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Best Free Income Tax Filing Software and Service
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In a Hurry?
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Go straight to the Quick Selection Guide |
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Introduction
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Free or low cost alternatives are probably more important today than in past decades. The USA tax code becomes more complex with each new administration. We could all use help in ensuring our returns are accurate. The IRS Free File site lists many options for filing Federal Income tax returns. I tested all of the programs listed by the IRS and include their ratings below. I tested several scenarios including the more common filing status, exemptions, income, adjustments, credits, other taxes, payments, etc. All of the recommended programs prepared accurate 2011 returns with all appropriate schedules. Unless otherwise noted, all of the recommended programs and online applications:
I don't have experience with tax preparation for other countries but encourage you to share your suggestions so I can include the links in the Related Products Section. If you feel overwhelmed you might check out the IRS VITA and TCE free federal and state tax return preparation by volunteers. They can prepare most returns but some situations are out of scope for them, e.g. seperate returns in a community property state. |
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Discussion
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TaxACT offers two versions. TaxACT Free Edition is the only free tax preparation program for download. TaxACT Free Edition Online is the online version of the same program. Both versions are virtually identical except that the download version is limited to only one return and the online version lacked the form view section at the bottom of each page. I found the step-by-step interview process to be straightforward. I liked the help screen display on the right. I could easily add a mini-schedule to any numeric field which would be very helpful in recording the details of an entry for later recall. I could easily choose between step-by-step guidance and quick entry. The quick entry popped up a form similar to the actual IRS form. This would be very helpful for anyone who wants to save time and is already familiar with the specific section. I could bookmark sections I wanted to revisit. Navigating back and forth is easily accomplished by either selecting jump to topic; selecting the tab, sub-tab, and review for the appropriate section; or by directly selecting the forms in the forms view. I imported personal info from a PDF of last years return. Helpful but not a huge labor saver. I would have been more excited if the numbers were imported also. The form view section at the bottom of each page of the download version was very helpful. I could make entries directly in the form. However this would not bypass any of the step-by-step interview like the quick entry selection would. The program nags for upgrade on every start up and at several points during the interview process. State returns are $14.95 for the download version and $9.95 for the online version. |
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HR Block Free File is free if you meet the age and Adjusted Gross Income (AGI) limitations. The state return for some states is also free if the federal return is free. The help screens always displayed a topic related to the current window. Navigation is by a menu bar. No bookmarks and no mini-schedules. I liked that a dual Federal and State tax refund/owed was displayed after the state return was started. You could make changes to areas on the Federal return and see if the amount saved on the federal side was more than offset by an increase in the state taxes or vice versa. For example, tuition might give a larger reduction to the total taxes if used as a reduction to the income instead of using it as a Federal tax credit. Doubtful but possible. Eligibility criteria for free return:
State returns are $14.95 if you don't qualify for the free state filing. |
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TaxHawk and FreeTaxUSA are identical except for the name and styling differences. Indeed an account in one carries over to the other. The interview process was fairly easy to follow. I liked the ability to bookmark sections. Navigating was accomplished by tabs at the top but was limited to entire sections of the return, e.g. the entire Itemized Deductions Schedule A section. No form navigation provided. Eligibility criteria for free return:
FreeTaxUSA state returns are $9.95 and TaxHawk, $12.95. Free if your AGI is less than $20,000. |
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FileYourTaxes.com is another alternative. The interview process is a bit more difficult than the above but not too bad. Schedule A Medical does not ask about medicare insurance nor calculate medical mileage. Foreign tax deduction defaults to Schedule A taxes; process to take the deduction as credit is confusing. Log in process requires entering all information as if registering for the first time. Eligibility criteria for free return:
State return is $23.50. |
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Related Products and Links
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State return is $21.95.
State return is $14.95
Free State filing for the following states: AL, AR, GA, IN, MI, MN, MO, NY, NC, OK, OR, SC, VA.
If you don't qualify for free state filing, the cost is only $14.95.
Identical to TaxHawk. State returns are $9.95
Identical to FreeTaxUSA. State return is $12.95
State return is $23.50.
State return is an additional $27.95
No state returns.
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Editor
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This category is maintained by volunteer editor okrick. Registered members can contact the editor with any comments or suggestions they might have by clicking here. |
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Tags
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free tax preparation, best free tax preparation, free tax preparation programs, free tax preparation program, tax preparation software, free tax preparation software, tax preparation program free, tax preparation programs, tax preparation, online tax preparation |
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Comments
Regarding this statement in the opening paragraph: "We could all use help in ensuring we receive the maximum refund allowable.".
What it should have read is that everyone needs help in figuring out how not to make a no-interest loan to the government because he or she did not manage his or her deductions properly.
If you are getting too much of a refund, add a deduction to your account with your employer so you have your money during the year.
Of course, there are those that use it as a savings account so those folk can ignore this comment.
Good point. I'll rephrase the statement.
Rick
Thanks okrick. I've never filed via e-file and was a bit adamant about an old dog like me learning new tricks. I used TaxACT for the simple reason that I could download the program to my PC. This way I can skim through it and gather documents as requested at my leisure. It worked well for me, very informative and easy to use. The only thing I saw that was poorly executed was they place a "check for updates" button in the program AFTER you have finished filling out the forms. They should have that on the very first page BEFORE you start working with the program. The only other feedback I have about TaxACT is for anyone who is retired military. Get ready to scratch your head and say "WTF" along with a few other colorful expletives. I don't know if it's a TaxACT problem or an IRS problem, but the program insists that if you are under the age of 59, you can't possibly have a 1099R. It does let you submit it, but it will keep badgering you telling you that it can't be correct. (Somebody at TaxACT or the IRS need to do some simple math. I joined at the age of 18. Twenty years later, I retired at the age of 38.)
Gator,
Thank you for your comments.
I agree with you somewhat about the Check for Updates issue. But I don't think it is that critical. I started my return before the updates. When I finish my return any updates may have impacted an area I already completed. I expect them to alert me to any issues that may have been created during the review process. Some of the online preparers delayed issuing their program until 14 January 2011 when the IRS first allowed e-filing to avoid this problem entirely.
When I clicked the Military Pension option on the page titled Retirement Plan Income - Special Distributions I didn't get an alert. But if I left it unchecked then the program did give me an alert for having a Normal Distribution Code 7 which would be uncommon but not impossible for someone under 59 1/2 who is not a military retiree. You might want to go back and check that option on your return.
Rick
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