Have you ever been mugged? Probably not, but if someone ever did forcibly raid your wallet, what are the chances you’d throw in the extra $50 you keep on your keychain to tip them for the experience? Pretty slim, I’d wager, but that’s distressingly similar to paying for the “privilege” of filing your taxes.
If you’re tired of paying extra for your annual IRS mugging, then I’ve got good news: If you qualify for the IRS Free File Program, you may never have to pay tax preparation or filing fees again.
Here’s everything you need to know about what the service is and how it works.
What is the IRS Free File Program?
The IRS Free File Program is an official agreement between the IRS and a group of tax preparation software companies who call themselves the Free File Alliance. The program allows Americans to access several user-friendly tax filing systems for free, as long as they meet the eligibility requirements.
The Free File Alliance members process and file federal tax returns without charge, and some will throw in your state return for free too. In exchange, the IRS promised not to compete with them or offer their own software. Instead, the IRS website refers taxpayers to the Alliance members’ sites, which gives them some good press and may help them generate paying business.
Who is Eligible for the IRS Free File Program?
The IRS claims that 70% of Americans qualify for the Free File Program[1]. That’s because the only official hurdle is a modest income limit. You’ll have to earn less than $72,000 in adjusted gross income (AGI) to use the IRS Free File Program for that tax year. Earning that much would put you in the top 73% of earners in the United States, so the IRS statistic is about right[2].
Note that the calculation for your AGI does not include the standard or itemized deductions. If you’re an employee, the most reliable way to reduce your AGI is to contribute to eligible retirement accounts like traditional 401(k)s or Individual Retirement Accounts (IRAs).
📘 Read More: Are you interested in learning more about how retirement accounts can reduce your AGI? Take a look at our guide to the different strategies: Roth or Traditional Retirement Accounts.
IRS Free File Providers
The Free File Alliance members have similar products and services, so you probably won’t find too much variation between their software interfaces. They do have some unique eligibility requirements, though, which might make one more appealing to you than the others.
1. Free 1040 Tax Return
Free 1040 Tax Return is one of the less attractive options on this list. Neither their federal nor their state tax services are available in every state, and there’s no chance for a free state return. They won’t help you file the federal extension form, and qualifying for the EITC won’t automatically make you eligible for the federal free file either (it does for some of them).
| Feature | Description |
|---|---|
| Adjusted Gross Income (AGI) Limits | Up to $72,000 |
| Age Limits | N/A |
| Active Military Returns | Up to $72,000 AGI |
| Support for the Earned Income Tax Credit (EITC) | Yes |
| Qualify via the EITC | No |
| Federal Filing In | All states except AL, DC, FL, IN, LA, MT, NH, NM, NV, RI, SD, TN, TX, and WA |
| State Filing In | CO, CT, HI, ID, KS, MS, NY, OH, OR, and UT. |
| State Filing Price | $19.95 |
| Support for Federal Extensions | No |
2. TaxAct
If you meet the slightly lower AGI limits, actively serve in the military, or qualify for the EITC, TaxAct is a great choice. You can file a federal and state return for free in any state, and they’ll help you file your federal extension.
| Feature | Description |
|---|---|
| Adjusted Gross Income (AGI) Limits | Up to $63,000 |
| Age Limits | Up to 56 (N/A if eligible for EITC) |
| Active Military Returns | Up to $72,000 AGI |
| Support for the Earned Income Tax Credit (EITC) | Yes |
| Qualify via the EITC | Yes |
| Federal Filing In | Any State |
| State Filing In | Any State |
| State Filing Price | Free with Federal |
| Support for Federal Extensions | Yes |
3. ezTaxReturn
You can do better than ezTaxReturn. Both their federal and state return services are limited to a lower than average number of states. Their state fee is also higher than some others on this list, and you can’t waive it. To top it off, they won’t help you file the federal extension form.
| Feature | Description |
|---|---|
| Adjusted Gross Income (AGI) Limits | Up to $72,000 |
| Age Limits | N/A |
| Active Military Returns | Yes |
| Support for the Earned Income Tax Credit (EITC) | Yes |
| Qualify via the EITC | No |
| Federal Filing In | AL, AR, AZ, CA, CO, GA, IL, LA, MA, MD, MI, MO, MS, NC, NJ, NY, OH, PA, SC, VA, and WI. |
| State Filing In | AL, AR, AZ, CA, CO, GA, IL, LA, MA, MD, MI, MO, MS, NJ, NY, NC, OH, PA, and SC. |
| State Filing Price | $19.95 |
| Support for Federal Extensions | No |
4. OLT
OLT‘s offer is a solid choice. They’ll let you file both your federal and state returns for free, regardless of which state you live in. They’ll also file your federal extension form. There is a minimum AGI requirement, though, so you may need to use a different provider if you’re not currently earning much income.
| Feature | Description |
|---|---|
| Adjusted Gross Income (AGI) Limits | Between $16,000 and $72,000 |
| Age Limits | N/A |
| Active Military Returns | Up to $72,000 AGI |
| Support for the Earned Income Tax Credit (EITC) | Yes |
| Qualify via the EITC | No |
| Federal Filing In | Any State |
| State Filing In | Any State |
| State Filing Price | Free With Federal |
| Support for Federal Extensions | Yes |
5. 1040NOW
1040NOW is an average option. They’ll work with most states, but they don’t offer a free state return. Their AGI requirement is only a grand lower than the standard, though, and they do support federal extension forms.
