Best Free Income Tax Filing Software and Service

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Introduction

The IRS Free File site lists many options for filing Federal Income tax returns.

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 2013 returns with all appropriate schedules.

Unless otherwise noted, all of the recommended programs and online applications:

  • E-file for free.
  • Allow printing and submitting the return by mail.
  • Choice of an interview process or direct form entry.
  • Display tax guidance on data entry screen or only one click away.
  • Have a review process to alert the user to errors and omissions or potential problems.
  • Automatically transfer data to other sections of the return, e.g. Medicare payments on SSA-1099 worksheet or state and local tax entries on W-2 worksheet are transferred to Schedule A.
  • Require registration.
  • Offer state tax returns for a fee.
  • Nags about state returns or other for fee services.

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. 

 
Discussion

 TaxHawk and  FreeTaxUSA are identical except for the name and styling differences.  Indeed an account in one carries over to the other.  Uses a mixture of interview and form entry process.  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.

If you have a 1099R with taxable unknown and employee contributions then you must calculate the simplified method yourself.  They do provide a link to a downloadable PDF to guide you through it.

Doesn't calculate estimated state sales tax for Schedule A.  Does not calculate medical mileage amount (did indicate how to calculate this yourself).

State returns are free if adjusted gross income is less than $20,000.

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.  Most IRS forms are supported.

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 impressed 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.

HR Block 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.

Eligibility criteria for free return:

  • Adjusted Gross Income: $57,000 or less, and
  • Age: 52 or younger, and
  • Live in any state or U.S. Citizens and resident aliens with foreign addresses

TurboTax is free to filers eligible for filing 1040A plus filers with Schedule A itemized returns.

Good interview process. Can navigate at will to other topics once basic and income information is entered. Supports Schedules A, B, EIC, and R.

Schedule C, D, E, F, H, or SE not available with free version.

 
Related Products and Links
USA:
Canada:
California State Taxes:
Colorado State Taxes:
Connecticut State Taxes:
Delaware State Taxes:
Malaysia:
Singapore:
 
Quick Selection Guide

TaxHawk
5
 
Gizmo's Freeware award as the best product in its class!

Is a web service or web application
Free state returns if AGI less than $20,000. Bookmark feature. Mixture of interview and form input. Many of the screens mimic the forms. The program is noticeably quicker than others, e.g. less of a delay between completing one screen before the next appears.
Can't calculate simplified method for employee pension contributions (did provide instructions to calculate this yourself). Doesn't calculate estimated state sales tax for Schedule A. Does not calculate medical mileage amount (did indicate how to calculate this yourself).
https://www.taxhawk.com
2013
Free for private use only
Browser

Identical to FreeTaxUSA.

FreeTaxUSA® IRS Free File Edition
5
 
Gizmo's Freeware award as the best product in its class!

Is a web service or web application
Free state returns if AGI less than $20,000. Bookmark feature. Mixture of interview and form input. Many of the screens mimic the forms. The program is noticeably quicker than others, e.g. less of a delay between completing one screen before the next appears.
Can't calculate simplified method for employee pension contributions (did provide instructions to calculate this yourself). Doesn't calculate estimated state sales tax for Schedule A. Does not calculate medical mileage amount (did indicate how to calculate this yourself).
https://www.freetaxusa.com
2013
Free for private use only
Browser

Identical to TaxHawk which owns both sites

TaxACT Free Edition
4
 
Runs as a stand-alone program on a user's computer
Downloaded program. Fast and easy to use. Can add mini-schedules to most fields. College Student Financial aid worksheet. Can file most Federal forms and schedules.
No provision to apply portion of refund against next years taxes.
https://www.taxact.com
2013
21.6 MB
32 bit but 64 bit compatible
Free for private use only
There is no portable version of this product available.
Windows
TaxACT Free Edition Online
4
 
Is a web service or web application
Fast and easy to use. Can add mini-schedules to most fields. College Student Financial aid worksheet. Can file most Federal forms and schedules.
No provision to apply portion of refund against next years taxes.
https://www.taxactonline.com
2013
Free for private use only
Browser
H&R Block
3
 
