When looking for free tax software providers, it’s important to know that almost all online companies offer a free version of their software. However, only the best tax software providers partner with the IRS to to bring free or low-cost tax preparation services to millions of low- and middle-income taxpayers each year. After analyzing all of the top free tax software companies, I chose TurboTax Federal Free Edition as the best overall option.
Get started for free with TurboTax.
Over 70% of Americans may be eligible to file their federal taxes for free using preferred online software partners selected by the IRS, according to the agency. Even though TurboTax came out on top in my analysis, each of our top picks has been endorsed by the IRS as a Free File Alliance member.
The 5 best free online tax software services for 2016:
- TurboTax Federal Free Edition
- H&R Block Free Edition
- TaxAct Free Federal Edition
- eSmart Tax
- TaxSlayer Free Federal Edition
If this is your first time venturing into the world of tax software, be sure to check our post on the best tax software of 2016 to get a more in-depth look at where the top companies stand out and fall short. Each service featured in the main article offers a first-rate free version for filing federal taxes. In the case of many straightforward tax returns, free software could be enough to completely file your taxes, a more-than-welcome money saver around tax season.
Regardless of your tax situation, it’s always best to start off with the free version of the tax software of your choice. Not only does this give you the chance to learn whether or not you actually like the software before paying for it, but you may discover that the free version is all the tax software you need. Every tax software service has an intuitive way of detecting which users need to upgrade to file their taxes, so starting off with the free option really can’t hurt.
Just like with paid tax software, there are dozens of viable options on the market — and some not-so-viable ones, too. For anyone looking to file their own taxes this year, I wanted to exhaust all of the best options for free tax software, recommending only the best companies to you. After countless hours of research and comparisons, I have found the five best free online tax software services you can trust this tax season.
What Makes TurboTax the Best Free Online Tax Software?
It’s no shocker that filing your own taxes can be a pain in the neck. Whether you’re dealing with multiple income sources or tricky tax loopholes, without the right software, you may feel like jumping ship. Thankfully, what Intuit’s TurboTax does best is offer intuitive simplicity. By offering streamlined tax preparation and an easy-to-use interface, TurboTax firmly anchors itself as the best free online tax software that your money won’t have to buy.
TurboTax is known for offering easy-to-understand, step-by-step instructions that can help even first-time tax filers cough up their dues to the IRS with unrivaled ease. It’s not just for newbies, though. TurboTax’s simplistic method produces the most competitive results on the market, making it a true force to be reckoned with.
The software also prompts you with key questions during the filing process to help hone in on any changes in your life that could make major waves in your taxes. There’s also a real-time audit risk detection and refund ticker, and users have access to free live advice via live chat and help from an expert. These minor but helpful details all add up to make TurboTax the industry standard in free online tax software.
A huge point in TurboTax’s favor is its Absolute Zero guarantee on its Federal Free Edition. Starting in January 2016, if you’re simply filing a 1040A or 1040EZ return, you won’t have to pay a dime for federal or state tax returns, which can be a big money saver this time of year.
Turbo Tax also rolled out a few new benefits that should make tax time even easier this year. Those new perks include:
- W-2 Snap and Autofill – Upload your W-2 instantly by snapping a picture and uploading it
- SmartLook ™ – Customers can get their tax prep questions live using one-way video technology,
- ExplainWhy ™ – A customized service that offers in-depth answers to the most common tax questions based on the customer’s individual return
However, like all free online tax software, TurboTax does have its limitations. Generally speaking, you can only file your taxes for free if you’re using simple forms such as the 1040EZ, 1040A, and 1040. Anything more complicated than that and you’ll likely have to pony up for the paid version. Thankfully, TurboTax allows you to start with the free version and simply upgrade if necessary, making it a no-brainer to give TurboTax a try this tax season.
The Rest of the Best Free Tax Preparation Software
Although TurboTax is king of the mountain, it’s hardly the only solid free tax software choice. As with any product, each company has its own strengths and weaknesses, and you as a customer must weigh which options are most important to you. Let’s take a quick look at our runners-up and see what each of these companies has to offer.
H&R Block Free Edition
H&R Block is one of the most recognizable names in accounting, and rightfully so. There are many things that H&R Block’s free edition does right, particularly its attention to customer service. If you’ve ever filed your own taxes, you know just how overwhelming it can be. H&R Block strives to make it easier by offering free support via phone or email and, most impressive of all, the option of a face-to-face consultation at any of the company’s 12,000 branch locations.
On top of H&R Block’s unrivaled customer service, H&R Block also offers more than the basic 1040 tax form on its free tier. Most notably, you can file forms for self employment tax, something that’s more typically included only in an upgraded paid tier. And for extra peace of mind, if your return is flagged for an audit, H&R Block offers free in-person audit support.
