What do I do if my income is just a little too high for "free file"?

Question

I live in North Carolina and I'm using the H&R Block website to file my taxes and finally at the end of everything they informed me that there's a limit to how much I could make last year and still be eligible for free file. My income was staggeringly close to this limit and yet I'm being asked to pay $29.99 to sign up for a premium account.

Given that this is the first time my income has been high enough to pay income tax, I don't know anything about how the IRS works. Does anyone have any suggestions about what to do in this situation or am I out of luck?

EDIT: Turns out it's actually $66.98 because they're charging for state filing too.

Answer 1

What they're charging you $30 for is the ability to get your refund sooner.

If you don't want to pay for that ability, then maybe it's time for you to learn to do taxes the old fashioned way (kinda).

Hit the IRS website http://www.irs.gov/ and download Form 1040, 1040A or 1040EZ and the accompanying instructions. They are all PDF files which have been rigged to let you fill them out right in the form with any modern computer.

I fill out my forms except for SSN and banking account data... then I save the form as PDF, add my SSN/bank, print them out and don't save the form. That way my SSN isn't lurking about on my computer. Sign and date in ink with your own hand, and mail them postal mail to the address in the instructions.

IRS now reads tax forms using OCR technology, which isn't as fast as e-filing since a human must open your envelope and set it on a scanner (they even scan the envelope for postmark etc.) So if you use their PDF form and their font selection, their OCR should pick it right up.

You kids these days have it easy with your fillable PDFs and your OCR. In my day, we had to hand-write every figure, in neat block lettering, and if you messed up you had to start over. Then we'd walk 15 miles to the post office, barefoot in the snow, uphill, both ways. With wolves biting at our heels. And we liked it! At least the Post Office was open til midnight on April 15 (that part actually was true).

Answer 2

If your adjusted gross income (AGI) is over $66k, you don't qualify for the free tax filing software anymore, per the IRS Free File site (link).

Some options:

1. Pay for tax preparation software
2. Use the tax preparation software on a relative or friend's machine, but don't e-file - print out your return and mail it in. (Note: Some software packages may have more than 1 e-file included - you may be able to utilize one of the "extra" e-files for free)
3. Fill out your return on paper forms (free, but you'll need to mail the return)
4. See if there are any special offers
5. Use the IRS Free Fillable Forms option, which lets you fill in PDF like forms online, and still file online. You will have to do the math yourself, or follow the above points first.

From one perspective, not qualifying for free software is a positive thing - you're now making enough where you don't qualify for free software. It's a good milestone in your career path.

If you really don't want to pay for tax filing software, you can "borrow" the software installed on a relative or friend's computer and generate the filled-out paper forms to print and mail. It's more hassle, but if you don't mind one or more visits to use another person's computer AND the trip to the post office, it's a relatively inexpensive option. Some software, such as TurboTax, have a limited number of federal e-files included, so a "free" e-file may still be available if your relative/friend hasn't used all of the ones that come with the software purchase.

Since you mentioned H&R Block, one page on their site indicates some free options:

1. Free Federal 1040-EZ (update: no longer available)
2. H&R Block More Zero

One or more of the options above may work for you.

Answer 3

Normally, you can use "free file fillable forms", which is the IRS file for free option for higher incomes. The forms are web-based and very basic; aside from some basic addition and subtraction, you have to enter everything manually as you would on a paper form. You also have to manually enter information such as your W-2 information. This is free for all users, but does not have the same features as the tax software which is free for lower-income filers.

This may not be helpful for you as a first time income tax filer because one requirement is: "You must have your 2016 Tax Return".

Answer 4

Well, if your income is too high for typical "free" file services, you could use something like Credit Karma Tax which is free to use with virtually no income limits (so long as they cover your tax situation - which is pretty likely).

My income has been above the "free" file limits for years yet I've never paid to file taxes and always do so online. Maybe you've not looked for alternatives?

Answer 5

Free File eligibility is based on your Adjusted Gross Income. If you are just slightly over the limit, an increase in any of the above-the-line deductions will lower your adjusted gross income and could bring you below the Free File threshold.

If you haven’t yet contributed the maximum contribution for 2017 to a traditional IRA, you have until you file your taxes to make this contribution and lower your adjusted gross income.

Likewise, if you have an HSA, an additional HSA contribution could also bring you into Free File eligibility.

If you don’t want to do either of these things, just pay the thirty bucks. You make enough money to be able to afford it.

