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Pro Tip: File Taxes Online

By Selena Maranjian - Updated Feb 27, 2017 at 9:51AM

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File taxes online and get your return faster. Here's what you need to know about using software to prepare your federal and state tax return.

One of the best ways to get your tax return in is to file taxes online. You can prepare both your federal and state forms efficiently with software -- and by filing electronically, you'll get your refund faster, too. Best of all, it's inexpensive -- and sometimes free.

How to file federal and state taxes online

So how do you go about preparing your return online? There are several ways. Through the IRS's Free File program, about 70% of taxpayers are eligible for free tax preparation online. To qualify, your adjusted gross income (AGI) needs to be $64,000 or less for the 2016 tax year.

Happy successful man in glasses with raised hands in front of computer at office

Image source: Getty Images.

For those who qualify, there are a range of companies (some rather well known, such as H&R Block and Intuit, maker of TurboTax) offering free federal tax preparation software and, in some cases, free state tax preparation, too. Some require lower AGI levels than $64,000. Here's a summary of just some available services:

  • FreeTaxUSA IRS Free File Edition: This offers a free federal return if your AGI is $51,000 or less and you're between age 17 and age 60. Free state returns are available for some states.

  • TurboTax All Free: You can get a free federal return if your AGI is $33,000 or less -- or if you're eligible for the Earned Income Tax Credit (EITC), with free state returns available, as well.

  • Online Taxes at OLT.com: This offers free federal and state returns if your AGI is between $13,000 and $64,000.

  • ezTaxReturn.com: You can get a free federal return if your AGI is $64,000 or less and you live in Alabama, Arkansas, Arizona, California, Colorado, Georgia, Illinois, Louisiana, Massachusetts, Maryland, Michigan, Missouri, Mississippi, North Carolina, New Jersey, New York, Ohio, Pennsylvania, Virginia, or Wisconsin.

  • H&R Block's Free File: Free federal and state returns are available if your AGI is $64,000 or less and you're between the ages of 17 and 50, or if you're eligible for the EITC.

  • TaxAct Free File: A free federal and state return is available if your AGI is $52,000 or less and you're 56 years old or younger -- or if you're eligible for the EITC.

This list isn't comprehensive. Online, you can look up exactly what's available to you given your AGI, age, and state.

red traffic light in front of building with IRS plaque on it

Image source: Getty Images.

Other free federal and state tax-filing software programs

There are other free filing options available to many taxpayers. Following are two major ones, but if you favor another tax-prep company, look into what it offers.

  • TurboTax: Intuit offers an "Absolute Zero" program, featuring free state and federal tax filing if you meet the following conditions: You're preparing a 1040EZ or 1040A form, not the full-length 1040 form. You earned less than $100,000 in 2016, didn't own a home or rental property, didn't sell any investments, didn't own a business or have 1099 income, and didn't have major medical expenses.

  • H&R Block: H&R Block offers a "More Zero" software package, featuring free federal and state returns if you're using the 1040EZ form, the 1040A form, or the regular 1040 form with Schedule A.

  • Credit Karma Tax: This is a new offering that's probably making investors in Intuit and H&R Block nervous, as it offers free tax filing for more complicated returns -- where the other companies make much of their money.

What it costs if it's not free

Of course, because of your income level or the complexity of your tax return, you may simply not qualify for free filing. That's OK, because using tax-prep software is generally considerably less costly than hiring a human tax preparer. A human tax preparer may cost several hundred dollars (which can be well worth it if he or she is a skilled tax pro able to help you employ tax-saving strategies) -- but good software programs can be used for around $125 or $100 or less.

Filing your federal and state taxes online can make your whole tax-prep process easier -- and by e-filing your return with the IRS, you'll likely get your refund much more quickly, too.

A final thing to know is this: The deadline for filing your tax return in 2017 is April 18 (because the 15th falls on a weekend and the 17th is a holiday). You can always file for an extension with the IRS if you need to, but know that you still have to pay by the 18th. The extension is for the filing of your full return, not for payments.

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