I remember the first time I filed my taxes. I was dropping something off at the post office when I saw tables full of cardboard boxes filled with forms with the now-familiar IRS eagle and scales logo. Tax season!
Those boxes were so intimidating. I was so scared of filing my taxes wrong and getting audited.
Fortunately, a friend of mine told me that I didn’t need those forms. There was software for that now and the software was really good.
I used TurboTax for many years before transitioning to an accountant when my business required it but looking back, that software was amazing, even back then! Can you imagine doing your taxes on one of these forms? All those boxes. All those complicated formulas. It’s amazing anyone gets it right.
Nowadays, software is even more impressive. They walk you through the process with real questions a human being would ask and then fill out the boxes for you. Then they compare the boxes for potential errors and ask you more questions. It’s truly amazing and totally worth the price. That’s the beauty of software!
What makes it even better is that if you qualify, you can get all the awesomeness of the software without paying a penny.
Why do companies offer this? They want to get your loyalty as quickly as possible, so they offer free tax preparation now in the hopes you will continue with them when you are no longer eligible for the free product. It’s also because it costs them very little to give this service (marginal cost) so it’s a good investment on their part.
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Credit Karma Tax
There is just one plan and it includes practically everything. There are no upsells or hidden fees and no income limit, unlike other free tax preparation.
They support a lot of forms and will probably we work for for you but there are a few exceptions. They aren’t able to do (full list here):
- multiple state filings,
- part-year state filing,
- foreign earned income,
- married filing separately returns in community property states,
- or state filing without a federal filing.
So if you qualify (you probably do), give them a look.
(read our full review of Credit Karma Tax for more details)
FreeTaxUSA is a tax preparation program that offers a free and Deluxe version. If you have a simple, or even slightly complicated return, you can use their free program regardless of income. If you only have W2 income, minimal interest and dividend income, and only basic itemized deductions then you qualify. The Deluxe version is just $6.99 if you have a more complicated tax situation. (and State is $12.95)
If you have to pay, there’s a 10% off coupon code – FREETAXUSA10 (Thanks Thomas!)
We took a deeper look at FreeTaxUSA.
Income Below $72,000
The IRS has a Free File program that lets you use well known free tax preparation software from brands you recognize like H&R Block, TurboTax, TaxACT, and many more. Not every program is available to every income level and there are other conditions, but this is the definitive resource for finding the right provider for you. There are 13 providers on the page and the table lists the conditions of the free software.
Or you can use their tool to help narrow down the list of providers.
For example, TurboTax Free File Program has an adjusted gross income limit of $39,000 then it’s free. If you made more than $39,000 but less than $72,000 but were active-duty military, then it’s free. If you made more but qualified for the Earned Income Tax Credit, then it’s free.
Simple Tax Situations – Form 1040EZ/1040A
If you have a very simple tax situation, you may get free filing if you qualify for the Form 1040EZ or Form 1040A, even with incomes above $72,000.
The Form 1040EZ is a single page with a little more than a dozen boxes. You can be married or single, have no dependents, an income of less than $100,000, and claim no adjustments. All the rules are on the second page. You can use tax preparation software for this if you’d like, it’ll be free, and the only benefit is that you’ll be able to import that information next year.
The Form 1040A is a two page form that is a little more complicated but not significantly more.
In both cases, many preparers will let you file for free.
Volunteer Income Tax Assistance
For those earning $57,000 or less, need additional assistance due to disability, age, or limited language, the Volunteer Income Tax Assistance (VITA) program or the Tax Counseling for the Elderly (TCE) can help. You can find more about these programs here.
If you don’t qualify from an income perspective or filing status, you might be able to get it through a tax preparer’s partner:
- Active duty military: Many tax preparers offer discounts or free filing for active-duty military, such as TaxSlayer’s Military Discount Offer ($0 federal filing) and TurboTax military discount (currently free filing). If you are active, you should also check the Free File program because there are often exceptions to the income rules if you are active military.
- Fidelity customers can get a $20 discount on TurboTax products. click here for Fidelity. Vanguard used to offer this but no longer does so.
- Robinhood offers $20 off federal filing products on TurboTax for 2021.
- Southwest Rapid Rewards Shopping offers 1,000 points if you file your taxes with TurboTax going through their Shopping portal. This is valid for the Free Edition too.
- American Express cardmembers may see a statement credit offer of $15 after a $40 purchase at H&R Block – check under Amex Offers & Benefits.
- Many of the tax preparers still sell software. You can buy it from retailers like Amazon.com, Costco, and many others. It’s often slightly cheaper to buy the software versus doing it online because of the filing costs. For example, TurboTax Deluxe Federal + State Taxes is just under $40 on Amazon. TurboTax Deluxe on the TurboTax homepage is $30 + $35 per state filing. TurboTax Home & Business is just under $65 for the disc.
I will update this post with discounted options as they become available.
One final note, to get your refund as quickly as possible, remember to e-File and elect for direct deposit of your refund.
Once your return is accepted, your direct deposit is initiated in about a week. A paper check takes an extra day before it is sent, which means it’s several mor.
e days before it makes its way through the postal system and gets to your mailbox.
Then you deposit it and it’ll take a few more days to clear. Direct deposit will get you your own money at least a week faster than a paper check… plus there’s a zero chance it gets lost.