Every American has the option to file their taxes for free, but very few actually do. This is according to Beverly Moran, an emerita professor of law and sociology at Vanderbilt University, who focuses on tax law, and who adds that 70 percent of tax filers have the option to file their federal taxes for free online. Just 2 percent of those eligible for Free File, the IRS’s free online guided tax software program, used it in 2022.
First introduced in 2003, Free File offers Americans with adjusted gross incomes (AGI) under a specific threshold — for the 2023 tax season, that number is $79,000 — to file their federal and state taxes online for free. (Some Free File software programs will charge you for your state returns, but some offer it for free.) Even if your adjusted gross income is over $79,000, you can fill in the same forms used in the Free File program, just without any guidance or calculation.
New for 2024 is a pilot program called Direct File, another free option to file your federal tax return online. This is most suited for people who have simple tax returns. Those who earned more than $200,000 (or $160,200 if you have more than one employer) are not eligible for Direct File. Because Direct File is still in a pilot phase, only people who live in certain states are eligible.
While tax filing has always been free, many Americans didn’t need to worry about submitting a tax return when income taxes were first established over a century ago, Moran says. Over time, that changed. These days, in addition to Free File and Direct File, there are still more ways for Americans to file their taxes without paying a cent.
Why is doing my taxes so complicated?
Filing taxes wasn’t always so convoluted. Prior to 1913, the federal government mainly collected revenue from taxes on goods and alcohol. The ratification of the 16th Amendment in 1913 allowed for the federal government to collect income taxes, which mostly impacted the rich. About 2 percent of US households filed federal income tax returns in 1913, “and they were all wealthy people,” Moran says.
“The modern income tax was much fairer in 1924 than it is in 2024,” Moran says, “if you define fairness as ‘the more money you make, the more tax you pay.’”
Over time, tax filing got increasingly more complicated. By World War II, the number of people who were required to pay income taxes grew from 5 percent of American workers to 75 percent. Around this time, employers began withholding taxes from workers’ paychecks, and the standard deduction was implemented, as well as the addition of retirement income credit, credit for dividends, credit for partially tax-exempt interest, and changes to itemized deductions. In the ensuing decades, more deductions, credits, and special rules for different forms of income and investments were added to the tax code.
Filing taxes has always been free, but as the tax code grew to include anti-poverty programs and other benefits, a market emerged for paid tax preparation, targeting people who were overwhelmed by the process or who did not have the time to dedicate to filling out the requisite forms. By the 1960s and ’70s, H&R Block had expanded into “this franchise system where, rather than having Joe Smith’s Tax Preparation on this block and Mary Lou’s tax preparation on another block,” Moran says, “everybody knew in their town there was an H&R Block.”
With expansions of the earned income tax credit and the child tax credit in the 1990s, “individual taxes started getting a little bit more complicated,” says Ariel Jurow Kleiman, a professor of law at Loyola Law School who focuses on tax law and policy. “People didn’t want to miss out on these credits. Maybe then it was more likely that people needed some help.”
As the IRS began promoting online tax filing, the agency created the Free File program, offering an online tax filing option for low-income taxpayers. Rather than create a government-run tax filing software, the IRS originally partnered with 17 tax software companies to offer free online filing. However, companies like Intuit TurboTax pushed taxpayers into paying, despite promoting the product as free.
While TurboTax and H&R Block are no longer a part of Free File, they are two of many options Americans have for filing their taxes — some of which are free, and some not. Here are the free options available.
How to file your taxes for free
Free File
What is it? Free File is a partnership between the IRS and tax preparation software companies. Taxpayers can file their federal tax return with help from free guided tax preparation software. Some offer free state tax return filing as well.
Eight tax preparation software providers are a part of Free File: OnLine Taxes at OLT.com, 1040NOW.net, TaxAct, FileYourTaxes.com, TaxSlayer, FreeTaxUSA, ezTaxReturn.com, and 1040.com.
Who is eligible? Anyone whose adjusted gross income was $79,000 or less in 2023 is eligible to use the Free File guided preparation programs. Adjusted gross income, according to the IRS, is total income (such as tips, rents, interest, and stock dividends) minus deductions (like self-employed health insurance premiums or student loan interest paid).
Even if your adjusted gross income is above $79,000, you can still use the Free File program with Free File Fillable Forms. These are the same Free File electronic forms, just without any instruction or guidance; you’ll complete these to file your federal taxes. Just a note: This can be complicated, and you’ll need to prepare and file your state taxes separately.
How do I file? Choose from one of the eight Free File partner software programs. Make sure you are eligible for the provider, as each has specific requirements. For example, FreeTaxUSA is only available to taxpayers with adjusted gross income of $45,000 or less, but offers free state tax filing for all states. The IRS has a lookup tool that recommends a software partner based on your age, adjusted gross income, deductions, and other factors. Instead of going right to the company’s website, select your preparation partner via the IRS’s website.
You’ll then create an account for the respective software partner you chose (or log in with an existing account you used to file a previous year’s return). The program will then walk you through how to file your return.
According to the IRS, here is the information you’ll need to have on hand. (This applies to all the other free tax preparation options as well.)
- Social Security numbers for yourself and, if you have them, your spouse and dependents
- W-2s from all of your employers
- Social Security benefits
- Unemployment compensation
- Receipts from your small business, if you have one
- Income receipts from rental, real estate, royalties, partnerships, S corporation, and trusts
- Form 1099-INT, showing interest paid to you throughout the year
- Form 1099-G, showing any refund, credit, or offset of state and local taxes
- Forms 1099-DIV and 1099-R, showing dividends and distributions from retirement and other plans paid to you during the year
- If you get your health insurance through the Affordable Care Act, you’ll need Form 1095-A, Health Insurance Marketplace Statement and Form 8962, Premium Tax Credit
- Your last year’s tax return to get your adjusted gross income. You’ll need your last year’s AGI to verify your identity.
