Did you know that you could potentially save money on tax preparation and filing? It's true! Many US households pay for these services, but there are actually free options available through IRS-approved programs. So, why aren't more people taking advantage of these opportunities?
The answer might lie in the complexity of the tax code. It's a daunting task for many, especially those with lower incomes, to navigate the intricate web of tax regulations. As Margot Crandall-Hollick, a researcher at the Urban-Brookings Tax Policy Center, puts it, "Our research suggests this complexity drives families to seek help from tax intermediaries."
The Tax Policy Center's analysis, using IRS data, reveals an interesting trend. In 2024, a significant number of returns were prepared by paid practitioners (85.4 million) or using commercial software (61.7 million), with an estimated 26 million of those done for free. However, the free options can be challenging to navigate, as they vary in delivery methods and eligibility criteria.
For instance, the Direct File program, which aimed to provide free guided tax preparation directly through the IRS, was suspended due to its cost. This program, while promising, was still in its pilot phase. But fear not, there are still several free IRS-approved options available this tax season!
One such option is the Free File program, a public-private partnership between the IRS and trusted private tax-prep software companies. This program is available to filers with an adjusted gross income of $89,000 or less for 2025, and it covers the most commonly filed federal forms. The IRS provides an interactive tool to help you determine your eligibility and match you with the right partner for your needs.
Another option is the Free File Fillable Forms (FFFF) program, which allows taxpayers to fill out federal tax return forms directly on the IRS website. This option is open to everyone, regardless of income, age, or residency. However, it's important to note that not all forms are available, and there's no additional guidance provided, so it's best suited for those comfortable with the tax return process.
For tax year 2024, only a small fraction of returns (400,000 out of 161 million) were prepared using FFFF, according to the Treasury. This highlights the need for better awareness and understanding of these free options.
The Voluntary Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs are also great resources. VITA primarily assists filers with incomes below $69,000, those with disabilities, and non-English speakers. TCE, often paired with VITA, is tailored for seniors and has no formal IRS income limitations. These programs are available through partner organizations like the AARP Foundation, with an estimated 67 million filers eligible for VITA and 22 million for TCE in 2024.
Lastly, members of the military, veterans, and their families can access free tax prep and filing services for both federal and state returns through MilTax, provided by the Department of Defense. There are no income restrictions, and the software is designed to address the unique tax circumstances of military life.
So, there you have it! A range of free tax preparation and filing options to explore. Remember, knowledge is power, and understanding your rights and resources can lead to significant savings. Now, the question is: Will you take advantage of these opportunities? The choice is yours!