Is a web service or web application
Don't need account to try. Excellent interview process.
Simplified method calculation not available for pensions nor does the program prompt as to what entry is expected as the taxable amount or how it is to be calculated. Small business (schedule C) and Capital Gains (schedule D) are not supported.
https://www.hrblock.com
2013
Feature limited freeware
Browser
TurboTax
3
 
Is a web service or web application
Good interview process. Can navigate at will to other topics once basic and income information is entered. Supports Schedules A, B, EIC, and R.
Free return is roughly limited to filers eligible for filing 1040A plus filers with Schedule A itemized returns. Schedule C, D, E, F, H, or SE not available with free version.
https://turbotax.intuit.com/
2013
Feature limited freeware
Browser
1040.com Free File Edition
1
 
Is a web service or web application
Enters city and state from zip code.
Single or married, under 65 Without kids or dependents Standard deduction Taxable income < $100,000 Free efiling and printing
https://1040.com
2013
Feature limited freeware
Browser
IRS Free File Fillable Forms
1
 
Is a web service or web application
Totally free, i.e. no AGI, age, or state limitations on use. Few form limitations.
Online versions of paper forms designed for people comfortable preparing and calculating their own tax returns. No interview process. No help screens. Most values must be transferred manually from the Schedules to other places in the return. Most calculations must be done manually, e.g. the Federal Tax on line 44. Federal only, no state returns.
2013
Unrestricted freeware
Browser

No state returns.

This application is included only because virtually all forms are handled. However, due to the difficulties of use this is not for folks even slightly intimidated by manually calculating their taxes.

Editor

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.

 
Tags

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Comments

by howiem on 3. February 2013 - 22:49  (105074)

Here's an online tax calculator I came across the other day. Have not had time to test it.
http://www.completetax.com/income-tax/calculators/federal.asp

by rich (not verified) on 13. April 2012 - 18:05  (92048)

Here's another free service that looks interesting, but is not a candidate for a "best" list yet. In fact, I'm not sure that it's ready for prime time. However, diehard free-seekers may appreciate it, and perhaps it will be much better next year.

Yes I-CAN E-FILE
http://www.icanefile.org and http://www.yesicanefile.org
However, you'll pay $9.99 if you start at its home page. On its facebook page ( https://www.facebook.com/ICANEFILE ), there's a post saying, "To file your return for free you will need to [use] the special link found in the "About" section of I-CAN! E-File's Facebook." That special link appears to be
http://www.icanefile.org/?caller=998
Also, California's state tax agency links to them for free e-filing of your Federal and California returns; so perhaps the other states listed below do the same for their taxpayers.

So, with the right starting point, their main advantage is totally free Fed and state prep and efile. One nice touch is that for customers from last year, they import your information, your PIN and your AGI from your 2010 return to your 2011 account.

Their main limitation is that they can do state returns for only 5 states: California, Michigan, Montana, New York (I-CAN! does not e-file New York forms) and Pennsylvania. There are other restrictions, too, listed on the website, as to which tax issues they can handle.

This is an Internet-based application so there is no software to download.

Aside from those limitations, the main disadvantage for me is the frustration of some of the inefficiencies of their site. The one that bugged me the most was that after painstakingly completing the most time-consuming 1099-INT screens I'd ever seen, they didn't put ANY of that info into the Schedule B; all they did is put the total in the 1040. There was no explanation of this on the website, so I then had to waste even more time in their online chat to learn that "If the amount for your 1040, Line 8a is less than $1500, we do not enter this amount on your Schedule B, Part 1, .... Since [the total] does appear on Line 8a on your 1040, that is what and how it should be reflected."

It's run by non-profits, so they ask for a $9.99 donation at the end, but that--or a smaller donation--is optional.

by okrick on 13. April 2012 - 22:43  (92062)

Thanks for the comment. I looked at this site but declined to recommend it this year. Perhaps they'll make the list next year.

Rick

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