returns” or similarly worded offerings. Take TurboTax, the most popular tax-filing service, for example. In its Free Edition details page, it explains that you qualify for free filing if your return includes only:
- W-2 income
- Limited interest and dividend income reported on a 1099-INT or 1099-DIV
- Claiming the standard deduction
- Earned Income Tax Credit (EIC)
- Child tax credits
That won’t cover any of these common situations:
- Itemized deductions
- Business or 1099-MISC income
- Stock sales
- Rental property income
- Credits, deductions and income reported on schedules 1-6, such as the Student Loan
Additionally, there’s no such thing as free tax filing outside of IRS services. As the Washington Post outlined in 2019, entirely “free” tax services like Credit Karma make their money by using your sensitive data in targeted advertising. It’s up to you if saving a few bucks is worth the privacy tradeoff.
Free state tax filing online
Even if you use a free service to file your federal income taxes, you’ll most likely need to file a state tax return, too. Fortunately, there are many free options out there, depending on your level of income and state of residence.
The IRS provides this tool to look up where you can file your state tax return for free or cheap. For example: A 35-year-old man earning $68,000 a year in California, who isn’t eligible for the Earned Income Credit and doesn’t have military pay, can file a state return for free on these two sites:
That’s just one example. Run your info through that online form to see what options pop up for you.
Additionally, you can file your federal taxes for free on a site like FreeTaxUSA and use your state’s free resources to file your state return. That takes more organization and juggling, but if you’re set on saving $15, you have the option.
The best online tax filing software
It’s bad writing to inject first-person perspective this deep into an article, but here goes: I am not an accountant, nor do I pretend to be one. I have, however, written for a number of websites about personal finance, including this article on how to save money on your taxes. In that, Peter W. Ensinger, CPA, offered advice on how to determine whether you should file online on your own or consult a tax specialist.
“Anyone who has a simple return and is computer literate can use consumer tax preparation software. This includes individuals who own a home and have a mortgage,” he said. “Generally, someone with rental property or who is self-employed or has complicated investments should use a paid preparer.”
If you think you need a paid preparer, ask friends, family or colleagues for a referral. If you plan to file your taxes online, I vouch for FreeTaxUSA.
I discovered FreeTaxUSA through repeated recommendations on r/personalfinance. The subreddit provides a handy Wiki on taxes that answers more basic tax-related questions than I ever could. And every year, it starts a “Tax Filing Megathread.” This year’s includes many more FreeTaxUSA recommendations.
To that end, I’ve used FreeTaxUSA for the past two years. There are a handful of reasons:
- Federal returns are free
- State returns are $14.99, at the most (they’re $12.95 as of this writing)
- There’s no upselling for adding common deductions like an HSA, student loan interest or small-business itemizing
- FreeTaxUSA does not sell your data
- There’s multi-factor authentication, so I trust my data is protected
- It’s easy to import past returns from other services
- You get a free PDF of your return for your records
In past years, I used H&R Block, TurboTax and a paid preparer. All cost me more than MyFreeTaxUSA. Still, as many redditors suggest in the megathread, it’s worth your time to plug the numbers into two services, just to make sure they come out the same.
The first time I used FreeTaxUSA, I filled out my tax return on H&R Block and TurboTax to compare prices and services. Yes, I hate myself enough to fake-file my taxes three times. H&R Block and TurboTax quickly tacked on charges when I added forms for my Health Savings Account and student loan interest. FreeTaxUSA did not. I was sold.
Overall, FreeTaxUSA is pretty easy to use, and if you have a simple return, you can zoom through your federal and state return for $15 or less. And you can save 10% off by using the promo code FREETAXUSA10.
Filing your taxes doesn’t have to be difficult or stressful. And if you do things right, it won’t be expensive, either.
Hearst Newspapers participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites.
Ryan Craggs is the Director of Content Marketing for Hearst Newspapers. Email him at [email protected]
- Taking Advantage of Free Tax Filing
- Free Tax Preparation - Easy Online Process Explained
- Federal Taxes - Filing Them Online
- Free Tax Help - Suggestions and Tips
- Benefits of Using Tax Filing Software
- Free Online Tax Filing Services - How To File Your Taxes Free
- Free Online Tax Filing Services - How To Find Reliable Ones
- Tax Filing Online - Some Excellent Software For Your Use
- Filing Tax Returns Online - Some New Methods Of Tax Filing
- Free Tax Preparation Software - A Boon To All
- Online State Tax Filing - Advancement In Tax Filing
- Are Free Online Tax Filing Services a Scam?
Free tax filing: How to file online without paying add-on charges have 1363 words, post on www.sfgate.com at February 5, 2020. This is cached page on VietNam Breaking News. If you want remove this page, please contact us.