Best free tax filing software of 2017

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Best free tax filing software of 2017

By JENNA LEE

It's never fun to pay more than necessary, especially around tax time.

Yet nearly 70 percent of taxpayers paid to prepare and file their taxes last year (based on a 2016 Credit Karma / Qualtrics survey, which asked 1,000 Americans about their experience filing taxes). And one in five paid more than $100 to file.

Many of those people didn't have to pay to file. There are free tax filing options available that many eligible consumers don't take advantage of, as well as some new options on the market.

Below, we'll break down a number of free tax filing options to help you figure out which may be best for you.

Credit Karma Tax

Might be good for you if: You want truly free federal and state e-filing -- no upsells or hidden fees.
May not be the best if: You moved to a different state last year or are a nonresident.

Credit Karma Tax is new to the game, but don't let that stop you from trying us out. We're an authorized IRS e-file provider, and we're dedicated to protecting your information.

Pros

  • Always free. No expiration dates, income restrictions, hidden fees or upsells. In contrast, some other companies that offer free filing are only free until a certain date. Or you have to pay more to access your prior returns, file your state return or store your tax return. And if you wanted to file through one of the companies that's part of the Free File Alliance, a group of tax software companies that has partnered with the IRS to help taxpayers file for free, your adjusted gross income generally must be less than $64,000 -- and in some cases, even less.
  • Available for 1040, 1040A and 1040EZ filers. While many companies have free tax filing software, they may only allow you to file simple tax returns (Form 1040A and/or Form 1040EZ) for free. Anything more complicated -- if you own a house, are self-employed or want to itemize deductions, for example -- and you may have to upgrade at a cost.

Cons

  • Can't import prior returns. While this isn't a feature we support yet, we'll walk you through the forms, so you'll know where to enter your information.
  • Doesn't currently support filing multiple state or nonresident state returns. Here's a list of the forms that we generally support.


H&R Block More Zero

Might be good for you if: You're strapped for time.
May not be the best if: You have freelance income, own a business, own a home or rental property, or have investment income.

H&R Block offers a wide range of tax-preparation services, allowing you to file in an office near you, using downloaded software or online. They also offer a community where members can ask and answer questions and discuss all things tax.

Pros

  • Easy import. H&R Block allows you to import your Form W-2 simply by taking a picture of it with your smartphone or device. You can also import last year's return from any other tax-prep company for free.
  • File on almost any device. You can file using your smartphone, tablet or desktop.

Cons

  • You need to pay to automatically import last year's return from H&R Block. Importing is only free if you import last year's return from TurboTax, Tax Act or another tax-prep company.
  • You need to pay if you want to file Schedule C, Schedule D or Schedule E. H&R Block's More Zero edition is for relatively simple tax returns only -- anything more complicated than a 1040 with Schedule A and you'll generally need to pay to file.


IRS Free File Fillable Forms

Might be good for you if: You're comfortable doing your taxes yourself.
May not be the best if: You want to be walked through the process.

Free File, available through the IRS, provides two free filing options to taxpayers. Fillable Forms are electronic versions of the paper forms and are available to anyone, regardless of income.

Pros

  • There aren't demographic restrictions. Prepare, print and e-file your federal tax return for free, regardless of age, income or state.
  • It's available for more than just a simple tax return. The program supports Form 1040, Schedule A, Schedule C, Schedule D and more. Check out the available forms here.

Cons

  • It only offers basic guidance. The IRS states that you "must know how to do your taxes yourself."
  • There are limitations. For example, you won't be able to use Fillable Forms if you need to add statements or PDF attachments. Additionally, there's a variety of specific form limitations.


IRS Free File Software

Might be good for you if: You want a variety of options to choose from.
May not be the best if: Your adjusted gross income is above $64,000.

If your adjusted gross income (or your combined adjusted gross income with your spouse if you're filing jointly) was below $64,000 last year, you can use Free File Software, available through the IRS, to prepare and e-file your taxes for free through one of its partners. The IRS recommends using the "lookup tool" to narrow your choices and select the best match for you.

Pros

  • Using the software could make preparing your taxes easier. As IRS Commissioner John A. Koskinen put it, "You don't have to be an expert on taxes. Free File software can help walk you through the steps and help you get it right."
  • You may be able to choose from a variety of software providers. As of 2017, 12 tax software companies offer free file software.

Cons

  • You may not qualify for all the software available. Each software provider may have its own eligibility requirements, and you may be restricted based on your age, state of residence and/or military status.
  • You may have to pay to file your state taxes. You can review each company to find out which ones offer free state e-filing.


TaxAct

Might be good for you if: You anticipate having to upgrade to paid software.
May not be the best if: You have a more complicated tax situation that involves investment income, itemized deductions or self-employment tax.

TaxAct creates tax products for individuals, businesses and tax professionals. It's also one of the cheapest options for people who can't file for free and have to upgrade.

