Seven ways to file your taxes for free

By Sandra Block
Posted on April 05, 2017

Most do-it-yourself filers prepare their own taxes for one and only one reason: They want to save money.

This is a good option for taxpayers with simple tax returns. But you’ll have to pay to upgrade to TurboTax Deluxe if you have investment or self-employment income, or if you contributed to a health savings account last year.

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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 electronically import last year’s return, even if you used TurboTax to prepare and file your return.

Credit Karma Tax

Who can use it: Most taxpayers, including those with self-employment and/or investment income

State tax return included: Yes

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.

There are a few limitations — the program won’t handle income from estates, for example — but 90 percent of taxpayers will be eligible to use the product, according to Bethy Hardeman, chief consumer advocate for Credit Karma.

As it does with its offer of free credit scores, the company plans to market related products to taxpayers based on the personal information they provide when filling out tax forms.

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.

DIY Tax

Who can use it: All taxpayers

State tax return included: Yes

This program, offered by tax preparation company Liberty Tax, is available to all taxpayers, even those with complex forms.

So why would Liberty Tax, which has more than 4,300 tax preparation offices in the U.S. and Canada, offer this giveaway? It’s counting on DIY fatigue. A “find an office” link is always visible when you use this program, and a Liberty tax preparer can pick up where you left off — for a fee, of course.

But if you don’t need help, this utilitarian program will help you get the job done free. It’s not as flashy as other online programs, but it does offer online support, and you won’t discover midway through the process that you have to upgrade to a paid product.

TaxSlayer

Who can use it: Taxpayers who file 1040EZ

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State tax return included: Yes

Eligible taxpayers can prepare, e-file and print their tax returns free. E-mail and phone support are included at no extra cost.

If you have taxable income of more than $100,000, have dependents, or have taxable interest of more than $1,500, you must pay to upgrade to TaxSlayer Classic.

TaxAct

Who can use it: Taxpayers who file 1040EZ or 1040A

State tax return included: Yes

TaxAct has expanded its free product to include tips and guidance on 19 “life events” — such as getting married or buying a home — up from two last year.

You can electronically import a previous year’s TaxAct return for $5. In the past, users who wanted to import a prior year’s tax return had to upgrade to a paid product.

While Form 1040A allows you to report income from investments and capital gains, if you itemize and/or have taxable income of more than $100,000, you must pay to upgrade to TaxAct Plus.

IRS Free File

Who can use it: Taxpayers with 2016 adjusted gross income of $64,000 or less

State tax return included: Varies, depending on tax software company

This year, 12 private tax software companies are participating in the 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 who are eligible for the Earned Income Tax Credit.

eSmart Free File is available to anyone with AGI of $64,000 or less, as long as they’re between the ages of 18 and 54. Some programs are only available to taxpayers who live in specific states. Find the right tool for you via the IRS’ 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.