For all the horror stories about how difficult, time-consuming, and expensive it can be to prepare an income tax return, the reality is that if you don’t own several homes or businesses, don’t have a portfolio that generates a substantial amount of income or a lot of capital gains or losses, and aren’t a Wall Street tycoon, your taxes could be as simple as a one- or two-page return. What’s more, you can probably do your federal and state income taxes on your own, online, and even for free. The following companies offer free preparation and e-filing services that could make your tax season, if not totally painless, a little less expensive.

Key Takeaways

  • If your taxes are simple enough, you can use free online software to prepare and submit them without charge.
  • Companies that offer free programs include TurboTax, TaxAct, H&R Block, and TaxSlayer. The Internal Revenue Service has free programs as well.
  • Some free programs do both federal and state taxes, while others just do the federal ones.

TurboTax

TurboTax is one of the oldest and best-known brands of tax software, and TurboTax Free Edition doesn’t disappoint. If you have a relatively uncomplicated financial life—with job income reported on a Form W-2, a limited amount of interest and dividend income reported on 1099-INT and 1099-DIV forms, and are claiming the standard deduction this year—you will most likely qualify to file your federal and state returns at absolutely no cost. If you’re planning to itemize your deductions, however, you’ll need to pay for more sophisticated tax software.

TaxAct

TaxAct is another well-known tax-prep software company that offers a free service for people whose finances are simple enough to require only a Form 1040. You’ll pay no fee to prepare and electronically file your federal income taxes. (State taxes cost $4.95 per state. ) Besides your taxes, if you’re a student or the parent of one, TaxAct can also help you prepare the Free Application for Federal Student Aid (FAFSA).

H&R Block

The big international tax preparation chain also makes software available to do-it-yourselfers. For people with relatively simple tax returns, the free version does both federal and state taxes without charge. As with TurboTax and TaxAct, if you plan to itemize your deductions, you’ll need to pay for a more comprehensive product.  

TaxSlayer

Although not as well known as some competitors, TaxSlayer appears well liked by most of its users. The company offers SimplyFree, which people can use to file a basic Form 1040 free of charge. One state tax return is also free.

For the most part these free programs are available only if you take the standard deduction and don’t itemize.

The IRS Offers Free Programs, Too

The Internal Revenue Service (IRS) also has several programs for free income tax filing. If your adjusted gross income is $72,000 a year or less, you may qualify for the IRS Free File Program, which offers free online filing from 10 different private companies. Depending on the company, filing your state taxes may also be free.

If your AGI is higher than $72,000, the IRS's Free File Fillable Forms program is available to you. It provides basic tax forms that you can fill out online. The forms come with instructions and will do the math for you but they offer no tax advice. The program lets you e-file your federal return but not a state return.

For people who qualify, the IRS has two additional programs than can be of help. If you make $57,000 or less, have a disability, or speak little English, you may qualify for the Volunteer Income Tax Assistance (VITA) program. The IRS also has a Tax Counseling for the Elderly (TCE) program for people age 60 and older. Both the VITA and TCE programs operate in community and neighborhood centers, such as libraries, schools, and shopping malls. Some sites allow you to prepare your own federal and state returns electronically and have trained volunteers available to assist.

Due to the COVID-19 pandemic, some VITA/TCE sites are not open, while others are operating at reduced capacity.

The Bottom Line

A number of major companies offer free e-filing services. Why? Because they know that forming a relationship with you, even if they don’t make any money from you this year, is valuable. If your tax situation becomes more complex, you might turn to them for costlier services down the road. You might even do that this year, should complications arise.

These free services have their limitations, of course. They don’t offer all the forms that many taxpayers are likely to need. However, if your return is very simple, there’s no reason you should pay to file this year.