Best Free Income Tax Filing Software and Service

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Introduction

I tested several scenarios including the more common filing status, exemptions, income, adjustments, credits, other taxes, payments, etc.  The recommended programs covered far more situations than those listed at IRS Free File.  All are feature limited versions of commercial programs so expect to be nagged. 

State income tax returns may or may not be free depending on several factors such as your state, income, etc.  A taxpayer may be able to complete their state return for free using the information from the federal return.  Finally see the IRS VITA and TCE link immediately below.

The IRS Free File site also lists many options for filing Federal Income tax returns.   Beware, a few of the listed services don't nag and therefore don't necessarily warn that the taxpayer no longer qualifies for a free return.

I don't have experience with tax preparation for other countries but I included the links provided by commenters in the Related Products Section.


If you feel overwhelmed please contact the IRS VITA and TCE which provide free federal and state tax return preparation by volunteers.  The volunteers can prepare many returns but some situations are out of scope for them, e.g. separate returns in a community property state or Schedule C with inventory.     

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

TaxHawk and FreeTaxUSA® IRS Free File Edition

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

Is a web service or web application
2015
Feature limited freeware

TaxHawk and FreeTaxUSA are identical except for the name and styling differences. 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.

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.

TaxHawk owns both sites.

If you have a 1099R with taxable unknown and employee contributions then you must calculate the simplified method yourself. They do refer user to appropriate IRS publication.


Doesn't calculate whether state tax refund is completely taxable (does ask questions to determine if some was taxable and does provide a pdf worksheet to calculate the taxable part).

Doesn't calculate estimated state sales tax for Schedule A but clicking the "?" does provide a link to the IRS Sales Tax Deduction Calculator.

TaxACT Free Edition

4
 
Runs as a stand-alone program on a user's computer
2015
26.3 MB
32 bit but 64 bit compatible
Feature limited freeware
There is no portable version of this product available.

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.

TaxACT is the easiest of the rated programs to navigate. Also every form calculation tested was directly supported.

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.

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.

College Student Financial aid worksheet.


Small business, capital gains, rents, or farm income not included in free version.

No provision to apply portion of refund against next years taxes.

State returns are not free.

Windows

TaxACT Free Edition Online

4
 
Is a web service or web application
2015
Feature limited freeware

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.

TaxACT is the easiest of the rated programs to navigate. Also every form calculation tested was directly supported.

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.

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.

College Student Financial aid worksheet.


Small business, capital gains, rents, or farm income not included in free version.

No provision to apply portion of refund against next years taxes.

State returns are not free.

 
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.

 
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Comments

This year, TaxAct is forcing people who don't need to file a state return to pay for one anyway.
Because of ONE small sale (under $100) of stock to cover a required minimum distribution from an inherited IRA, I have to pay $29.99 or more for a version that provides far more than I need.
I'm really bummed at TaxAct for this - I download the program and mail in the form because I don't trust any website to keep all my info secure and refuse to do any "free" prep online.
After years of getting spoiled by not having to decipher hundreds of pages of tiny print in the instructions and not having to do my own math, I'm beyond outraged and disappointed that we're being coerced to pay for things we don't need.
Not sure how to proceed at this point. I may use the free software as far as possible, then print it out and fill in the rest of the forms by hand.
Any tips on sites that still let you download a FREE version of the federal return that includes things like Schedule A, B, and D info is very welcome!

There are no others. You should be thankful Taxact still produces downloadable free feature limited software. My suggestion is actually your idea "I may use the free software as far as possible, then print it out and fill in the rest of the forms by hand."

"TaxACT Free Edition is the only free tax preparation program for download."

That sucks. Now I remember the fact, but it still sucks. I used them for years, switched to TT for a few years when a friend was bootlegging a few copies, and I used TaxACT again for years. I prefer to do mine offline, print, and post them. H&R Block has local tax accountants, but why should the other companies know your business, when your only connection back to them is via their corporate web pages and robot-call-screeners?

TaxAct removed the forms/schedules from the free version this year (all or most of them?). I only need a very few of them. Sometimes I itemize, evaluate, and then switch back to the standard deduction. All the forms were there before. They were linked for calculations; the directions were linked; and you could override/toggle the form-data influence on the 1040 calculations to consider the difference (itemize or not, for example). Now TaxACT wants to profile you ahead to sell you a package with the forms. Even the first pay-tier seems really thin on forms/schedules. I think a relatively simple return could now force free filers to the second pay tier.

