It's relatively easy for most Americans to find free guided tax-prep and filing options for their federal income tax returns. Several commercial tax-prep companies offer at least one "basic" edition that's free to all. Or, if you meet certain income criteria--including household adjusted gross income of $58,000 or less--you can find software through the IRS's Free File program to guide you. The IRS estimates that 70 percent of Americans are eligible for Free File, and roughly the same percentage take the standard deduction. In prior tests, we've found guided tax software quite appropriate for those folks.
In the 21 states that partner with the IRS Free File program, qualifying taxpayers can get free, guided help filling out and filing both federal and state forms. Taxpayers who qualify for Free File but live in other states also may be able to prepare and file their state forms for free, too. However, those states might not offer the same level of guided help.
Either way, you need to follow the rules to avoid a preparation or filing fee. In this blog, we discuss what to do if you qualify for IRS Free File and want to access your state's free electronic tax preparation and filing system. Advice for folks in states partnering with IRS Free File
Before starting your federal return, click on your state, below, to link to its electronic filing page. You'll see which tax-prep software companies are offering free services to people like you. In a single state, one service may be available to everyone with AGI of $58,000 or less, another to people making $20,000 or less, and another only to those age 25 and younger, or 65 and older.
Follow the directions on the state page. You may have to link to your chosen company's software from that page to avoid a tax-prep or filing fee. The software will guide you first through your federal form and then your state form, and file them both at no cost.
When I tried this process recently with a friend from New York who qualified for IRS Free File, it worked seamlessly. We clicked through the H&R Block At Home link on the New York free filing page to an H&R Block page to begin her federal form. The software imported her federal data to her state form, and didn't charge her a dime for anything. And by going through Free File, we skipped annoying pop-up ads that show up at the regular commercial sites.
Advice for folks in non-Free File states
Numerous other states don't partner with IRS Free File, but still let you prepare and file your state forms electronically for free. They just might not provide the more-cushy guided experience. Instead, your state may offer "fillable" forms: You type in the figures from a print-out of your federal forms, the software does a few computations, and you send your forms directly to your state taxing authority.
Don't panic at the prospect of filling everything in yourself without prompts. State tax forms are based on information you've already created on your federal forms, so a fillable state form could very well take very little time to complete. A few states--notably Masschusetts--do offer a free, guided tax-prep experience. But as with the fillable forms, they won't import any information from your federal return. You'll have to key it in yourself.
If you live in one of these states and qualify for IRS Free File, do your federal return at IRS Free File, and print out your return. Then, click on your state's electronic filing page (links are below) and follow the instructions.
Links to D.C. and all states with some form of electronic income-tax filing
District of Columbia
Montana and Montana FreeFile.org