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By David Kim•Last Updated May 23, 2024

All You Need to Know about Free At-Home Tax Filing

When it comes to claiming expenses, honesty is key. While it might be tempting to justify deducting items like a Nintendo Switch as stress reducers that enhance productivity, it’s important to be honest about their business necessity. Ask yourself if the item is genuinely essential for your work. Claiming only items exclusively used for business purposes helps avoid any confusion or suspicion about your deductions.

Before you dive into tax preparation on your computer, ensure you have all your necessary documents at hand. Beyond your pay stub, this might include a variety of forms. For instance, if you sold stocks, you’ll require a Form 1099-B from your broker. Educational expenses might necessitate a Form 1098-T from your school. And if you’re a homeowner seeking to deduct mortgage interest, you’ll find pertinent information on Form 1098.

With modern tax software, the filing process becomes remarkably streamlined when you have all the requisite forms upfront. Save yourself the frustration of starting and stopping by gathering everything you need before selecting your software.

Free tax software often lacks the guidance and support found in paid versions. While it enables online filing, users may find themselves navigating the tax process with less assistance. Understanding where to input information and determining eligibility for credits and deductions might fall on the taxpayer.

Therefore, it’s advisable to conduct some tax research before relying solely on free software. This research need not be extensive and can be tailored to individual tax situations. For example, new parents might explore common credits and deductions, while homeowners could investigate tax considerations specific to property ownership.

The market is flooded with tax preparation software, with many companies offering free versions of their products. However, not all free software options are created equal. Some impose strict limitations on the tax situations they support. For instance, individuals who are self-employed or have income reported on a form 1099 may be required to upgrade to a paid plan. Similarly, users who have sold stock may also face the same requirement.

Income level is another factor to consider. Some free tax filing software sets restrictions based on income. Individuals with more complex tax situations and higher incomes should conduct thorough research before choosing a provider.

The IRS collaborates with various tax preparation software companies to provide free online tax preparation through its Free File program. Individuals with an adjusted gross income (AGI) of $73,000 or less can access these free filing services. However, these offerings often consist of basic versions of the software, which may provide limited guidance or support compared to paid versions. Some providers may restrict access to features like live chat support.

For those with an AGI exceeding $73,000, there is still an option to file for free. However, this typically involves using an IRS electronic form, which essentially replicates a paper form in digital format. It’s important to note that not all states offer a free file option, meaning individuals may still need to pay for state tax return preparation even if their federal return is filed for free.

The IRS partners with eight companies for its Free File program, with TaxAct, TaxSlayer, and FreeTaxUSA recognized among PCMag’s top picks for tax software in 2022. However, each partner has its own set of conditions for eligibility.

For instance, three of the Free File program providers impose adjusted gross income (AGI) limits for users. TaxSlayer sets its limit at $39,000, FreeTaxUSA at $41,000, and FreeTaxUSA has a higher threshold of $65,000. Additionally, age restrictions apply to certain providers, with TaxAct capping eligible users at 56 and FileYourTaxes.com at 65. It’s important to note that not all providers offer free filing in every state, and free state returns may not be available from all providers.

Members of the military have two options for filing taxes at no cost. Firstly, MilTax, powered by H&R Block, provides online filing and personalized assistance tailored to service members’ needs. Their support staff undergo specialized training to ensure military personnel access all eligible tax benefits. MilTax allows users to file federal returns and up to three state returns for free.

Alternatively, TurboTax offers free filing for active duty and reservists, including one free state return. However, this offer is not extended to officers.

TurboTax, a prominent tax preparation software, does not participate in the IRS Free File program but provides its free version. TurboTax Free is suitable for “simple” tax scenarios, such as those involving a 1040 form from an employer (W-2). However, it does not support forms like the 1099 for freelance or business income, nor does it accommodate reporting of stock sales or rental property income.

Despite its limitations, TurboTax Free remains popular due to its user-friendly interface and ease of use, characteristic of the company’s renowned software.

CashApp Taxes, formerly known as Credit Karma Tax, offers a convenient and cost-free option for tax filing. Its standout feature is its comprehensive free service, which includes audit defense at no additional cost. Additionally, users have the convenience of filing taxes directly from their mobile phones.

However, there are some limitations to consider. CashApp Taxes only allows one free state return, and it lacks support for all tax forms. Additionally, live support is not available. Despite these drawbacks, CashApp Taxes remains a viable option for individuals with straightforward tax situations.

For individuals with complex tax situations, a useful strategy is to initially complete tax forms using the paid version of their chosen software provider. While the software functionality is essentially the same between the paid and free versions, paid options often offer more detailed guidance and tips, simplifying the filing process. This approach is particularly beneficial for those with intricate tax scenarios.

By using the paid version, users receive clear instructions on where to input specific tax form information, streamlining the filing process. Once completed, individuals can then transfer this knowledge to efficiently file their taxes using the company’s free software. However, this strategy may not be suitable for individuals with straightforward tax situations, as the additional features of the paid version may not be necessary.

One drawback of using free tax filing software is the lack of access to live support. Fortunately, the IRS offers free phone support, which can be a valuable resource for taxpayers. You can reach the IRS by calling 1-800-829-1040 from 7 a.m. to 7 p.m. local time Monday through Friday. Before seeking assistance, you’ll need to verify your identity, so have your prior-year tax return and social security number handy.

The IRS estimates wait times of around 13 minutes, with longer waits on Mondays, Tuesdays, and the filing deadline day. While getting on the phone with the IRS may seem inconvenient, it can save you money, as many tax filing software companies charge for live support.

The Interactive Tax Assistant (ITA) is an IRS resource that provides free tax assistance to filers. It functions as a wiki containing articles that address common tax queries, available in both English and Spanish.

While the ITA has its limitations, it offers official responses to frequently asked questions. These encompass topics such as deducting various forms of loan interest, eligibility for tax credits, and filing taxes from overseas.

Reddit can serve as an unexpected resource for tax assistance, with various “subreddits” or communities dedicated to financial advice. These include r/tax, r/personalfinance, and r/taxhelp, among others. While r/personalfinance is the largest, it covers a broad range of financial topics beyond taxes.

It’s important to note that posting a tax question on Reddit doesn’t guarantee a response, but the community is generally helpful. Often, your question may have already been addressed, so searching the subreddit beforehand is wise.

However, exercise caution when considering advice from anonymous internet users. While Reddit communities can offer valuable guidance, always verify the information before applying it to your tax return. Remember, you’re ultimately responsible for any errors on your return.

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