The Internal Revenue Service (IRS) strongly encourages taxpayers to file their taxes electronically, rather than submitting paper forms. E-filing increases accuracy, allows your return to be processed faster so you get your refund sooner, saves paper, and is more secure.
But, what's the best way for taxpayers to e-file? For many taxpayers, the answer is a free e-filing service. But is free e-filing right for you?
What is a free e-filing service?
Free e-filing services are software programs that people whose income is below $66,000 can use to file their federal taxes without paying any money for the software or to actually file their return.
If your income is above $66,000, you can't use a free e-file service, but free fillable forms from the IRS are available to you. These free fillable forms do not provide the same level of support and assistance provided by free file tax software.
The IRS has a list of free e-filing services on its website, including:
It's important to know that the eligibility rules for these free e-file software programs differ from each other. While Online Taxes at OLT.com provides fee filing for taxpayers with incomes below $66,000, other software programs have lower income thresholds or age limits to qualify for free filing.
To make sure you don't incur a cost, look carefully at the IRS list of free e-filing services and find a service that you truly qualify to use for free given your specific situation. Read the fine print and don't assume they are all free to you just because they're on the list.
Should you use a free e-filing service?
Many of the free file software programs the IRS lists are top-rated tax software programs that make it easy to complete your tax forms by asking you simple questions to identify deductions and credits you qualify for. They also guide you through the process of figuring out which forms you need and how to complete them accurately.
These software programs can be free to use and make doing your taxes so much easier. There's little reason not to opt for free e-file if you qualify, although there are certain scenarios in which using the free e-file option is not optimal, like if your taxes are complicated, you require more help than the software programs provide, or you qualify for free in-person help and prefer that to online filing.
The free software programs may not be comprehensive enough for you if you've never filed taxes before, experienced lifestyle changes that affect your deductions and credits like having a baby or buying a home, have income from many different investments, or you run a business. In these circumstances, you should definitely seek in-person help if you qualify for free assistance -- and you may even want to bite the bullet and pay for tax help from a professional if you're ineligible for the free face-to-face programs.
The IRS provides information for two sources of free in-person tax help: Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) Programs. VITA offers assistance to taxpayers with incomes under $55,000, as well as to people with disabilities, or individuals who have difficulty with the English language. TCE helps taxpayers who are 60 or older file their returns.
Both VITA and TCE can e-file your returns for you, so you get the benefit of timely refunds and faster tax filing -- but you don't have to navigate a free e-file program on your own. If you qualify for free help and want the extra hand-holding, taking advantage of these services can be a better option than free e-file software.
Choose the right e-filing service for you
If you decide to use a free e-filing service, make sure you select one that's right for you.
Look for a software program that has a good reputation for its ease of use. And, if you live in one of the majority of states that collect state taxes, try to find a program that will allow you to file your state tax returns for free, as well as your federal returns.
It's easiest to stick with using the same tax filing software from year to year, as the program usually maintains records from the prior year and should automatically fill in parts of the forms for you. So, it's worth doing the research up front to find a program that works well and is affordable so you can stick to using it each year.
Free e-file can help make filing returns easier
If you make less than $66,000 a year, you don't qualify for free in-person tax help, and you don't have an especially complicated return, free e-file is often the best and cheapest way to take care of your tax obligations. There's little reason to pay for software programs when there are good free tools available, so take the time to find one that's right for you.