The Internal Revenue Service (IRS) offers taxpayers the ability to complete and file their taxes for free through its e-file program. Called "Free File," this program permits taxpayers to either complete forms electronically or use software provided by private tax to complete and file their returns.
The Free File System
The IRS Free File system is only available to private taxpayers with an annual gross income of less than $58,000. Married taxpayers filing jointly must also not earn more than $58,000 per year. Additionally, the system only contains software and forms for IRS tax forms 1040 and 1040EZ. Taxpayers needing to file different tax forms may be unable to use Free File.
Filing Your Taxes Electronically
The system offers two different methods for completing and filing tax forms online: electronic forms and tax software. Both methods require taxpayers to gather their relevant tax documents and input information, but forms do not perform complex mathematical calculations whereas software programs do.
Free Electronic Forms
Electronic forms are simply computer versions of paper IRS forms. The online versions contain the same lines, requirements and other elements of their printed counterparts. The forms are designed to perform basic computations, such as addition and subtraction, but are incapable of performing more complex calculations. The IRS only offers forms for federal tax returns, but some state tax agencies may also offer their tax forms electronically.
Using these forms is a seven-step process:
- Gather tax documents and other relevant paperwork.
- Establish an account on the IRS Free File system. To establish an account, the taxpayer must provide their contact information and an email address.
- Input relevant tax numbers.
- Calculate the total amount of tax owed or refund due.
- Check calculations to ensure correctness.
- Submit the tax forms electronically.
- Pay any taxes owed or provide the IRS with direct deposit information for any refund due.
The fact that forms only do basic calculations means that taxpayers have to understand not only how to complete the form, but also the calculations required for determining their tax liability. Forms submitted with mistakes may result in the taxpayer being penalized.
Tax Software Programs
The IRS entered into agreements with private tax software companies to provide free versions of their products to taxpayers. This software is available only through the IRS website, and only for federal tax returns. However, some software companies may also provide their products free for state tax returns. Check with the software company or your state tax authority to determine if you can access tax software for state forms for free.
Companies offering free tax software include:
Although the gross income and form requirements apply to these software programs, some companies may have additional restrictions for using their product. Examples of these additional limitations include being available for use only in certain states or having lower annual gross income maximums. The IRS offers a service to taxpayers to help them find the appropriate software to use for their tax needs on its website.
For many taxpayers, their prompts for information and ability to calculate tax liability or refunds makes these programs easier to use than the electronic forms. However, taxpayers must still understand the basics of the form and remember that they are responsible for its content, regardless of whether they used software for its completion.
A Note of Caution
The IRS Free File system provides taxpayers with a way to file their taxes online for free. The forms and software provided by the agency, however, should only be accessed through the IRS website. Beware of a third-party company who requests that users provide unnecessary personal information, as it may be untrustworthy.
Additionally, all tax forms are due by the filing deadline, regardless of how they were filed. Extensions can be requested online.