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All Contents © 2019The Kiplinger Washington Editors
By Sandra Block, Senior Editor
Rivan V. Stinson, Reporter
| March 9, 2018
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 who file a Form 1040EZ, and some extend their free offers to taxpayers who file a Form 1040A.
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. Others make money by using the information you provide on your tax return to promote products and services.
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.
Who can use it: Taxpayers who file Form 1040EZ or Form 1040A, and itemizers who claim the most-common deductions on Form 1040
State tax return included? Yes
Website: H&R Block More Zero
Taxpayers who deduct mortgage interest, charitable contributions or medical expenses on Schedule A of Form 1040 can file their federal and state tax returns free with 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.
You can use More Zero if you have income from interest and dividends. However, if you need to report capital gains or losses on Schedule D, you’ll need to upgrade to H&R Block Deluxe, which costs about $72 for a federal and state tax return.
Who can use it: Taxpayers who file Form 1040EZ or Form 1040A
Website: TurboTax Absolute Zero
TurboTax Absolute Zero 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.
The free Absolute Zero product lacks some of the features that have made TurboTax the most popular tax-prep program. For example, you can’t import information from last year’s return electronically, even if you used TurboTax to prepare and file your return. However, you can electronically import your W-2 forms, or you can import the information by taking a photo of your Form W-2 with your smartphone.
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 who file Form 1040EZ
Website: Tax Slayer Simply Free
If you have taxable income of more than $100,000, you claim dependents or you have taxable interest of more than $1,500, you must use TaxSlayer Classic, which costs $39 for a federal and state tax return.
TaxSlayer’s free version offers e-mail and phone support, but you’ll need to upgrade to TaxSlayer Premium, which costs $57 for a federal and state tax return, if you want live-chat support from a tax pro.
And if you have freelance income, TaxSlayer Self-Employed ($55 for a federal and state return) is worth a look: It also offers live-chat support, along with help identifying deductions for your business.
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.
Free Tax USA provides better user support than some of the other free programs, but if you want to ask a question, you’ll have to send an e-mail and wait for an agent to respond.
If you want live support chat and audit-assist protection, you must pay $6.99 to upgrade to the deluxe version.
If you itemize or have taxable income of more than $100,000, you must upgrade to TaxAct Plus. If you want to import last year’s tax return electronically, you’ll have to pay $15.
Who can use it: Taxpayers with 2017 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 AGI of $33,000 or less, or those who are eligible for the Earned Income Tax Credit. eSmart Free File is available to anyone with AGI of $66,000 or less, as long you’re 54 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.
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