The first thing to know about free tax preparation software is that every legitimate online tax software offers a free version.
If you’re new to tax software, check out my post on the best tax software to see what products rank the highest overall and to learn more about how the software works.
Remember, you can start using online tax software for free and you’ll only be charged if your tax return requires a more complex version.
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 2014:
- TurboTax Federal Free Edition
- H&R Block Free Edition
- TaxACT Free Federal Edition
- eSmart Tax
- 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. 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. While 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.
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. You also get free in-person audit support if your return gets flagged for an audit.
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 $8 with TaxACT.
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 of the support features you receive with the free version. You get free email support (just like with the other companies), but you also receive free phone support. The other top products either don’t offer this support to their free users or there is a one-time yearly charge for phone support.
On the downside, TaxSlayer only offers a 1040EZ tax return for free. You won’t be able to file any other forms except the 1040EZ. The free edition also doesn’t come with any tax audit assistance, which is offered for free by the other companies like TurboTax.
State Tax Returns Cost Extra Money
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:
- South Dakota
These 2 states have limited state income tax on individuals:
- 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 2014 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, I recommend reading about why you should file taxes online.