How To File Taxes Online With IRS Free File in 2024

Teddy Garcia
elenaleonova / iStock.com
elenaleonova / iStock.com

Filing taxes can be a challenge, with a wide range of requirements, deductions and other factors to navigate. Many choose to work with tax professionals or purchase software to handle their tax filing. However, this can carry significant costs.

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U.S. taxpayers spend over $100 billion each year on services and resources to file their taxes. They also spend over 6.5 billion hours dealing with taxes. While individuals with complex tax returns might still choose to work with tax professionals, IRS Free File provides an alternative that’s both free and easy to use for those who qualify.

What Is IRS Free File?

IRS Free File is a program developed by the IRS to allow qualified taxpayers to file taxes online. The software guides the user through the tax return preparation process, letting them report their income and deductions accurately.

The program provides two distinct options. The first is guided tax software, available for individual filers with an adjusted gross income or AGI of $79,000 or less. The second option is fillable forms that allow filers of any income level to submit their return online for free, although without guidance.

Who Is Eligible for IRS Free File?

The primary factor for IRS Free File eligibility is AGI, which plays a role in determining your tax bracket, and thus, how your income will be taxed. For tax year 2023, the AGI threshold is $79,000. However, those over this threshold can still file online for free but must fill out their own forms rather than using IRS Free File software.

AGI isn’t the same as gross income. Gross income includes the total of all wages, dividends, capital gains, retirement distributions and other forms of income. AGI is often significantly lower as a variety of adjustments are subtracted, including:

  • Retirement account contributions

  • Student loan interest

  • Educator expenses

  • Alimony paid

  • Certain business expenses

  • Health savings account contributions

These adjustments can often reduce gross income below the $79,000 threshold, allowing the tax filer to take full advantage of IRS Free File software.

How Does IRS Free File Work?

First, the tax filer must visit the IRS online and select the appropriate option, either guided tax software or fillable forms.

If the tax filer selects the guided tax software option, then they’ll get to choose from the available IRS Free File online tax preparation service options. These are organizations that partner with the IRS to carry out the Free File program. Each has its specific requirements, and some may not provide free state tax return filing for every state.

When using this option, the tax filer provides the required income and other tax information, and the software does all required calculations. They can then file for free. This option is also available in Spanish, at least for federal returns.

If the tax filer selects the fillable forms option, they can create an account and fill out the appropriate tax forms online. Once this is complete, they can then e-file their return. This option doesn’t provide automatic calculations, so the taxpayer is responsible for ensuring accuracy in their return.

The IRS will send a confirmation email to let the tax filer know whether it has accepted or rejected their return.

What You’ll Need to Get Started With IRS Free File

To complete a tax return using IRS Free File, the taxpayer must have the appropriate tax documents and information on hand. First, they’ll need to have their last year’s tax return, from which they’ll take their AGI to determine eligibility. Basic details such as Social Security numbers for the filer, their spouse, and any dependents are also required.

While IRS Free File focuses on income tax filing, being aware of how much you’ve paid in FICA taxes throughout the year.

Tax filers will need the various forms and receipts covering their income for the tax year. This will vary on a case-by-case basis but can include:

  • W-2s for employment income

  • Form 1099-INT for accrued interest

  • Form 1099-G for state and local tax refunds, credits or offsets

  • Form 1099-DIV for dividend income

  • Form 1099-R for retirement plan distributions

  • Social Security benefits

  • Unemployment compensation

  • Small business receipts

  • Any income from rentals, real estate, royalties, partnerships, corporations, or trusts

For those filing under the Affordable Care Act Tax Provisions, the following forms are required:

  • Form 1095-A Health Insurance Marketplace Statement

  • Form 8962 Premium Tax Credit

It’s necessary to verify the identity of those self-preparing their taxes and filing electronically. The tax filer will have to provide last year’s AGI or their self-selected signature personal identification number.

What Is the Best Free Tax Filing Program?