I just found Open-source Tax Solver (OTS): http://opentaxsolver.sourceforge.net
But, I don't know anything about it yet. Many software programmers have said never trust FOS Software for something like tax filing. They say, "don't risk it, and pony up for commercial software or even an accountant". If you have some complex issues, the accountant can research them and discuss how to file/report them better than any program. Also an accountant will optimize the return for the payer, while the IRS probably will not. The nuance is in the interpretation of thousands of pages of mumbo jumbo that are supposed to indicate what, and what fractions, are to be reported where and when. Making those data flow across forms and processing them might be done fine in many cases with many different tax softwares if you don't need a full tax-accountant service. The commercial programs link the instruction files nicely. Sometimes they have useful pointers to further explain the instructions, but other times they obscure or block the instructions with a forced "interview" and dumbed down script.

If you live outside the U.S., TaxAct will not work, the TaxAct website is blocked. Please read my e-mail to them and their reply!!!
axACT Customer Support

Initially, in Feb. 2016, I was able to access your TaxAct website and download and pay for the Plus version. Then, as I live in Panama, Central America, it seems that you have prevented clients from outside the U.S. or at least Panama, from accessing your website!!! I had to go, in an around about way, to update your TaxAct program and to submit my IRS return to the government. After paying for your product, I had to jump through loops to get it to the IRS.

I have been a TaxAct Client, for many years, but I now guess that you aren't interested in your outside U.S. Client business. I must tell you that it seems criminal to allow your program to be downloaded and paid for and then to cut off the client from updating the program or submitting to the IRS a legitimate return!!! There is nothing illegal for outside U.S. clients to submit IRS returns, as a matter of fact, we go to jail if we do not submit a return.

I await your comment as to why your policy has changed from 2014 to 2015.

Patrick
Republic of Panama,
Central America
-----------------------------------------------------------------------------------------------
Dear Patrick,

TaxAct takes the security of our customers and their information very seriously. We have industry-standard security protocols in place and are taking additional measures this tax season to further protect our customers.

Only accepting returns originating from US-based computers is one example of the extra steps we are taking to protect the security and data integrity of our customers. We are truly sorry that this has impacted you.

Thank you for using TaxACT. Please let us know if you have any further questions.

LauraW

TaxACT Customer Support

Patrick, Thanks for the information. Apparently expatriates will need to rely on one of the other programs I reviewed such as TaxHawk or refer to the IRS Free File. IRS is probably interested in receiving expatriate returns in a form other than paper. Perhaps forwarding your complaint to the IRS might get some attention.

The above generalizations about state tax returns not being free are incorrect.

It can depend on what state or states you are filing in, your Adjusted Gross Income from your federal filing, your age, if you qualify for the federal Earned Income Credit, and more.

I'm a Michigan resident and with my status I can file a free state return with TurboTax, TaxAct, Jackson Hewitt, and a number of other IRS approved on line tax preparation web sites.

If you want to file a state return for free, check the IRS Free File info and look at the various options. Keep in mind that in some cases the IRS info may not be fully accurate and you may need to go to the individual free tax providers web page to see what they offer for your specific situation. It took me less than 15 minutes to find a half dozen options that worked for me.

Thank you for discovering this. I'll modify my comments accordingly.

State returns with TaxHawk are NOT free, regardless of income.

Reviewed their web site. Corrected my comments. Have no idea where I got this from--probably wording changed since I first looked. Thanks for pointing this out. Rick

TaxAct is not really free. By this I mean that it even states before you get started that you can only get the max refund by using the paid Deluxe version.

Also, its import of a previous year's tax PDF file does not work.

"TaxACT Free Edition and Deluxe include a maximum refund pledge for accepted Federal IRS E-file returns" per https://www.taxact.com/taxes-online/. I doubt that the IRS would sanction a tax preparer which offers variable tax calculations (i.e. refunds) depending on the fee paid. I suspect doing so violates Federal law. If it works a pdf import saves no more than 15 minutes of entries. I wouldn't have commented but I had the delusion that the folks at TaxAct might read my comments and do something about it:) I'll remove the comments. Rick

If you need to file a state tax e.g., New York, TaxAct's "free" suddenly jumps to $18 because you need the "Ultimate" bundle, fees, addons, yadda yadda.

I did comment that state returns were not free. These programs are feature limited versions of commercial products and one of the features they charge for is state returns. This also the reason they all nag. The sole exception is the IRS site which lacks state returns. A couple of the other programs do have free state returns if certain criteria are met. An alternative if the state has a free filing website would be file the free federal return then use the federal numbers to complete the state return. This would work best if the state return is somewhat based on the Federal such as California which takes the Federal and adds or subtracts the exceptions. The state site should be able to handle most issues where the state and Federal returns differ. For more complex situations I recommend an appointment with the Vita or AARP volunteer tax preparation services mentioned in the article. Rick