Cheap and Free Tax Preparation Options

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Totally surprised! I qualify for the third option on here and I think most of my friends do, too! So many free tax preparation options...

This year, taxes are due on April 15, 2021. That seems like it’s far away, but it definitely sneaks up on you quicker than you’d think!

Beside avoiding procrastination, filing your taxes earlier helps you reduce the odds that you’ll be a victim of tax identity theft. That’s because the IRS only accepts one return for each social security number, so if an identity thief files a fake return before you get to your real one, you’ll have more than a headache on your hands.

If you’re looking to file and don’t want to do it yourself, but also don’t want to drop a ton of cash, check out these four cheap and/or free tax preparation options.

VITA

VITA is a free tax preparation service for low- and middle-income Americans.

Trained volunteers help you get your information sorted out in person, and then run it by the supervising volunteer, who has even more training. Once you’ve made it through all of your interviews, which can take about one to three hours depending, they e-File your return for you, and you’re good to go.

Anticipate a different experience of operations on the ground during the pandemic, likely to include fewer available time slots, masking and social distancing measures.

You do have to make less than $57,000 to qualify for this program for the 2020 tax year.

Those income limits change based on your geographic location, and specific life circumstances. You’ll have to run all of your family’s specifics by the organization that runs VITA in your area before being granted an appointment.

VITA closures during the pandemic

During the pandemic, many VITA locations have been shut down. You can check to see if yours is operational here. If it’s not, there may be other community organizations filling in the gaps.

In many communities, the United Way facilitates these programs or can direct you on where to find them. They are often the organization on the other end of the line when you dial 2-1-1, depending on which part of the country you live in.

Because of the virus, if it’s at all possible for you to file online, you are encouraged to do so. The United Way offers a free online program, in addition to the Free File program from the federal government.

Free File

Free File is another IRS-sponsored way to get free tax preparation.

The Internal Revenue Service has partnered up with some tax preparation software companies. This partnership allows households with income under $72,000 to use the tax prep software for free.

In many states, you can even file your state return for free using this method. Be sure to check out this wizard tool that will show you which software is best for your specific situation.

Transparent Software Options

If you don’t meet those income requirements, you can still file your taxes affordably with guidance from tax software. There are really expensive options that come with a big price tag and hidden fees, and then there are affordable, transparent options like FreeTaxUSA.

The Federal returns you file with FreeTaxUSA are always free. Even if you’re self-employed or own a small business. Even if you’re a homeowner. State returns are currently marked down to $12.95. Learn more here.

Big Box Tax Preparation

This is my least favorite option. The biggest reason is that in my experience, I haven’t found it to be affordable at all.

One year, I took my taxes into a big box store. I had multiple state returns because of frequent moves. Income tax for one state was supposed to be waived because of military status and state law. But this guy refused to listen, demanding I pay additional taxes erroneously. And then pay him $300+ for doing a bad job.

I walked out the door. That guy in the big box store wasn’t a CPA. He was a seasonal worker who received some seasonal training. I called up my state to make sure I wasn’t totally screwing up, and they confirmed that he was indeed wrong.

In my opinion, this solution can be especially expensive if you’re a contractor and have lot of schedules and forms to attach to your 1040.

Cheap and Free Tax Preparation Exists

If you’ve been putting off filing your taxes because of cost, worry no more. For most people, there are ways to get your return filed at a reasonable rate, or even free.

Oh, and if you think you don’t owe any taxes because you didn’t make enough money, you just might want to file anyways. It’s highly likely that the government owes you a refund.

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15 thoughts on “Cheap and Free Tax Preparation Options

  1. Gary @ Super Saving Tips

    I’ve done my tax returns the last several years using guidance software. I could still do it the old-fashioned way, but it’s cheap, quick, and reliable plus my returns get filed online. I’ve already gotten this year’s refund back!

    Reply
  2. RAnn

    Those walk-in chain places are a rip-off. Like you said, those folks don’t really know taxes; I’m a TaxAct fan, but all the major packages know as much as those folks do; all they really are is data entry clerks.

    Reply
  3. Michelle

    I filed my taxes on President’s day and already got my federal refund! Wish I had read your article first though. I used TurboTax but had to upgrade to one of their premium options which ended up costing over $100. Pinning this for next year! Thanks!

    Reply
    1. femmefrugality Post author

      It’s insane how much the bigger names have raised their prices over the past few years! Sorry you missed it this year, but at least it will be there for next!

      Reply
  4. kay ~ the barefoot minimalist

    Great options! We haven’t filed yet, and since we’re filing for Florida this time, there isn’t a state income tax. That’s definitely a change coming from NY. I remember (yeesh, age showing here) when H & R block was a straight $40 for any return. Then one year we went and everything had changed and we paid $300 + . Never went back after that. We can do it ourselves, CHEAP, thank you very much, just using their software! By the way, HI FEMME! Things have been crazy here. Missed you and apparently a ton of your posts. I need to catch up! 🙂

    Reply
    1. femmefrugality Post author

      Kay…I’m so sorry. There’s nothing I could say to alleviate any of the pain or grief, but I hope you know you are in my thoughts during this difficult time. I would say it goes away, but being here without them always leaves a mark. My deepest condolences to you and yours.

      Reply

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