How To ACTUALLY File Your Taxes For Free

Have you ever used online tax preparation software to file your taxes? Were you pulled in by the promise of FREE filing, only to end up paying more than you expected? Have you ever wondered why you can’t just file online to the IRS directly?

These are all common questions. The truth is, filing your taxes doesn’t need to cost anything. It’s a simple process in theory: every year, you complete some forms to describe how much money you made and how that income was categorized. Then, you send that information to the IRS, who determines how much money you owe.

In reality, filing your taxes can be a big, confusing hassle. The constantly changing rules regarding minimums, credits, and exceptions creates a tax environment that is ripe for exploitation by the private sector. As a result, tax preparation is big business. In this blog post, I will briefly describe the current agreement between the IRS and the big tax prep firms, and then list 3 ways to pay your taxes for free.

The IRS doesn’t allow you to directly file your taxes over the internet

Electronic filing would be a huge benefit to both the citizen and the government. Electronic filing offers several benefits over paper submissions:

  1. Faster turnaround and processing
  2. Automatically calculated fields
  3. Automatic error checking
  4. Pre-filled information — if you work legally for an upstanding employer, the government already knows what you earned and how much you’ve paid in taxes, because your employer submits that information to the IRS at the same time they give you your W2 or 1099

So why doesn’t the IRS offer this service? The answer to that is worth its own post, but the short version is that the big tax prep companies, like H&R Block and Intuit Turbotax, have extensively lobbied the government and struck an agreement that the IRS will never offer a free online filing system as long as, in exchange, the tax prep companies offer a free option to their customers. That’s why the online tax preparation companies advertise extensively that they offer free filing and have become the default way many Americans file their taxes. A much more detailed account covering the details and history of this agreement can be found here.

Unfortunately (though perhaps not surprisingly) these companies are not terribly interested in providing services for free. So, while they technically do offer free filing, they use the following shady tactics [SOURCE] get money out of their ‘free’ customers:

  1. Purposefully hiding the “Free File” option.
    Both Intuit and TurboTax have added code to their websites explicitly to hide them from search engines. What that means is, these tax prep companies do offer a free filing option, but they can only be accessed with a direct link. Searching, for example, “TurboTax File Free” directs consumers to the “TurboTax Free Edition”, which the company has purposefully named to mislead customers, and is not actually free in many cases.
  2. Purposefully hiding costs
    The big tax prep websites emphasize the word FREE to entice customers to start entering information. It is only after a significant amount of information has been entered that the company reveals the customer does not actually qualify for free filing, for various reasons that could have been made clear up front. The companies are banking on users not understanding their options and simply agreeing to pay whatever fee the company assesses, instead of wasting time and starting over.
  3. Disguising upsells
    While a customer is filling out their return, the website may offer such services as “Live help” or “Audit protection”, without revealing these services cost extra. If a customer has already agreed to pay some price to file their return, they may reasonably assume that this fee would cover any pop-ups or options that arise during the process…which is not the case.

The Recommendations

If, like me, you don’t like giving money to a private company for the privilege of allowing you to give money to the government, here are several alternate, actually free, methods you can use:

  1. Paper/Mail it
    Printing out the forms and filling them out by hand doesn’t cost you anything except time and postage. This method is the most error-prone and also comes with a very slow turnaround time – for both you and the IRS – so I don’t recommend it.
  2. FreeFillableForms [LINK – this can also be accessed from the “IRS Free File portal” link below].
    All the IRS forms online, linked and formatted so you can easily enter, check, and submit. FreeFillableForms also offers basic calculations, and quick turnaround after filing – you’ll know if your return was accepted within a day. This is the nearest thing to filing online directly with the IRS that exists. There is no income cap to use it, and it supplies all forms that may be required to file your return, all for free
    FreeFillableForms is my preferred method to file, since I make more than $69k/year and can’t use a truly free option from a 3rd party tax prep service. My tax return usually includes various sources of income (W2, 1099, self-employment, interest) and a few other complexities, but the IRS provides very clear instructions explaining what goes where, and I have never had a question that couldn’t be resolved with a little reading. Unfortunately, since FreeFillableForms is a Federal service, I cannot use it to file my State returns; however, my state tax board (California) offers a similar free service on their own website.
  3. IRS Free File portal [LINK]
    If you make less than $69,000 (2019), The IRS provides a lookup service where you can enter in some basic information and be directed to 3rd party vendors that offer free federal return filing. The critical thing here is that going through the IRS website sends you to the actual free versions of various tax filing providers, instead of the scammy up-selling versions that you get by Googling the same companies, as described above. If you made less than $69,000 last year, use that link to file your taxes. Don’t follow an ad claiming to offer FREE tax return filing, and don’t start your return by going to the companies’ websites via Google.

There are legitimate, non-scammy tax prep websites out there who offer free federal filing (use the IRS free file link above to find them). Those companies are able to make money by charging to file state returns. If you use one of these companies to file your federal return anyway, it’s probably worth the time and effort saved to just pay their $15 fee to file your state return too, even though it’s not strictly necessary.

In conclusion: if you make less than $69k, I HIGHLY recommend using the services listed on the IRS website. If you make more, my personal recommendation is to do your taxes yourself via FreeFillableForms, or, if your tax situation is too complicated to handle yourself, hire a local expert you can work with in person. If you go this route, look for someone with CPA (Certified Public Accountant), RTRP (Registered Tax Return Preparer), or EA (Enrolled Agent) in their title.