Free File is back for 2008. Once again, if your income is under $56,000, you can prepare and e-file your federal income tax return for free. But be careful before you choose a company. Most will charge you to prepare a state return, and one company, TaxSlayer.com is advertising free income tax preparation, but if you want to print or e-file your taxes, there will be a fee.
The IRS’s Free File Page has a good list of companies, and their restrictions. Make sure to read the fine print, because companies may have different restrictions based on income, age, or what state you live in. In fact, if you live in a state without a state income tax, you may have difficulty finding a free file site.
Here are my top picks for free Tax Filing.
If you don’t need to prepare a state income tax return, start with the big names.
H&R Block’s TaxCut Free File: Free federal online tax preparation and e-file if your adjusted gross income is $56,000 or less and you are age 50 or younger. Includes Form 982 (Mortgage Forgiveness Debt Relief).If you have to do a state return, it will cost you $29.95 at H&R Block. You can find a better deal elsewhere.
If your income qualifies, (under $30,000 or active military and under $56,000) look at Turbo Tax. In addition to free federal tax filing, they offer free state tax filing for residents of AL, AR, AZ, GA, ID, IA, KY, MA, MI, MN, MO, MS, NY, ND, NC, OK, OR, RI, SC, VT, WV. Or just $9.95 if you live in a state that does not have a free file program.
TurboTax® Freedom Edition: Free federal tax preparation and e-file if your Adjusted Gross Income is $30,000 or less or you are active military or you qualify for Earned Income Tax Credit. Includes Form 982 (Mortgage Forgiveness Debt Relief).
You may not have heard of TaxAct. But they have been a supplier of professional tax preparation software for some time. They charage $13.95 for a state return, and a federal return is just $7.95 if you don’t qualify for the free program.
Free TaxACT: Free federal online tax preparation and e-file if your adjusted gross income is $56,000 or less and you are age 19 through 55 years old. Includes Form 982 (Mortgage Forgiveness Debt Relief).
Liberty tax service may be a good choice. State returns are just $9.95 and if you don’t qualify for the free federal, your federal return is just another 9.95. They also online tax preparation in spanish.
eSmartTax From Liberty Tax Service: Free Federal online tax preparation and e-File if your adjusted gross income is $56,000 or less, and you are age 50 or younger. Includes Form 982 (Mortgage Forgiveness Debt Relief). En Español.
Free tax services are only good to use if you have a fairly simple return. If your return is not simple, you should consider hiring a professional. Many times you will save more money in taxes, than you spend on tax preparation, just by having someone who spends the whole year studying taxes.