The IRS has eight official partners that provide software and filing for the IRS Free File program. They each have eligibility requirements based on things like AGI, age and applicable states. The IRS provides a straightforward tool to match tax filers to the most appropriate option.

Here are the key details tax filers should know about the eight IRS Free File tax preparation service options.

  • TaxAct: This provider has an age requirement of 20 to 58 years and the standard $79,000 AGI threshold. Federal returns are free in all states, but state returns are only free in AR, IA, ID, MS, MT, ND, RI, VT, WA and WV. The Earned Income Tax Credit is included if age and AGI criteria are met, and military pay is included.

  • TaxSlayer: This provider has no age restriction but does have a lower AGI threshold of $44,000. Federal returns are free in all states, while state returns are free only in AR, AZ, DC, GA, IA, ID, IN, KY, MA, MI, MN, MO, MS, MT, NC, ND, NY, OR, RI, SC, VA, VT and WV. Both EITC and military pay are included.

  • FileYourTaxes.com: This provider has an AGI minimum of $8,500 and a maximum of $79,000. It only offers free returns for filers 64 or younger. Federal returns are free in all states, while state returns are only free in AL, MT, RI and WV. EITC is included if age and AGI criteria are met, and military pay is included.

  • 1040.com: This provider has an AGI minimum of $17,000 and a maximum of $79,000. It offers returns for all ages. Federal returns are free in all states, and state returns are free only in AL, AR, AZ, GA, IA, ID, IN, KY, MA, MI, MN, MO, MS, MT, NC, ND, NY, OR, RI, SC, VA, VT, WI and WV. EITC is included if AGI and age criteria are met, and military pay is included.

  • FreeTaxUSA: This provider offers free returns for those with an AGI of $45,000 or less. Returns are free for filers of any age, and both federal and state returns are free in all states. Military pay is included, and EITC is included if AGI criteria are met.

  • Online Taxes at OLT.com: This provider offers free returns with a maximum AGI of $45,000. Returns are free for any age, and all states enjoy free federal and state returns. Military pay is included, but EITC is only included if AGI criteria are met.

  • 1040NOW.NET: This provider has free returns for those with an AGI of $68,000 or less and of any age. Federal returns are only available for free in AL, AR, AZ, CA, CO, CT, DC, DE, GA, HI, IA, ID, IL, KS, KY, LA, MA, MD, ME, MI, MN, MO, MT, MS, NC, ND, NE, NM, NJ, NY, OH, OK, OR, PA, RI, SC, SD, UT, VA, VT, WI and WV. No free state returns are available. Both EITC and military pay are included.

  • ezTaxReturn.com: This provider has the standard AGI threshold of $79,000 and offers returns for any age. Federal returns are only available for free in AL, AR, AZ, CA, CO, CT, GA, ID, IL, KS, KY, LA, MA, MD, MI, MN, MO, MS, NC, NH, NJ, NM, NY, OH, OK, PA, SC, VA, WA and WI. No free state tax returns are available. EITC and military pay are included if AGI and residency criteria are met.

What’s the Difference Between IRS Free File and IRS Direct File?

IRS Free File has been providing free tax preparation and filing since 2003. IRS Direct File is new for tax year 2023. IRS Direct File provides a new type of software that will hopefully improve online tax filing, although it is currently only a pilot program.

For now, IRS Direct file is only available for eligible participants in:

  • Arizona

  • California

  • Florida

  • Massachusetts

  • Nevada

  • New Hampshire

  • New York

  • South Dakota

  • Tennessee

  • Texas

  • Washington state

  • Wyoming

The system is only open to individuals with certain types of income and deductions. This means that many business owners, independent contractors, and those who itemize deductions or claim certain credits won’t be eligible.

Taking the Right Approach to Your Taxes

IRS Free File provides an effective free option for many people to file their taxes. However, those who don’t meet AGI and other requirements might face challenges navigating free fillable forms. Anyone with a complex tax situation should consider working with a tax professional to maximize their return and avoid any penalties.

This article originally appeared on GOBankingRates.com: How To File Taxes Online With IRS Free File in 2024

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