How to File Your Taxes for Free?
When are taxes due? Due to the coronavirus crisis, Tax Day 2020 has been moved to July 15th. And, despite moving Tax Day to July 15th, the official IRS filing season statistics show that more people filed their tax returns on time this year compared to last year.
If you haven’t filed your taxes yet, it’s time to start gathering the documents you’ll need in order to do so. Save money by filing your taxes for free. But, if that’s the route you’re going to take then you’ll want to learn how to file your taxes for free in order to save money.
Here’s how much it costs for tax filing in 2020, what to know about tax brackets this year, and how to file your taxes for free to make the most of your return.
How Much Does it Cost to File Your Taxes?
When taxes are due, you can pay an accountant to file your taxes for you. Most of the time, this is helpful if you’re a freelancer or have a contract position with a company as you’ll want to be sure you’re claiming the right kind of deductions to reduce the amount you owe in taxes. However, anybody can go to one of the top tax preparation companies to receive help filing their taxes.
According to Investopedia, the average cost of independently hiring a certified public accountant to prepare and submit a federal tax return and a state tax return with no itemized deductions is $176. However, you can also head into the nearest office of your local tax preparation company to have them do it for you as well.
- H&R Block: Filing your taxes through H&R Block’s online software starts at $69 for a federal return and $59 for a state return. While this seems costlier than other options, they offer the most features for their deluxe packages.
- TurboTax: You can file for free with TurboTax depending on the forms you need to fill out to file (only 1040EZ or 1040A). State tax returns are $29.99. For a deluxe package, federal tax returns are $60 and a state tax return is $50.
- TaxAct: This is one of the lesser-known tax preparation companies but is often compared to TurboTax and H&R Block. Filing your federal taxes with TaxAct costs $29.95 and state tax filing is $39.95.
Which Tax Companies Offer Free Tax Filing?
It’s important to note that even the major tax preparation companies do offer free tax filing services. Depending on federal tax brackets, if you make under a certain amount of income for the tax year, you can qualify for free tax filing.
Federal Tax Brackets 2019:
Image: Tax Foundation
The TurboTax Free File program, for example, allows you to file for free if your adjusted gross income (AGI) was $36,000 or less.
Through the IRS Free File website directly, however, you can file your taxes for free if your income was $69,000 and below.
H&R Block offers a free tax filing option if you only have to submit W2s and don’t have freelance income, rental property income, and a host of other more complicated forms to submit and deduct.
FreeTaxUSA is another great option for filing your taxes for free. But, like other platforms, state tax returns are extra and will cost you $14.99 each. It’s important to note that if you have to file at 1099 form due to freelance or contract income, it’s often hard to find a website that will allow you to file for free. With FreeTaxUSA, you can. But, they won’t let you file for free if you have to report foreign income earned abroad.
How to File Your Taxes for Free
As mentioned, if you make less than a certain amount, you’re eligible to use a "Free File" software through the IRS. If you made under $69,000 in 2019, you’re eligible to file your taxes for free.
Check the federal tax brackets for 2019 and see how much you’ve made and how much tax you owe. Then, find the free tax filing platform that fits your needs. This includes figuring out whether you’re eligible to file for free or not according to whether you need to file freelance income and make other deductions.
Gather all of your documents together, including any 1099 forms, W2s, and receipts for deductions. Then, log into the platform and follow the steps on the screen. They’re usually extremely easy to follow and offer points of information for those who need further assistance.
Make sure you remember when taxes are due this year, which is July 15th.