Pros

  • It's affordable to upgrade. If you find your tax situation is more complicated than a 1040EZ or 1040A can handle, you can upgrade to the Plus Edition for $27 (plus $33 for each state return). With both TurboTax and H&R Block, the cheapest paid plan generally costs $54.99 plus $39.99 per state return.
  • You can download the product. Are you worried about saving your information to the cloud, or don't have a reliable Internet connection? TaxAct allows you to download its free version and prepare your return on your Windows computer.

Cons

  • If you want to file your state return using TaxAct's download product, you'll need to pay. It costs $33 for the single state edition or $70 for the all-states edition.
  • Some personal finance writers find TaxAct less user-friendly than other software. Kiplinger found that "TaxAct doesn't provide as much hand-holding as some other programs," while personal finance website Money Crashers wrote, "Exhaustive questions, coupled with a somewhat less user-friendly interface, were the main reasons it took me more than 30 minutes longer to file with TaxAct than with TurboTax and H&R Block."


TaxSlayer

Might be good for you if: You appreciate software flexibility.
May not be the best if: You need to file anything other than Form 1040EZ.

TaxSlayer started as a brick-and-mortar income tax-preparation business, but now offers only online software to help taxpayers e-file their federal and state tax returns.

Pros

  • The software is flexible. According to Money Crashers, you can choose when you'd like to complete the forms on your own and when you'd like more guided help.
  • No out-of-pocket fees. If you end up upgrading to a paid plan, you can deduct your TaxSlayer filing fees directly from your federal tax refund for an additional $25.

Cons

  • You can only file Form 1040EZ for free. All the other options on this list allow at least 1040EZ and 1040A filing.
  • You'll need to pay to import your W-2 and prior year's information. This means that if you want to use TaxSlayer to compare this year's return to a prior year's, it'll cost you.


TurboTax Federal Free

Might be good for you if: You want the process to be as easy as possible.
May not be the best if: You're wary of add-on charges.

TurboTax is probably the most well-known tax software provider on the market. According to the Credit Karma / Qualtrics survey, a majority of consumers (55 percent) said TurboTax was the first company or website they thought of that allows them to file a tax return online.

TurboTax offers two free filing options. Federal Free is the software promoted by TurboTax on its website. Unlike the Freedom Edition, which is only available through IRS Free File Alliance program, it can be used by higher-income filers, but it only handles simple returns (1040EZ and some 1040A returns).

Pros

  • Many people find TurboTax easy to use. After comparing TurboTax, H&R Block, TaxACT, FreeTaxUSA and eSmart Tax, Forbes wrote that "TurboTax makes entering your tax data more simple and comfortable than anything else we tested." Money Crashers agreed, writing that "[TurboTax's] interview-based filing process is highly intuitive, and the mobile-friendly platform is a snap to use."
  • You can easily import your W-2 tax forms. TurboTax allows you to either snap a photo or import it if you work for one of the more than 1 million companies with whom it works.

Cons

  • Lots of potential additional charges. If you want to transfer last year's info from your TurboTax return or file various schedules, you'll need to pay more.
  • Filing state returns isn't always free. While TurboTax was offering free state filing earlier this year, that offer ended March 16, 2017. Now, you'll pay $29.99 per state.


TurboTax Freedom Edition

Might be good for you if: Your tax situation is more complicated.
May not be the best if: Your Adjusted Gross Income is more than $33,000 a year or you aren't eligible for the Earned Income Tax Credit.

TurboTax Freedom Edition is only offered through IRS Free File Alliance program, which is geared toward those with lower incomes. If you're interested in learning more, be sure to go straight through the IRS site. Otherwise, you might end up trying to file using TurboTax Federal Free.

Pros

  • It supports a wider array of tax forms than TurboTax's other free version. This means you may be able to file more than a simple tax return with TurboTax Freedom Edition.
  • State returns are free. This isn't the case for all of the software options available with the IRS Free File Alliance program.

Cons

  • It's not available to as many people. For the 2017 tax season, it's only available to active military personnel with adjusted gross incomes of $64,000 or less and taxpayers with adjusted gross incomes of $33,000 or less or those eligible for the Earned Income Tax Credit.
  • There are form limitations. For example, in 2016, TurboTax didn't support Form 1099-B, which summarizes the proceeds of stock transactions.

About the Author: Jenna Lee is Credit Karma's Copy Editor. Although her specialty lies in creating witty post-it notes, she also enjoys sharing all the financial information she's learned since joining Credit Karma in February 2012. When she's not working, you can probably find her trying out a new dessert recipe or learning/perfecting any musical instrument she can get her hands on. Say "hi" @leejennaa!

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I have been trying for days to get assistance on the new tax program; however, this has been futile!   What good is a tax program if you have questions and no one is there to help you????  I have sent several inquiries through different medias and still no anwer ... what gives???

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