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List of Free Tax Preparation Services

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I bet the first thing you thought after you screamed “Happy New Year!” was how it was now time to do your taxes. (no? me neither) Unfortunately, it’s now February and it’s time to start thinking about doing taxes! Wheee! To help you along, I wanted to outline all the free resources you have for tax preparation. By this I mean I’m listing every single way I think you can get absolutely free tax preparation based on your financial situation. Some tax prep companies offer free tax filing if your situation is simple (1040EZ, or plain 1040), the IRS offers free tax filing if your adjusted gross income was under $54,000 in 2007 (it’s through third party companies), and some other companies offer free tax preparation for their customers as a fringe benefit. I’ll try to list them all. If I miss one that you know of (one that expands on the group of eligible taxpayers, we don’t need another company that offers free tax prep for the same groups already covered below), please leave a comment or email me and I’ll add to this list.

Why do companies offer free tax filing?

Companies don’t do things out of the goodness of their hearts, so where’s the catch? It appears that many of these companies offer free federal tax filing in the hopes that you’ll sign up for their state tax filing services too. With many of the programs it’s easy for them (and thus easier for you) to transfer the data over and recalculate for your state taxes. They also hope to capture you as a recurring customer since your tax information will be stored in their databases and thus you’ll have a history with them. Finally, some will try to make money off services such as “refund anticipation loans” or “money back loans.” Those “loans” are horrible deals for the consumer, which means they make tax prep companies lots of money. (If you e-file, the IRS estimates that it takes around 8-15 days with direct deposit to get your tax rebate!)

How good could these freebies be?

I haven’t tried them all, but William Perez of About.com has tried a few and wrote about their advantages and disadvantages. I don’t know how accurate that article is because it’s not dated, but it’s a start. I think that most of the major companies are going to give you great free service. The field is simply too competitive for them to risk standing up a sub-par “free” version. Today’s free customer is tomorrow’s paying customer. If my free experience is bad, there will never be a paid experience!

Now, onto the offers!

IRS freefile

The IRS freefile program is designed for those with an AGI under $54,000 in 2007 and some of the companies that offer these services also put age restrictions as well. For example, Free1040TaxReturn.com states: “Free Federal online tax preparation and e-File if your adjusted gross income is $54,000 or less and you are age 49 or under.” (emphasis mine) I suspect that has to deal more with handling the added complexities of Social Security and Medicare and isn’t age discrimination. With any of those companies listed, you’ll definitely get free federal tax filing and e-filing; you may have to pay extra for state. The IRS also offers a wizard to help determine which company is best for you.

One caveat is that not every company listed follows the $54,000 AGI rule the same way. As you’ll see in the description below of TurboTax’s offering, the $54,000 AGI rule only applies to active duty military.

TurboTax

TurboTax offers free tax filing if you:

  • earned $30,000 in adjusted gross income, or,
  • qualify for earned income credit with an AGI up to $39,783, or,
  • served as active duty military with an AGI of $54,000 or less.

As an added bonus, you get free state filing if you live in Alabama, Arkansas, Arizona, Georgia, Idaho, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, New York, North Dakota, North Carolina, Oklahoma, Oregon, Rhode Islane, South Carolina, Vermont, or West Virginia.

What does TurboTax cover in their free version? Your standard 1040, 1040A, and 1040EZ forms along with a bunch of schedules. They provide a list of what’s covered in the free version. The first part of that list shows the included forms, the second part shows the forms not included. One notable form excluded from the free filing is Schedule D: Capital Gains and Losses.

TaxAct

TaxAct offers free federal tax filing of 1040, 1040A, and 1040EZ along with free e-filing, with no income restrictions (state filing is, as expected, extra). I was wondering if they had any catches (I realize they say “no catches! no gimmicks!” but c’mon… who takes marketing at face value!?) and discovered this list of “Included IRS Forms.” From what I can tell, it contains everything I could possibly need including Schedule C: Profit/Loss from Business. In fact, I wrote up this review of TaxAct and give it a B+ back in March of 2005. It’s nearly three years later, I might have to try them again and update that review.

State Farm Customers

State Farm is offering free tax filing through TurboTax for its customers.

Just Need Some Assistance?

If you’re just looking for a little extra help but not full blown preparation (or you don’t qualify for any of the above programs), you can turn to the IRS Volunteer Income Tax Assistance (VITA) Program or the Tax Counseling for the Elderly (TCE) Program if you qualify. To learn more about either program and their criteria, please visit this IRS page.

{ 21 comments, please add your thoughts now! }

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21 Responses to “List of Free Tax Preparation Services”

  1. HC says:

    TaxAct rocks. The Q&A formula is easy to understand, it’s possible to skip sections that don’t apply, and you can do a form view to see how everything stacks up. (I haven’t done any schedule filing, but I have done a couple of additional forms and that’s worked fine.)

    If you’re lazy, you can also pay $13 and it will populate the fields with W-2s and 1099s from your prior year return. I ended up doing that this year because I’ve used it for free three years running (without filing my state taxes) and figured the company had earned it.

