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All Contents © 2020The Kiplinger Washington Editors
By Sandra Block, Senior Editor
Rivan V. Stinson, Associate Online Editor
| March 14, 2019
There are more ways than ever to prepare and e-file your tax return at no charge. Most of the major tax-software providers offer free versions of their products for taxpayers with straightforward returns (no itemized deductions or self-employment income, for example).
Even if your tax return is more complex—you have a lot of investments, for example, or income from a side gig—you may qualify for a free program. But before you start plugging your numbers into any program, read the fine print and disclaimers. Some providers offer a free federal tax return but charge a hefty price for a state tax return. And in some cases, simply reporting contributions to a health savings account will make you ineligible for a free program.
Keep information security in mind throughout your tax prep and filing. Use a strong password for your software log-in (not “password” or your dog’s name). Be wary of e-mails purporting to be from your software provider; so-called phishing e-mails are used by scammers to obtain your personal information. Don’t click on links included in e-mails. If you need to communicate with the software provider, do it through the provider’s website.
Prices are as of March 12, 2019.
Courtesy H&R Block
Who can use it: Taxpayers with W-2 income who claim the standard deduction
State tax return included? Yes
Website: H&R Block
Taxpayers who deduct student-loan interest, receive the child tax credit or rent can file their federal and state tax returns free with H&R Block.
Users can electronically import information from last year’s tax return, whether it was prepared using H&R Block’s program or a competitor’s product.
If you contributed to a health savings account in 2019 or have mortgage interest to deduct, you’ll need to upgrade to H&R Block Deluxe, which costs about $90 for a federal and state tax return (prices are as of March 12).
Who can use it: Taxpayers with W-2 income who claim the standard deduction and have less than $1,500 in dividend or interest income
TurboTax Free Edition is a good option for taxpayers with simple tax returns, but you’ll have to upgrade to one of TurboTax’s paid programs if you have investment or self-employment income or you contributed to a health savings account last year.
You can get a jumpstart on your return using last year’s TurboTax information or you can import a PDF file of your 2017 return done with a competitor. You can also electronically import your W-2 forms, or you can import the information by taking a photo of your Form W-2 with your smartphone.
Courtesy Credit Karma Tax
Who can use it: Most taxpayers, including those with self-employment or investment income
Website: Credit Karma Tax
Unlike many other free tax-prep programs, Credit Karma Tax isn’t restricted to users with simple tax returns. Taxpayers with income from investments or self-employment can use this program. You can import information from prior years’ tax returns from TurboTax, H&R Block and TaxAct. Credit Karma also allows you to import W-2 forms from major payroll providers. If your payroll provider isn’t supported, you can take a photo of your W-2 with your smartphone to import your data.
If you need to file a return for more than one state, you can do your federal tax return on Credit Karma, but you’ll have to use another program for your state returns.
As it does with its offer of free credit scores, the company plans to market related products to taxpayers who use the free program based on the personal information they provide. For example, Credit Karma could use your income to trigger an offer for a specific credit card. If you sign up for the credit card, Credit Karma receives a fee. If that makes you uncomfortable, you can opt out and still use the tax-filing product.
Who can use it: Taxpayers with simple returns
If you want to import your W-2, deduct mortgage interest and/or claim dependents, you must use TaxSlayer Classic, which costs $46 for a federal and state tax return (prices are as of March 12).
TaxSlayer’s free version offers e-mail and phone support, but you’ll need to upgrade to TaxSlayer Premium, which costs $66 for a federal and state tax return, if you want live-chat support from a tax pro.
Courtesy Free Tax USA
Who can use it: All taxpayers
State tax return included? No
Website: Free Tax USA
The federal program is free and isn’t limited to taxpayers with simple tax returns. You can use it to report self-employment income, along with income from investments. A state return costs $12.95 (prices as of March 12).
If you want live support chat and audit-assist protection, you must pay $6.99 to upgrade to the deluxe version.
Who can use it: Taxpayers with income from a W-2 and/or retirement savings and no dependents
You can file a federal return for free with TaxAct, but a state return will cost you $19.95 (prices are as of March 12). You can also import data from PDF files of last year’s returns prepared using TurboTax or H&R Block programs.
If you have dependents, you must upgrade to TaxAct Basic, which costs $14.95 to prepare and file a federal tax return and $19.95 to prepare and file a state tax return.
Courtesy Internal Revenue Service
Who can use it: Taxpayers with 2018 adjusted gross income of $66,000 or less
State tax return included? Varies, depending on tax-software company
Website: IRS Free File
This year, 12 private tax-software companies are participating in the IRS Free File program. Each participant has its own criteria. TurboTax All Free, for example, is limited to taxpayers with adjusted gross income (AGI) of $34,000 or less, or those who are eligible for the Earned Income Tax Credit. Another option, eSmart Free File, is available to anyone with AGI of $66,000 or less, as long as they’re 53 or younger. Some programs are available only to taxpayers who live in specific states. Find the right free program for you via the IRS's look-up tool.
Free File isn’t limited to taxpayers with simple returns. If you itemize or have income from investments or self-employment, you can prepare and e-file your federal tax return (and in some cases, your state tax return) free, provided you meet the AGI requirements.