March 24, 2021 · Investment, Retirement, Savings, Taxes
Filing your taxes online has become a preferred method for many Americans. Often, they purchase and use tax preparation software to complete their taxes, and then they may also pay a fee to have their taxes transmitted and filed with the Internal Revenue Service (IRS) using the software. But there is an option for filing your taxes over the internet that generally doesn't require a purchase or a transmission fee, and it has the benefit of using versions of well-known tax software.
The IRS offers its Free File service, which lets taxpayers prepare and file their federal individual income tax return for free using brand-name tax software from companies that are partnering with the government to offer this service. The IRS partners are members of the Free File Alliance, which works with the IRS to provide their tax services to you. The Alliance is a non-profit, public-private partnership committed to helping millions of Americans prepare and file their federal taxes online for free.
Free File allows you to either file using IRS partner software with the IRS Free File program or instead use Free File fillable forms. The IRS emphasizes that using Free File is “safe, easy and no cost to you.” One restriction for the program is that you can only file your current year tax return using IRS Free File; you're not allowed to process a previous year's federal tax return using the service. Note that IRS partner companies do offer additional services to supplement the free federal tax filing at a cost to the filer; it’s important to read through and give close attention to these offers and their costs so you don't end up paying for tax services you don’t want.
The basic differences in filing for free come down to income level and how much the online filing systems assist you with the preparation process. The more sophisticated Free File program online software is offered for those with a lower income, and the simpler, more limited Free File fillable forms are available for filers with higher incomes. Here’s a summary of the options:
You can pay your taxes online, but there may be fees involved; Delta Community has details on it in this 2020 blog post.
Before you file, you should take a minute to double check and confirm that your savings, checking, or money market account information that you provided to the IRS is accurate. This will ensure that your tax refund or future stimulus payments will be deposited correctly and quickly. If you are unsure about your account numbers, we’ve provided detailed instructions for using the right account information for deposits on our Direct Deposit page. Keep in mind that the IRS says that Direct Deposit is safe and faster than waiting on a paper check from them.
For anyone who currently uses paid software to do their taxes, the IRS options for free tax filing may not be an improvement, at least in terms of efficiency. However; if you’re doing your taxes manually with paper forms, then you may want to investigate Free File as—potentially—a faster, easier, and cheaper method for preparing and filing them this year.