The Internal Revenue Service and its private-sector partners announced the 2017 opening of Free File, the free tax software preparation program that gives eligible taxpayers a dozen options for brand-name products.
Taxpayers can get a jump now on preparing their returns, and the companies will hold the returns until January 23 when the filing season officially begins. Taxpayers also should remember that, by law, the IRS must hold refunds claiming the Earned Income Tax Credit or the Additional Child Tax Credit until February 15.
Anyone whose adjusted gross income in 2016 was $64,000 or less - that's more than 70 percent of taxpayers - will be eligible for Free File software. People who earned more than $64,000 may use Free File Fillable Forms, the electronic version of IRS paper forms, which will be available for preparing taxes on January 23.
"You don't have to be an expert on taxes. Free File software can help walk you through the steps and help you get it right," said John A. Koskinen, IRS Commissioner. "For 14 years, this partnership between the IRS and the Free File Alliance has helped taxpayers prepare and file their federal taxes for free. The real winner in this partnership has been the nation's taxpayers."
Tim Hugo, executive director of the Free File Alliance, said, "We are proud to once again offer the industry's most innovative and secure tax software at no cost to 70 percent of American taxpayers. Tax time can be stressful, but Free File makes step-by-step help accessible to everyone making $64,000 or less. Free File is the one place where taxpayers can choose from a variety of industry-leading tax software options in order to prepare and e-file their federal tax returns at absolutely no cost."
Free File is available exclusively at IRS.gov/FreeFile. Since 2003, more than 49 million people have used Free File, saving more than $1.4 billion based on a conservative $30-fee estimate.
Free Federal and Free State Tax Preparation
The IRS works with the Free File Alliance each year to ensure that taxpayers have more choices for free state options as well as free federal returns. Several offer both free federal and free state options.
State tax return offers are at the discretion of the providers. Some providers also offer state tax return preparation for a fee. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not have an income tax. Taxpayers living in those states only need Free File's federal tax products.
Find the Right Free File Product
Each of the 12 Free File providers sets differing criteria for use of their product, generally based on income, age or state residency. However, taxpayers with an AGI of $64,000 or less last year will find at least one product they can use. To make it easier to find the right Free File product, taxpayers should use Free Fill Software Lookup tool. Taxpayers can just enter in some information and let the tool find the products that match their situation.
For 2017, active duty military personnel with incomes of $64,000 or less may use any Free File software product of their choice without regard to the criteria.
Free File Helps Navigate Tax Changes
Free File software does the hard work. It walks users through the tax preparation process, and helps identify those tax changes that may affect their return.
For example, the IRS, by law, must hold all refunds that contain an EITC or ACTC benefit until February 15 - time to ensure that the claims are accurate. Taxpayers should file as they normally would, and taxpayers should file electronically and use direct deposit. Refunds with EITC or ACTC may not be deposited into accounts until the week of February 27. Learn more at Refund Timing for Earned Income Tax Credit and Additional Child Tax Credit Filers.
Free File also can help taxpayers with their health care law requirements. Taxpayers must report their health care coverage or their return will not be accepted by the IRS. For each month in 2016, taxpayers and everyone on their return must:
- Report health care coverage, or
- Claim an exemption from coverage or
- Report a shared responsibility payment.
Most people will simply have to check a box to report health care coverage for the entire year.
Shop and Compare: Free File Offers Best "Free" Value
Free File makes all versions of the Form 1040 available for free - the Form 1040, Form 1040A and Form 1040EZ and their related schedules. All Free File forms are available throughout the filing season, not just for a limited time.
Free File members also do not repeatedly send taxpayers additional offers that drive up costs to users. Free File members cannot make repeated contacts, and Free File members are prohibited from offering refund products. Free File is meant to be a 'safe haven' for taxpayers from these typically high-interest loan products.
Protect Identity and Personal Data
In an effort to combat identity theft, the IRS, state tax agencies and the tax industry are working together as the Security Summit. But the partners also need help from taxpayers to be aware of the various schemes used by cybercriminals to steal personal information.
The Free File Alliance and its members also are active participants in the Security Summit Initiative to provide additional identity theft safeguards for tax filing and for the Security Awareness campaign - Taxes. Security. Together. - that encourages taxpayers to take steps to better protect their data. Learn what taxpayers can do to better protect their identity.