Filing Taxes Online for Free-What You Need to Know

A new year brings all sorts of ads saying the advertised service will enable you to file your income taxes online for free. Before you head to a particular site, remember these two things:

  1. All taxpayers don't qualify for all free tax-filing programs or services.
  2. Different programs and companies offer different services and have different criteria and limitations.

This brief summary will help you compare the free-tax filing opportunities available. You decide which best fits your needs.

Free-File from the Internal Revenue Service (IRS)

If your adjusted gross income is $62,000 or under then you qualify for the IRS's Free-File program. Because the IRS partners with other companies to provide this service, you need to compare the choices carefully because all do not have the same criteria. Some differences in criteria include the following:

  • Limiting adjusted gross income to a figure below $62,000
  • Having an age limit on those who may file using their program
  • Being available only in certain states
  • Providing or not providing free filing of state income tax returns

Whatever your income, if you are comfortable preparing your own taxes, you can use the Free File Fillable Forms program available on the IRS site and file online for free.

Read more about the IRS programs.

Commercial Tax Preparation Software

A number of companies offer some form of free online tax-filing programs for federal income taxes. Again criteria and limitations vary. For example, the free program may have an income cut-off, be limited to filing only Form 1040-EZ or 1040-A, or charge for state income tax returns.

This review from reviews.com gives you a thumbnail comparison of six popular software companies. Do note that companies are not listed in any order of preference or quality.

Commercial Tax Preparation Services

Many taxpayers choose to go to a professional tax preparation service. These range from individual CPAs, for instance, to national store-front chains. Such professional preparers are usually required to file your returns electronically. Though you may qualify for "free" filing, such companies charge fees for their advisory and preparation services. This tip sheet from Consumer Reports gives guidance on how to choose a reliable and reputable tax preparer that meets your needs.

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