Tips to make the process easier: Again, double-check the requirements for the program you choose to use. You can try searching Reddit to get insight on others’ experiences with specific Free File platforms, Moran says. If you find you are being asked to pay despite using a platform initially marketed as free, do not pay. Find an online preparation service that is actually free, however frustrating it may be to restart the process.
Direct File
What is it? Direct File is a new pilot program built and run directly by the IRS, says Jurow Kleiman. It will launch in mid-March. Those eligible can file their federal taxes for free online with step-by-step guidance in English and Spanish. Taxpayers can also live-chat with customer service representatives as they work their way through the process. You can sign up to be notified when the pilot is open.
Who is eligible? Since Direct File is still in the pilot stage, only people with simple returns who live in certain states are eligible. If your wages exceed $200,000 or $160,200 if you had multiple employers, you are not eligible for Direct File. Other situations are ineligible, including if you’re filing jointly with your spouse and they earned $200,000 or more (or $160,200 if your spouse had more than one employer) or you and your spouse’s combined wages total more than $250,000. If you’re married but filing separately and your wages are more than $125,000, you are not eligible for Direct File.
Direct File is for those with simple tax needs, such as income from a W-2, Social Security income, unemployment compensation, and interest income of $1,500 or less; credits like earned income tax credit, child tax credit, or credit for other dependents; and whose deductions are limited to the standard deduction, student loan interest, and educator expenses. If you have income from gig work or a business, or if you itemize deductions or claim other credits like child and dependent care credit, saver’s credit, or the premium tax credit, you are not eligible.
Direct File is available in the following states: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington state, and Wyoming.
If you’re still not sure whether you’re eligible, Direct File has a form that will let you know if you can participate.
How do I file? Create an account with ID.me, which helps prevent tax fraud. You’ll need an account to start the pilot. You must be at least 18 years old, prove your identity using state-issued identification or a passport, and take a video of your face or video chat with an agent. When Direct File launches in mid-March, you can head to the Direct File website to use your ID.me login to begin.
You will then be guided through the process, with simple instructions on how to report wages and taxes withheld based on information from your W-2 and other forms. After you submit your return, you will first receive an email confirmation from Direct File and another when the IRS accepts your return.
While Direct File doesn’t handle state returns, the program will point you to a state-supported tool to file your state taxes if you live in Arizona, California, Massachusetts, or New York. For those who live in Washington, Direct File will take you to a state site where you can apply for the working families tax credit.
Tips to make the process easier: Direct File won’t auto-populate your information, so make sure you have your W-2, 1099s, and student loan interest, if applicable, nearby so you can enter it into the program. Take advantage of the customer service chat option for any questions you may have.
Volunteer Income Tax Assistance and Tax Counseling for the Elderly
What is it? Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) are programs that offer free, in-person tax preparation by an IRS-certified tax professional. These services are available to those who make under a specific amount, who need assistance, or who are 60 years of age or older. VITA/TCE sites prepare returns for W-2 income, interest income, dividends received, state tax refunds, unemployment benefits, earned income tax credit, child tax credit, and more. They do not prepare Schedule C with loss, depreciation or business use of home, capital gains and losses, non-deductible IRA, and other more complicated returns.
Who is eligible? People who make $64,000 or less, people with disabilities, and those who speak limited English are eligible for VITA. Taxpayers over the age of 60 are able to receive free tax assistance through TCE.
How do I file? Find a VITA/TCE site near you by entering your zip code in the IRS’s lookup tool. Check whether the location offers appointments. Bring photo ID; Social Security cards for you, your spouse, and your dependents; a copy of last year’s return; your W-2 and 1099; Affordable Care Act statements, if applicable; information for other income, deductions, and credits; and the total amount you paid to a day care provider and their tax ID number.
Tips to make the process easier: Many sites require appointments and can get busy, so make one if you can — the earlier the better.
MilTax
What is it? Members of the military, veterans, eligible family members, and survivors of deceased active duty members can file their federal tax and state returns for free via an online platform called MilTax. The service includes tax preparation, electronic filing, and support from tax consultants and is designed with military life in mind, with guidance on deployments, combat and training pay, housing and rentals, and multi-state filings. There is no income limit.
Who is eligible? Active, retired, or discharged duty service members of the Army, Marine Corps, Navy, Air Force, and Space Force, and their immediate family members (spouses, children, and anyone who has legal responsibility for their children), are eligible. In addition, National Guard and reserve service members, regardless of their activation status, and their immediate families are eligible. Plus, immediate family, caregivers, and parents of wounded, ill, or injured service members; and surviving spouses of active-duty, National Guard, and reserve service members.
How do I file? First, verify your eligibility by using your DoD Identification Number (located on the back of your Common Access Card) or the last four digits of your Social Security number, date of birth, and last name. You’ll need requisite tax info (listed above under Free File information). The free preparation software will ask you about military-specific tax benefits and scenarios, such as extra pay for those serving in combat zones, special benefits for military members serving outside the United States, how to handle multiple moves within a year, and other deductions and allowances.
Tips to make the process easier: You can live-chat or schedule an appointment (call 800-342-9647) to speak with consultants trained in military tax considerations. Some VITA centers offer in-person MilTax preparation, but be sure to check ahead of time.
The more complicated your tax situation (for instance, if you have income from gig work, if you own a business, or if you earned money from stocks and bonds), the more difficult any of these free filing options will be. However, it’s worth taking a look at your family’s situation to see if there’s a no-cost tax filing option that works for you. A note of hope: Should the Direct File pilot be successful, it could expand, giving more taxpayers another free option in the future.
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