This attention to detail and customer service helped H&R Block challenge TurboTax for our No. 1 pick, but ultimately, TurboTax’s intuitive design and ease of use were slightly more valuable than having access to your own personal agent. However, if you’re looking for a more personal touch, or attempting DIY tax prep for the first time, H&R Block may be exactly what you’re looking for.
TaxAct Free Federal Edition
TaxAct falls into third place on our list of the best free tax software because the product simply doesn’t match the advanced tools that TurboTax and H&R Block offer. However, like the other top products, TaxAct does offer free email support, tax guides, and resources to help you file along the way. You’ll also be able to file the usual basic forms for free, as well as some more complicated forms for certain life situations.
The biggest benefit of using TaxAct, however, has nothing to do with its free version. If it turns out that your tax return requires more than just a simple filing, TaxAct is the cheapest tax software on the market that can still be considered a high-quality product. With any other tax software, you have to pay up to $37 to file your state taxes, but you can file for as low as $14.99 with TaxAct. That cost goes down to $5 if you use their premium product.
Owned by Liberty Tax, eSmart Tax is an online tax software that finds new ways to prove itself every year. With the free version of the software, you can e-file your federal return for free, as with the other products. With eSmart Tax, you’ll also receive free tech support (via live chat) and free audit support from a Liberty Tax CPA, an added bonus you don’t get with most free tax software.
The tax forms you can file using the free version of eSmart Tax are nothing to write home about, but it does have a unique feature in its corner: With eSmart Tax, you can import your previous year’s tax return from a competitor like TurboTax or H&R Block for free, and get going as if you’ve been an eSmart customer for years.
Overall, though, the unique features that eSmart Tax has to offer weren’t enough to find it a home in my top three picks for 2016.
TaxSlayer Free Federal Edition
TaxSlayer proudly holds the fifth spot on the list, standing as a solid alternative to any of my top picks. Like its competition, TaxSlayer offers an easy-to-use deduction guide, step-by-step instructions, and free email and phone support, all while guaranteeing a maximum refund.
TaxSlayer’s free edition supports the basic 1040, 1040A, and 1040EZ tax returns, just like the companies listed above it. What holds TaxSlayer back, however, is its lack of audit detection or assistance, which my top pick TurboTax does include. However unlikely, comprehensive audit detection can mean the difference between a normal fiscal year and financial ruin, which is why TaxSlayer ended up at number five on my list.
If You’re Unsure, Start With a Free Version
I’ve stressed this a few times already, but it should be crystal clear that it’s almost always best to start with free tax software. If you’re a first-time tax filer, you’re likely in the dark when it comes to how complicated your taxes will be; perhaps you imagine that a nightmare of numbers, forms, and frustration awaits. But the truth is, if you work a typical nine-to-five job, your tax return might be way simpler than you think.
Like I said earlier, every reputable tax software offers a comprehensive free tier to get you started — and in many cases, that may be enough to get you through the tax season. However, if it’s not, the good tax software companies, including TurboTax, allow you to simply upgrade to the level necessary to file your taxes without having to start all over again.
Tax season is already a stressful time of the year, and there’s no need to make it even more of a headache. If you only require a straightforward tax return, you may be able to save yourself some cash, time, and stress, and file those federal taxes for free.
Remember, State Tax Returns Aren’t Always Free
Unfortunately, even if you can get away with filing your federal taxes for free, those pesky state tax returns are eagerly waiting to siphon some money out of you. Depending on the software you use, filing your state taxes will cost you anywhere from $8 to $37.
As I noted above, your most affordable option for filing both federal and state returns is TaxAct, which charges $14.99 to file a state return after the free federal return. The most efficient, yet slightly pricer option is TurboTax, which will cost you between $27.99 and $36.99. But if you’re simply filing a 1040A or 1040EZ return, TurboTax’s Absolute Zero guarantee on its Federal Free edition will allow you to file your state tax return for free as well.
However, if you’re one of the lucky ducks living in a state with no income tax, you won’t have to worry about filing a state tax return at all. Here’s a list of the states with no income tax.
States that don’t have income tax:
- South Dakota
States that have limited state income tax:
- Tennessee (6% on income from interest and dividends)
- New Hampshire (5% on income from interest and dividends)
Tax season isn’t a joyous time of year, but it doesn’t have to be migraine-inducing, either. With the right free tax software, you can not only save time and a few bucks this April, you can also discover which tax software works the best for you should you need a full, premium version.
In my research, I found TurboTax to be the unequivocal pinnacle of free tax software. Its intuitive design, audit detection, and step-by-step instructions are simply unmatched in the industry. It also allows you to easily upgrade beyond its free software if need be.
However, it’s important for you to find the software that best fits your needs. There are many solid companies with great things to offer in their free tax software. No matter which free tax software you go with, it should be the one that gives you the least amount of stress and helps put the most cash back into your wallet.