Tax Policy

How to File Your Taxes For Free

This article will detail if you qualify for free tax filing, and give a step-by-step run down on how to do just that.

Filing your taxes may not be as complicated as you think. There is a common misconception that filing your taxes is complicated, and therefore should cost you accordingly. For the majority of Americans, if you pay to file your taxes than you paid too much. This article will detail if you qualify for free tax filing, and give a step-by-step run down on how to do just that.

Don’t Pay to File Your Taxes if…

Not all tax situations are the same, so there is no one size fits all answer to this question. However, if any of the following apply to you then chances are you may be able to file your taxes for free.

  1. You don’t itemize your deductions: If you don’t itemize your deductions, then chances are your taxes are pretty straightforward. Filing Schedule A adds a little more time and complexity to your return.
  2. Your only income is from a W2: If your only income is from a W2 then odds are you can file your taxes easily, and for free.
  3. You have no dependents: If you don’t have dependents, then filing your taxes is straightforward.
  4. You had a boring year: If you didn’t get married, buy or sell a house, change jobs, retire, or do anything exciting, then odds are your taxes are simple and can be filed for free.
  5. If you don’t own a business: If you just work full-time or part-time and don’t own your own business, then odds are your taxes will be easy to file. No added forms or paperwork needed.

Pay to File Your Taxes if…

If your taxes are complicated and you’ve been using an accountant year after year, then you probably shouldn’t go the free route – sometimes you get what you pay for. The following are reasons why you should file your taxes with an accountant.

  1. You own your own business: If you own your own business, then your tax return can be complicated which is especially true if your business is sizable business. You want to make sure you are filing correct forms and that your business is protected from IRS liens or penalties for incorrect tax returns.
  2. You have revenue from multiple sources: If you have wages, business income, rental income, investment income, and other sources of income, then your return will be complex and will require the help of a professional.
  3. You had an eventful year: If you got married, bought your first home, sold your home, started a business, retired, or did anything that might impact your tax return, then it’s a safe bet to pay a professional.
  4. You make a lot of money: If you have a high income, then it’s probably best to pay for tax services. There are issues when it comes to paying estimated taxes during the year, and other complexities when it comes to high income taxpayers. You want to ensure you take the right steps to minimize your taxes due by using all the deductions that you’re entitled to take.
  5. You don’t want to be bothered with filing your own taxes: If you are super busy and just don’t want to do the research to do your own taxes, then paying for tax services is the way to go. Just because someone pays to get their lawn mowed doesn’t mean they don’t know how to use a lawnmower.

How to File Your Taxes For Free

If you think your taxes are simple and you’re tired of paying to file your taxes, then these are some links you can use to file your taxes for free:

  • Credit Karma: This is one of my personal favorites. I’m an accountant and I still use online software to file my taxes as well as my family member’s taxes. Why? Because it’s totally free and easy to use. Just answer the questions and follow the prompts and you’ll see how easy it is to file your federal and state taxes for free. The only downside is that Credit Karma doesn’t offer multi-state returns so if you live in one state but work in another (i.e. New Jersey and New York) then you won’t be able to file your taxes for free.
  • Check Your State’s Websites: Several states offer the option to file your state and federal taxes for free if you are under specific income limits. Simply Google [Enter state name here] free file. For example, NY Free File allows you to use well-known online tax softwares like Turbo Tax, Tax Act, and H&R Block to file your federal and state taxes for free. So, if you already use these services, just follow the links through the state’s website and you can file your taxes at no cost (just check the income limitations).
  • IRS Free FileIf you make under $63,000 per year, then you can file your taxes for free using the IRS Free File website. They will redirect you to popular online tax software that you can use to file your taxes for free. If you make more than $63,000 then you can use the free Fillable Forms to complete your tax return. However, I would only recommend this to people who are familiar with the tax forms and know what they are doing. Also, you will have to file your state return separately and can’t e-file the return through the IRS website.

So What Should You Do?

Choosing to file your own taxes can save you hundreds of dollars. However, if you are not careful, then you can pay penalties and interest for under-reporting income or incorrectly filing your return. If you do chose to go for the free option then make sure to have a professional on speed dial so you can squeeze out free advice.

For more tax tips, checkout the tax policy page to stay updated on the latest tax news.

Jeremias Ramos is a CPA working at a nationally recognized full-service accounting, tax, and consulting firm with offices conveniently located throughout the Northeast. Jeremias specializes in tax and business consulting with focus areas in real estate, professional service providers, medical practitioners, and eCommerce businesses.

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