If you plan to file form 1040EZ or 1040A for the 2016 fiscal year — meaning you’re an average W-2 worker who makes less than $100,000 a year and has no alternate sources of income — you should know two things.
First, the 2017 filing deadline is April 18th, not the 15th. Second, you can file federal and state returns for zero dollars thanks to free editions from five of the best tax software companies in the business.
We recommend you start with TurboTax Federal Free Edition because it’s the easiest to use, but any of our top picks can get the job done.
The 5 Best Free Online Tax Software Services for 2017
- TurboTax Federal Free Edition
- H&R Block Free Edition
- TaxAct Free Federal Edition
- eSmart Tax
- TaxSlayer Free Federal Edition
There are a bunch of perks and features among the top five tax software companies, but when it comes to free e-filing, it’s a level playing field. Each one offers free filing for forms 1040EZ and 1040A, and that’s pretty much it. Fortunately, that makes choosing one really simple: Go with the software that’s easiest to use.
So, to find the best free online tax software, we test-drove each top company’s free edition, evaluating customer support features and which made the filing process the least frustrating.
What Makes TurboTax the Best Free Online Tax Software?
The most important thing free online tax software should do is make you feel totally confident about your return — and that’s the main reason why Intuit’s TurboTax is our top pick. If you’re a regular W-2 worker, you can prepare your return without paying a dime and feel great about the process. TurboTax’s easy-to-understand, step-by-step instructions are unparalleled, even on the mobile app. In fact, it’s just as easy to e-file a 1040EZ or 1040A from your smartphone or tablet (which 6 million people did for the 2015 fiscal year, according to Intuit).
After taking a snapshot of your W-2, or importing it from TurboTax’s bevy of payroll partners, the software prompts you with key questions throughout the filing process to help home in on any changes in your life that could make major waves in your taxes. There’s also a real-time audit risk detection and refund ticker, and users have access to free live advice via live chat and help from an expert. (If you get a paid edition, you can take advantage of SmartLook™, which allows you to schedule one-way video chats with live CPAs or enrolled agents). These minor, but helpful details all add up to make TurboTax the industry standard in free online tax software.
Thanks to the company’s Absolute Zero program, anyone filing a 1040A or 1040EZ return qualifies for the Federal Free Edition (the free online version of TurboTax). Specifically, that’s anyone who:
- Has an income of less than $100,000
- Doesn’t have sizeable medical bills to deduct
- Doesn’t claim any rental, investment, or business income
If you don’t meet those criteria, you’ll wind up navigating multiple pricing tiers and add-ons, which is one of the downsides of TurboTax — its pricing structure is not transparent. For more information about the best tax software for more complicated returns, check out our guide on paid editions.
The Rest of the Best Free Tax Preparation Software
H&R Block strives to make life easier for self-preparers by offering free support via phone, email, and most importantly, face-to-face consultations at any of the company’s 12,000 branch locations — even if you’re using its free tier (called “Free Edition”). Customer support aside, TurboTax’s streamlined software was slightly more valuable than having access to your own personal agent — because if you’re using a free tax software option, you’re probably filing a 1040EZ or 1040A, and those are incredibly simple to prepare. However, if you’re looking for a more personal touch, or attempting DIY tax prep for the first time, H&R Block won’t let you down.
TaxAct is third on our list of the best free tax software because it’s more of a lightweight version of its competitors; it has free email support, tax guides, and resources to help you file along the way, but it’s not as robust as our top picks.
The biggest benefit to using TaxAct, however, has nothing to do with its free version. If it turns out that your tax return requires more than just a simple filing, TaxAct is the cheapest tax software on the market: It’s most expensive edition (which covers all schedules and forms necessary for freelancers, investors, and the self-employed) costs $55 in total for state and federal. TurboTax’s comparable edition costs over twice that much ($140).
It’s also worth mentioning that TaxAct is the only software that offers a desktop version of its free edition. So if you’d prefer to prepare your own taxes and store data locally, TaxAct is the only company that can oblige. The only catch is that state returns prepared on the desktop version cost $25. (That’s not a problem if you live in a state without income tax.)
The free version of eSmart Tax lets you e-file your federal return for free, as with the other products, but there is no free state e-filing. What it does offer is free tech support (via live chat) and free audit support from a Liberty Tax CPA — an added bonus you don’t get with most free tax software. You can also import your previous year’s tax return from a competitor like TurboTax or H&R Block for free, which can get you going as if you’ve been an eSmart customer for years. Otherwise, there’s not much to write home about, which is why eSmartTax is fourth on this list.
TaxSlayer is a solid alternative to any of our top picks. Like the competition, TaxSlayer offers an easy-to-use deduction guide, step-by-step instructions, and free email and phone support, all while guaranteeing a maximum refund.
The free edition supports the basic 1040, 1040A, and 1040EZ tax returns, just like the companies listed above it. What holds TaxSlayer back, however, is its lack of audit detection or assistance, which TurboTax includes.
If You’re Unsure, Start with a Free Version
I’ve stressed this a few times already, but it should be crystal clear that it’s almost always best to start with free tax software. If you’re a first-time tax filer, you’re likely in the dark when it comes to how complicated your taxes will be; perhaps you imagine a nightmare of numbers, forms, and frustration awaits. But the truth is, if you work a typical nine-to-five job, your tax return might be way simpler than you think.
Like I said earlier, every reputable tax software offers a comprehensive free tier to get you started — and in many cases, that may be enough to get you through the tax season. However, if it’s not, the good tax software platforms, including TurboTax, allow you to simply upgrade to the level necessary to file your taxes without having to start all over again.
Tax season is already a stressful time of the year, and there’s no need to make it even more of a headache. If you only require a straightforward tax return, you may be able to save yourself some cash, time, and stress, and file those federal taxes for free.
Remember, State Tax Returns Aren’t Always Free
Unfortunately, even if you can get away with filing your federal taxes for free, those pesky state tax returns are eagerly waiting to siphon some money out of you. Depending on the software you use, filing your state taxes will cost you anywhere from $8 to $37.
As I noted above, your most affordable option for filing both federal and state returns is TaxAct, which charges $14.99 to file a state return after the free federal return. The most efficient, yet slightly pricer option is TurboTax, which will cost you between $27.99 and $36.99. But if you’re simply filing a 1040A or 1040EZ return, TurboTax’s Absolute Zero guarantee on its Federal Free edition will allow you to file your state tax return for free as well.
However, if you’re one of the lucky ducks living in a state with no income tax, you won’t have to worry about filing a state tax return at all. Here’s a list of the states with no income tax.
States that don’t have income tax:
- South Dakota
States that have limited state income tax:
- Tennessee (6 percent on income from interest and dividends)
- New Hampshire (5 percent on income from interest and dividends)
Tax season isn’t a joyous time of year, but it doesn’t have to be migraine-inducing, either. With the right free tax software, you can not only save time and a few bucks this April, but also discover which tax software works the best for you should you need a full, premium version.
In my research, I found TurboTax to be the unequivocal pinnacle of free tax software. Its intuitive design, audit detection, and step-by-step instructions are simply unmatched in the industry. It also allows you to easily upgrade beyond its free software if need be.
However, it’s important for you to find the software that best fits your needs. There are many solid companies with great things to offer in their free tax software. No matter which free tax software you go with, it should be the one that gives you the least amount of stress and helps put the most cash back into your wallet.