Is There Free Tax Software? Unfortunately, even with free software offers, businesses can “get you.”
The majority of the businesses on this list provide free federal filing to a subset of taxpayers. The issue is that each company has distinct free filing criteria. Some only provide free filing to a select group of filers (usually those with W-2 income only and no credits or deductions). Other firms provide free federal filing but charge for state filing.
Because to Covid-19, the so-called free-filing issue has gotten even more complicated. During the 2020 filing season, numerous companies increased their Free offering to include unemployment income and American Rescue Plan benefits. However, while some businesses have kept their increased free services this year, others have resorted to more limiting options.
Many employers retain “gotchas” about student loan interest deductions, retirement contributions, daycare charges, and HSA payments, regardless of whether they have kept expanded services. When you begin claiming these credits, almost every major filing service needs you to upgrade to the “Deluxe” category. When you don’t realize you have to pay until you’re an hour into the process and ready to finish filing, it might feel like huge money grab.
We wish we could provide better news to taxpayers. Unfortunately, however, few tax software businesses provide free filing for “complicated” filing. Therefore, even if your scenario is quite typical, you may be required to pay to upgrade.
This isn’t to argue that investing in tax software is a bad idea. On the contrary, many tax software products are affordable. Be aware, though, if a tax software business advertises “Free” on its website. You might not be eligible.
Another stumbling block is the cost of filing with the state. The majority of people are required to file federal and state tax returns. Some companies provide free federal filing but always charge users for state filing fees. Unfortunately, the state filing fees are frequently buried on the website, so be cautious before selecting one of the tax software businesses that strongly offer free federal filing.
Which Companies Provide Free Federal And State eFile Tax Returns?
Cash App Taxes will be the only firm in 2022 that provides free state and federal filing for ALL users. In addition, cash App Taxes (formerly known as Credit Karma Tax) provide:
- A surprisingly robust user experience.
- Audit support assurances.
- Assistance with most key tax problems.
H&R Block is also giving a robust free pricing tier this year. It backs all credits associated with the American Rescue Plan (including the 2021 Rebate Recovery Credit). If you got W-2 income, unemployment income, or Social Security Income, you might qualify for this tier. Student loan interest deductions, educational credits, and child tax credits are available at the free tier. On the other hand, filers with retirement credits and deductions may need to update. Those who have HSA contributions and child or dependent care contributions will almost probably need to upgrade to collect all of their relevant deductions. In certain cases, people must upgrade to Deluxe and may be better off using Cash App Taxes.
We love H&R Block’s increased free pricing and Cash App Taxes’ entirely free offers. On the other hand, a free product might not be the ideal fit for you in 2022. Individuals with complicated filing scenarios may benefit from using low-cost software such as FreeTaxUSA. Furthermore, aggressive traders or those with complex situations may prefer premium software such as H&R Block (the upper levels) or TurboTax. This article focuses on free software; however, before making a decision, evaluate your scenario.