  2. RacerX says:

    Nice post wit lots of great resources. Thanks!

  3. Tyler says:

    Vanguard customers get a discount for using TurboTax. Just be sure to start and access your return from the link on Vanguard’s site.

    I’ve heard about TaxAct for a couple years now but have not tried them. Maybe this year I will…?

  4. MoneyNing says:

    I filed for free with taxact.com the first year I got to the united states because it was well… free :) Then, every year from then on, I used the same service for both federal and states since I only qualified the first year.

    So, by giving it away for free the first year, they got more than $50 out of me. I’d say it was a good dead for them :)

  5. JB says:

    I’m using Vanguard via Turbotax for approximately a 33% discount. I used it last year and it was nice to have it all of my 2006 info imported. I used their State filing last year which people have told me was a waste of money. Will be trying Calfile, California’s free State filing this year.

  6. KeithM says:

    I used TaxAct for the first time this year. I downloaded the software, installed it onto my PC and completed our joint 1040 with no problems. Granted, my return wasn’t complicated, but it did the job just as well as TaxCut. The constant offerings/pushing of the Premium version (an additional $12.95) from TaxAct were kind of annoying, but I got over it.

    I’ve been a fan of TaxCut for the last 3 years, but the increase in the cost of the software plus the additional cost for efiling both federal and state gave me the reason to try TaxAct. I’m glad I made the move.

  7. JohnW says:

    I used TaxAct this year and it worked fine and was free! No rebates to hassle with.

  8. Dave says:

    I’ve used TaxAct for the last 4 years and I’ve had nothing but good results. I pay the $17 bucks for the “Premium” package because it includes the $13 State charge and it also populates all of my info from the previous year to compare against – I did my taxes last weekend in about an hour because all I had to do was update all of the 2007 numbers to the 2008 numbers (My wife and I have the same employers, mortgages, loans, investment accounts, etc) and it was a breeze. I’ve used Turbo Tax in the past and have found it nothing but unnecessarily complicated and every time I used it the results were wrong (I’m a nerd engineer who didn’t believe the numbers it was shooting out at me, so I redid it by hand and it was wrong)

  9. kitty says:

    Thanks for info about State Farm. I’ve been buying Turbo Tax and paying for filing not knowing I could get it for free through State Farm.

  10. laxtosnoco says:

    Just to clarify on your last heading; VITA programs provide more than just a little extra help. VITA volunteers prepare your entire return for free. Some programs do set income limits, but people who are not comfortable with the free-file options should look into the service.

  11. cheo reom says:

    VITA is great! They offered to help me fill out my entire tax return! :)

  12. Chas says:

    This year you can only get access to the free Tubotax by having a State Farm Bank product added to your online account. Just having a State Farm insurance product isn’t good enough.

  13. Shahid says:

    I’ve used TurboTax but felt scammed last year when they wanted an additional fee to efile my state return. I bought the software in a store and no where on the box did it state that. I had to look in the inside flap (after buying it of course) and in very small letter it had an asterisk with the extra fee.

    I’m going to give TaxAct a try this year.

  14. DEB says:

    FREE1040TAXRETURN.COM IS A TERRIBLE SITE…FIRST, THERE IS NOTHING “FREE” ABOUT IT…WAS CHARGED WRONG AMOUNTS…CAN’T GET MONEY BACK…I FOLLOWED ALL OF THEIR DIRECTIONS AND MY STATE TAX RETURN NEVER WENT THRU. THEY CHARGED ME $24.95 FOR AUDIT PROTECTION…I NEVER AUTHORIZED THIS…DON’T USE THIS SITE!!!

  15. Shahid says:

    Deb,

    Thanks for letting us know about that website. I’m debating whether or not to use TaxAct this year. I file jointly, have no kids, take the standard deduction…….and only have a few stocks to put on the Schedule D (Capital Gains & Losses).

  16. L says:

    I used Tax Act for my federal taxes for years 2006 through 2008. The constant requests to upgrade are annoying but you can’t beat the price. I recommend tax act.

  17. Shahid says:

    I used TaxAct last year for the very first time. The interface is a little bland and that is where TurboTax shines.

    Anyhow…….I found it be good and I am going to use it again this year.

  18. Andrew Zumwalt says:

    You might want to search at the website below for a free tax preparation site near you:

    http://extension.missouri.edu/hes/taxed/vitasites.htm

  19. Jimmy Kaufman says:

    I found FreeTaxUSA.com on the IRS free file page a few years ago. I’ve been filing with them ever since because their state price is one of the best around. TaxAct is also a good company.

  20. Pamela says:

    This is the first time I am visiting your site. My return is really simple and I am anything but wealthy, so think I am going to find a company through the IRS site. I am looking forward to receiving your emails and becoming a little more financially savvy. Speaking of why free? why is your info free? Just asking.

  21. Krista says:

    When i lived in ohio, i had a credit union, and they did my tax returns for free. I dont think you even had to be a member to do it. I reccomend looking into that. its a good idea to call earlie in january to make an appointment tho.


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