| Feature | Description |
|---|---|
| Adjusted Gross Income (AGI) Limits | Up to $71,000 |
| Age Limits | N/A |
| Active Military Returns | Up to $72,000 |
| Support for the Earned Income Tax Credit (EITC) | Yes |
| Qualify via the EITC | No |
| Federal Filing In | Any State Except: AK, FL, IN, NV, TX, WA, and WY. |
| State Filing In | AL, AZ, AR, CA, CO, CT, DC, DE, GA, HI, IA, ID, IL, KS, KY, LA, MA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NE, NJ, NM, NY, OH, OK, OR, PA, RI, SC, UT, VA, VT, WI, and WV. |
| State Filing Price | $17.95 |
| Support for Federal Extensions | Yes |
6. FreeTaxUSA
FreeTaxUSA has a much lower AGI limit than the standard, which disqualifies their offer for most average income earners (unless they’re active military or qualify for the EITC). FreeTaxUSA also charges for state filings, so there’s little incentive to use them.
| Feature | Description |
|---|---|
| Adjusted Gross Income (AGI) Limits | Up to $39,000 |
| Age Limits | N/A |
| Active Military Returns | Up to $72,000 |
| Support for the Earned Income Tax Credit (EITC) | Up to $72,000 |
| Qualify via the EITC | Yes |
| Federal Filing In | Any State |
| State Filing In | Any State Except: AL, AK, FL, NV, NH, SD, TN, TX, WA, and WY. |
| State Filing Price | $12.95 - $14.99 |
| Support for Federal Extensions | Yes |
7. FileYourTaxes
FileYourTaxes‘ offer is a decent one only if you live in one of the states to which they offer free state returns. Otherwise, their price for state filing is noticeably higher than the others on this list, and there’s little to differentiate them in positive ways.
| Feature | Description |
|---|---|
| Adjusted Gross Income (AGI) Limits | Between $9,500 and $72,000 |
| Age Limits | Up to 65 |
| Active Military Returns | Up to $72,000 AGI |
| Support for the Earned Income Tax Credit (EITC) | Yes |
| Qualify via the EITC | No |
| Federal Filing In | Any State |
| State Filing In | Any State Except: AK, FL, NV, NH, SD, TN, TX, WA, and WY. |
| State Filing Price | Free With Federal in IA, ID, ND, and VT. $29.95 in Other States. |
| Support for Federal Extensions | Yes |
8. TaxSlayer
TaxSlayer is a good choice if you live in one of the states where you can get a free state return. There are quite a few of them, so your odds are pretty good. They also support the federal extension form and have no additional restrictions on AGI other than the standard. Their maximum age limit is lower than most, though, so watch out for that unless you qualify for the Earned Income Tax Credit.
| Feature | Description |
|---|---|
| Adjusted Gross Income (AGI) Limits | Up to $72,000 |
| Age Limits | Up to 51; N/A if Eligible for EITC |
| Active Military Returns | Up to $72,000 |
| Support for the Earned Income Tax Credit (EITC) | Yes |
| Qualify via the EITC | Yes |
| Federal Filing In | Any State |
| State Filing In | AR, AZ, DC, GA, IA, ID, IN, KY, MA, MI, MN, MO, MS, MT, NC, ND, NY,OR, RI, SC, VA, VT and WV. |
| State Filing Price | Free With Federal in: AR, AZ, DC, GA, IA, ID, IN, KY, MA, MI, MN, MO, MS, MT, NC, ND, NY, OR, RI, SC, VA, VT, and WV. $32 in Any Other State. |
| Support for Federal Extensions | Yes |
9. TurboTax
I’m sure you’ve heard of TurboTax, but that doesn’t make their offer the best one on this list. Their AGI limit is far below the standard, which again disqualifies them for many taxpayers. That said, if you can meet the requirement or are active military, they’re a good option. They won’t file your extension, but your federal and state returns would be free.
| Feature | Description |
|---|---|
| Adjusted Gross Income (AGI) Limits | Up to $39,000 |
| Age Limits | N/A |
| Active Military Returns | Up to $72,000 |
| Support for the Earned Income Tax Credit (EITC) | Yes |
| Qualify via the EITC | Yes |
| Federal Filing In | Any State |
| State Filing In | Any State |
| State Filing Price | Free With Federal Return |
| Support for Federal Extensions | No |
What You Can Do if You’re Not Eligible
If you’re not eligible for any of the IRS Free File Program offers, you can still file your federal return for free. The IRS provides Free File Fillable Forms (say that five times fast) specifically for taxpayers whose AGI is above $72,000. They’re blank electronic copies of the federal tax forms that go into your tax return. If you’re comfortable filling them out yourself, you can do so.
😞 Unfortunately, if you have to use the Free File Fillable Forms, you’ll need to find another solution for your state forms. Start by checking with your state’s tax agency. Many of them offer their own free file systems.
Pros and Cons of the IRS Free File Program
The IRS Free File Program is a great resource for taxpayers who meet the eligibility requirements and have relatively simple tax returns. It’s (obviously) free and most of the software products are user-friendly. If your only sources of income are a W-2 job and some savings account interest, you can probably go ahead and go with one of the options above. By the same token, if you are filing taxes for the first time, you can probably go with one of these options.
If you have a more complicated tax situation, you may want to bite the bullet and pay for a legitimate tax preparation service, even if you qualify for the IRS program. For example, you might want to get expert help if you’re:
- Self-employed and considering or already using a separate business entity
- Actively investing in or holding real estate properties
- Approaching retirement or considering making adjustments to your portfolio
All of these potential scenarios can make your tax returns a lot more complex, and the IRS Free File Program probably won’t offer enough guidance for you to optimize your strategy. If you’re not sure whether you need help, reach out to a Certified Public Accountant for a free consultation. It’ll cost you nothing but time, and they’ll be able to tell you whether tax preparation services will add value.
📘 Learn More: Tired of handing over so much cash to the IRS? Take a look at our favorite ways to pay less in taxes: 8 Practical Ways to Cut Your Taxes in 2021.