Answer 6

freetaxusa.com has free federal filing and $12.95 state filing. As far as I can tell, there is no income limit for the free federal filing.

Answer 7

Ben Miller has already answered with some ways you might be able to bring your adjusted gross income below the cutoff.

If you are unable or unwilling to do so, then your options are more limited:

• Pay the $30 (which is actually a pretty good deal for tax prep software - I paid nearly $70 for mine this year)
• Go elsewhere (several of the other answers proposed various possibilities)

Fundamentally, a limit like this must be a hard limit, or else it is meaningless. If they move it for you, then they need to move it for everyone else who's in a similar situation. So let's say that your income was $66,249 so you're over the limit of $66,000, but would be under at $66,250. So they make $66,250 the new limit. But then someone at $66,499 would have a reasonable argument that the limit really ought to be $66,500. And so on.

Let's reverse the situation, to make it more plain: Let's say that you have contracted with a company at a rate of $100 per hour. At your first pay cycle, you discover that they have only paid you $99 per hour. But their reasoning is, "$99 is staggeringly close to $100, so you really should just accept that." Following pay cycle, they pay $98/hour, for the same reason. Etc. No! No sane person would accept that. If they're not paying you $100, they're breaching the contract.

There are dozens of tax preparation companies and software packages. None of these are official IRS representatives. Their rules and regulations are contractual - what you must fulfill in order to use their service - not legal. Nor is there any requirement that you must use any such service in order to complete your taxes. By using their software to submit your taxes, you agree to abide by the contract as stated - which includes any income limits. If you don't like the limit, or any other clause of the contract, you walk away.

You also need to consider that this $30 is in lieu of sitting down face-to-face with a tax prep specialist, who will charge much more than $30 for their time.

Answer 8

use credit karma, but double-check using turbotax

the "free file" limitations vary widely from one provider to another. just pick one of the tax filing websites that is free for your income level (e.g. credit karma for 2017). if you're concerned about the accuracy of the provider, simply complete your taxes in a name brand provider like turbotax (but don't pay to file) then compare the final numbers to the free software.

personally, i complete my taxes in 2-3 different providers every year and compare the results. so far they have always matched eventually, but sometimes only after reconciliation. it gives me some peace-of-mind to know both that the software is working correctly, and that i entered everything correctly. sometimes it reveals the shortcomings of a given app. for example, this year i used turbotax and credit karma. i discovered that credit karma doesn't handle 1099-r forms correctly if they have the "taxable amount not determined" box checked (but they clearly call this out on the 1099-r screen). to get around the problem, you have to update the "taxable amount" from your 1099-r yourself, which means it might not match what the 1099-r provider sent to the irs, which might be an audit flag. turbotax does handle that scenario correctly, but only after you enter in your non-deductible ira contributions at a later point in the wizard. that means for a few minutes, it shows a smaller refund amount than it should in the running total. not a big deal, but more confusing than it would have been if the non-deductible contribution came first in the wizard.

here is a list of free providers for the 2017 tax year

Answer 9

VITA sites prepare taxes for free if the return meets their qualifications. (I know this because I am a qualified VITA volunteer). This includes regular wages, some small businesses income, interest and dividend income, capital gains, IRA distributions and social security benefits, earned income credit and many other tax situations.

They have sites in all states that are open during tax season. All sites are staffed with helpful and friendly folk who fill out all tax forms and e-file for free. This includes state taxes for those of us lucky enough to live in a state that taxes income.

Answer 10

I was able to file my taxes for free last year but not this year. I am not a finance specialist whatsoever and after spending 45 minutes to an hour of struggling to find the correct form I simply gave up.

Take a step back and examine how much time you've spent on trying to figure out how to file your taxes. Think of how much your time is worth and compare it to how much time you've spent trying to fill out the forms for your taxes.

Ultimately I went with TurboTax, I answered their questions and was done in about 20 minutes. At the end they charged me $89.99 (Premium Plan), this included IRS protection, identity theft protection and some other stuff. In my opinion, being able to file my taxes in 20 minutes was already well worth the $89 dollars. Furthermore, they were able to get me $200 dollars more than last year.

Does spending time finding and filing the free solution outweigh getting your taxes filed for you and paying a small service fee at the end?

Answer 11

I use Credit Karma Tax and it has ALWAYS worked for me. They don't allow amended returns, so make sure you have ALL your forms ready to go. They are completely free and I had my Federal and State refund in 6 calendar days. I highly recommend them.