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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 congress. 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 2012 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. 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. The programs nag for upgrade on every start up and at several points during the interview process. |
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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:
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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. 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 have to be able to calculate the simplified method yourself. They do provide a link to a downloadable PDF to guide you through it. Don't use this product if you have a capital loss carryover. They don't have a provision to handle this. Can't calculate simplified method for employee pension contributions. Doesn't calculate estimated state sales tax for Schedule A. Does not calculate medical mileage amount. Didn't include mortgage insurance premiums with mortgage interest on Schedule A. Did not calculate penalty for 1040 line 77. State returns are free if adjusted gross income is less than $20,000. |
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Related Products and Links
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State return available.
State return available
Identical to FreeTaxUSA.
Identical to TaxHawk.
No state returns.
This rating is entirely based on forms handled--ease of use would be a one.
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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
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
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.
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
For TaxACT, your Discussion says "State returns are $14.95 for the download version and $9.95 for the online version." However, your Quick Selection Guide says "State return is $21.95" for the download version and "State return is $14.95" for the online version.
- The TaxACT website currently says "$14.95 per state" for the download version and "$17.95 State" for the online version.
-- At the risk of getting out-of-bounds for a free-SW site, I note an oddity about the pricing on the TaxACT website. With a free Federal return, their download State return costs LESS than the online version, but with the Deluxe Federal plus State (including "Import prior year data" and "Extra calculators & reports" and free "phone ... support") bundle, the download version ($21.95, which they tout as being a 20% discount--but compared to what?) costs MORE than the online version ($17.95).
For "TaxHawk and FreeTaxUSA", you say that a free Federal return requires: "Adjusted Gross Income: $57,000 or less, and Age: between 23 and 64". However, the TaxHawk website says, "Prepare, print, and e-file your federal taxes online for FREE! No restrictions on this offer," and FreeTaxUSA says the equivalent.
Thank you for your comment. Good catch on both issues. I copied the TaxHawk and FreeTaxUSA comments from the IRS Free File website. Next year I'll double check with the source websites.
Rick
Thanks, Rick. And I, likewise, didn't check the IRS Free File website, where I see that these (and other) vendors offer different terms than on their own sites. So, let that be a lesson to us all.
I suspect that the IRS Free File program requires participating vendors to impose restricted qualifications. Note that their Free File website says "Everyone can use IRS Free File. If your adjusted gross income was $57,000 or less in 2011, use brand-name software to do your taxes for free. If your income was more, use Free File Fillable Forms." I suspect also that the requirement for restricted qualifications is imposed by the entrenched major vendors, as a competitive barrier against the newer firms.
You can go to a local service center and have someone help you with returns. If you are disabled or have a complicated tax problem you can call the service center, leave a messgae and they will make an appointment with you.
If neither one applies, you can not make an appointment. it is first come first serve. My advice: Check the hours of operation. And be one the first in line.
Do not show up after 3. They will tell you they won't be able to finish in time and you'll have to come back tomorrow. Also, avoid busy times around April 15th and Octobber 15th.
Go here to find your closest service center:
http://www.irs.gov/uac/Contact-Your-Local-IRS-Office-1
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