The Cheapest Ways to File your Taxes this Year
It’s almost tax time again! The IRS will start accepting 2016 tax returns as of January 23, 2017. Interestingly, there are a few additional days to file taxes this year due to April 15 falling on a Saturday as well as the District of Columbia’s Emancipation Day holiday. That pushes the traditional April 15 deadline to April 18, 2017.
Of course, there are always a multitude of options when filing your taxes. While free is always preferred for Americans under a specific income threshold, we are also going to break down the top software options for knocking out those pesky taxes on a lazy Sunday.
The Best Free Options, $64,000 and under:
If you made less than $64,000 over 2016, you can visit the Free File page on the IRS site. That site provides thirteen software options on third party sites. Read each option carefully to see if you qualify. Many of the options are limited to a specific age range, state or even dollar figure.
For instance, the TurboTax’s popular software caps the limit at $33,000 rather than $64,000 unless you eligible for the Earned Income Tax Credit. Alternatively, Free1040TaxReturn.com offers the $64,000 limit to anyone under 70, assuming you don’t live in five excluded states.
Some of these sites will also offer free state returns, but others will charge. It’s recommended that you search your state’s website for information regarding free filing options for state taxes.
The Best Free Option, over $64,000:
If you make more than $64,000 in your household, you can also just enter your tax information into the paper forms using FreeFile. Of course, this is significantly more complex as you have to understand how tax forms work rather than answering questions in tax software. However, you can use your tax forms (completed with tax software from previous years) to figure out where to fill out data correctly.
The 2017 Wild Card Option
Announced at the end of 2016, Credit Karma is planning on offering free tax filing to a select group of users. This is the first year that Credit Karma has offered this service. According to the signup page, the service will be completely free. Specifically, they claim to offer free federal & state filing, no additional fees for using the service and have a support staff on hand to answer questions.Disclaimer: We have no idea if the service is going to be perfect at launch. It may be worthwhile to sit out a year and let the company work out any potential issues before jumping in.
The Cheapest Software Options:
TaxAct remains the champion for least expensive tax software at between $15 to $30 for federal filing and $25 for state filing. It’s also highly competitive (feature-wise) to H&R Block as well as TurboTax, particularly ideal for anyone that’s filing a simple return. It’s a little less intuitive for people that are self-employed or have lots of investment income, but it will do the job with a little digging. It’s our pick for the best option for most users.
If your taxes are very complicated and requires lots of itemizing, you may want to invest in TurboTax. This would be more ideal for anyone that’s a small business owner or has to deal with investments like rental property. The downside is that you will have to pay up to $80 for the right software as an additional $37 when filing your state taxes.
There are also some perks to consider with more expensive software. Some tax software has an auto-import feature that pulls all W2 information in without having to enter it line by line. Other features included in some tax software are audit-checks, saving tax info online and the ability to load your refund onto a Visa prepaid card or a store gift card.
Here’s a breakdown on costs for the top five tax software options:
- TurboTax – Federal: $35 to $90 / State: $37
- TaxAct – Federal: $15 to $30 / State: $25
- TaxSlayer – Federal: $17 to $35 / State: $22
- H&R Block – Federal: $35 to $55 / State: $37 to $40
- Jackson Hewitt – Federal: $50 / State: $37
Do You Even Need to File?
Just a reminder, you may not need to file a tax return if you make less than $10,350 per year (under age 65). Here’s a chart that breaks down income thresholds for filing. However, you may want to considering filing anyway, especially if you can tax advantage of credits like the American Opportunity credit. That will help you get a little money back this year.
Are There Deals on Tax Software?
Yes. Turbotax’s software packages will go on and off sale frequently starting in late January through about early March. Look for deals in the Ben’s feed here from retailers such as Amazon and Dell.