The 5 Best Free Tax Software for 2015

The first thing to know about free tax preparation software is that every legitimate online tax software offers a free version. However, not every free version is legitimate. Brand, ease of use and reputation still matter for getting the job done right, especially when dealing with the IRS.

LIMITED TIME OFFER from TurboTax
Update: 1/9/2015

Starting today, for the first time ever, TurboTax will be allowing simple filers to complete their federal and state taxes at absolutely no cost to them—
That’s—$0 for federal, $0 for state, and $0 to file with TurboTax Federal Free edition.

Pricing Disclaimer: TurboTax Federal Free Edition: Actual prices are determined at the time of print or efile and are subject to change without notice. Offer may change or end at any time without notice. Simple returns; 1040EZ/A filers only.

I do not know how long this TurboTax discount promotion will last!

If you’re new to tax software, check out my post on the best tax software for 2015 to see what products rank the highest overall and to learn more about how the software works. The great news is that every service on that list also have a top notch free federal version.

Remember, you can start using online tax software for free to complete your federal taxes, and you’ll only be charged if your tax return requires a more complex version.

For this year, in addition to reviewing the top free tax preparation software, I have also added a short note on how these free tax software services are handling the biggest change to the tax code: The Affordable Care Act.

For anyone with basic tax needs, you can get started right away.

Here’s my list of the 5 best free online tax software for 2015:

  1. TurboTax Federal Free Edition
  2. H&R Block Free Edition
  3. TaxACT Free Federal Edition
  4. eSmart Tax
  5. TaxSlayer Free Federal Edition

What Makes TurboTax the Best Free Online Tax Software?

The #1 reason why TurboTax is the best for free online tax preparation is because the software is simple enough to use for any beginner, yet it produces advanced results. There are step-by-step instructions that walk you through every part of the tax-filing process.

In addition to instructions, they also ask you questions along the way to pinpoint life changes that affect your taxes. This feature is super helpful especially for first time tax filers who might not know exactly what they can deduct or when they can do it. For instance, my colleague Michael Gardon, was using TurboTax in 2012 to do his 2011 taxes, when TurboTax asked him if he had any children born in 2011. While he would never forget that his child was born, he did forget that the change applied to the previous year’s tax return. This simple question saved him from a costly oversight.

The entire time you work through your taxes, your refund amount is displayed in real-time along with your audit risk meter. When you start filing taxes for free online, you can return to specific areas or save your progress at any time. You’ll also have access to free live advice using live chat and expert help with the free version.

TurboTax’s free tax preparation software is useful for filling out simple forms, like the 1040EZ, 1040A, and 1040. You’ll need to upgrade to another version for anything more complex. However, you can always start with the free version and then upgrade as you discover you need a more advanced version.

The Rest of the Best Free Tax Preparation Software

While I rank TurboTax at the top, several products trail right behind. Ultimately, the right choice for you depends on what you value more. For instance, TurboTax might offer the best software and user experience (saving you time), H&R Block allows you to file more forms for free and provides great customer support.

H&R Block Free Edition

Usability and functionality are the key components that place H&R Block slightly behind TurboTax, but I could certainly see an argument for naming H&R Block as the best free online tax software. If you’re making the transition away from your accountant, or if you just want the face-to-face interaction, H&R Block is your top choice.

All H&R Block products come with unlimited expert tax advice either by chat or by phone. Yes, this is included even for the free version. Need more help? Just walk into one of their 12,000 branch locations.

In addition to the excellent customer service and support, there are other benefits of using H&R Block’s free tax prep software. H&R Block provides you with more than just the basic 1040 income tax form. You can file forms and schedules that are a level above basic for free such as self employment tax. You also get free in-person audit support if your return gets flagged for an audit.

Finally, this may be a bit gimmicky, but hey, we’re talking about FREE here. When you get your refund, you have the option to use all or part of it to buy various gift cards at over 40 retailers. When you do this, H&R Block will add an additional 5% to the amount you designate if you’re using the free version – 10% if you’re using a Deluxe version or higher. Just thought this was worth mentioning as we are all trying to find ways to stretch our hard earned dollars.

TaxACT Free Federal Edition

TaxACT falls into third place on the list of the best free tax software because the product doesn’t offer the same level of advanced tools as TurboTax and H&R Block. 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 basic forms and some complex forms for certain life situations.

The other major benefit of using TaxACT occurs if you find out your tax return requires more than just a simple filing. TaxACT is the cheapest tax software on the market that’s still 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 deluxe product.

eSmart Tax

Owned by Liberty Tax, eSmart Tax is an online tax software that continues to make improvements each 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 (live chat) and free audit support from one of Liberty Tax’s CPAs.

The tax forms you can file for the free version are very basic. However, eSmart Tax has an extra feature that may interest people who want to try a new product this year. You can import your taxes from a competitor for free. That means you can take your previous year’s return from TurboTax or H&R Block and get started as if you’ve used eSmart Tax in prior years.

TaxSlayer Free Federal Edition

TaxSlayer is the final product that holds a place on the list of the best free tax software simply because it offers many of the same features as the others, and still guarantees a maximum refund. You get step by step, easy to use deduction guide, and you get free email and phone support.

One big improvement for TaxSlayer is an upgrade to the supported forms for the free version. TaxSlayer now supports 1040, 1040A and 1040EZ tax return for free with many common supporting schedules.

The free edition, however doesn’t come with any tax audit assistance, which is offered for free by the other companies like TurboTax.

Your Taxes and the Affordable Care Act

Hundreds of changes get made to the tax code each year. Rarely does a change profoundly impact more people than has happened with the Affordable Care Act (ACA). The good news is that no matter how you are affected by this change, each of these to tax preparation software companies have fully integrated ACA forms into their product. That includes the free versions, so you shouldn’t need to upgrade versions just because of the ACA changes. H&R Block stands out as being the service most on top of the ACA changes by providing several articles and guides on how these changes will affect your taxes.

The two biggest ways the ACA can affect your taxes are:

The advanced premium tax credit: If you enroll in health care through the marketplace you might be eligible to receive the advanced premium tax credit. This credit helps reduce the cost of your health insurance premium, but it is estimated and needs to be reconciled so that the amount of credit you receive is correct.

Penalties or Exemptions: If you do not have health insurance in 2014 you are supposed to pay a penalty unless you have an exemption. Exemptions to this mandate have been a hot topic lately because they have been changed several times.

If you don’t fully understand how these changes affect your tax situation, any one of our best free tax software picks should be able to guide you through the process.

Remember, State Tax Returns Cost Extra Money

All of these free versions are for your federal tax returns. If you have to file a state return, you won’t be able to file your taxes completely for free.

Depending on the software you use, filing your state taxes will cost you anywhere from $8 – $36.99.

The cheapest option for filing your state tax in addition to your free federal return is TaxACT. However, the most efficient option, which costs a little more (between $27.99 and $36.99) is TurboTax because the software is the easiest to use and will likely take you the least amount of time to complete your taxes.

Keep in mind if you live in a state with no income tax, you won’t have to file a state tax return.

Below are the 7 states that don’t have income tax:

  • Florida
  • Texas
  • Washington
  • Nevada
  • Alaska
  • South Dakota
  • Wyoming

These 2 states have limited state income tax on individuals:

  • Tennessee
  • New Hampshire

The rankings on this page only account for the free editions of each tax software. You can check out my post on the best tax software for 2015 to see the full rankings for each product, including in-depth comparisons and analysis.

For those of you who are still considering whether or not to file your taxes online in 2015, I recommend reading about why you should file taxes online.

Written by Mike Jelinek
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