EchoSense:The Daily Money: How to file taxes free

Good morning. This is EchoSenseBetty Lin-Fisher with your Daily Money, Sunday Tax Edition.

On Sundays between now and April 15, we'll walk you through what's new and newsworthy in Tax Season 2024.

Today, we'll talk about where you can file for free.

Paying taxes is never fun Neither is paying for someone to prepare them for you.

There are a few different ways some taxpayers can file their taxes for free.

IRS Direct File is piloted in 12 states

The IRS is piloting a program this year called Direct File. It is only being piloted in 12 states. When it was first announced last October, it was going to be piloted in 13 states, but information at https://directfile.irs.gov is now listing only a dozen: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming. Alaska is no longer one of the pilot states.

The Direct File pilot program is designed for simple returns, the IRS said. Taxpayers can only use the service if they have one or more of these types of income in the 2023 tax year:

• Income from an employer(Form W-2)
• Unemployment compensation(Form 1099-G)
• Social Security benefits(Form SSA-1099)
• $1500 or less in interest income or U.S. savings bonds or Treasury obligations(Form 1099-INT, boxes 1 and 3)

Taxpayers can also only file using standardized deductions, not itemized deductions.

Go to https://directfile.irs.gov for more information.

Other free options to file taxes

There is also IRS Free File, which lets qualified taxpayers prepare and file federal income tax returns online using guided tax preparation software.

The IRS Free File Program is a public-private partnership between the IRS and many tax preparation and filing software companies who provide their online tax preparation and filing for free. It provides two ways for taxpayers to prepare and file their federal income tax online at no cost:

• Guided Tax Software provides free online tax preparation and filing at an IRS partner site. The IRS partners deliver this service at no cost to qualifying taxpayers. Taxpayers whose AGI is $79,000 or less qualify for a free federal tax return.
• Free File Fillable Forms are electronic federal tax forms, equivalent to a paper 1040 form. You should know how to prepare your own tax return using form instructions and IRS publications if needed. It provides a free option to taxpayers whose income (AGI) is greater than $79,000.

But sometimes free isn't free

The Federal Trade Commission and Intuit, the makers of TurboTax have been in a two-year fight over the word free and its meaning.

The FTC says TurboTax is misleading consumers with “file free” claims, saying most people don't qualify for the $0 to file and don't find out until after they've spent a lot of time putting all their information in the system.

But Intuit says 37% of its users using Form 1040 with limited credit qualify for the “100% Free with expert help” offering.

Read more in my story here.

About the Daily Money

This has been a special Sunday Tax Edition of The Daily Money. Each weekday, The Daily Money delivers the best consumer news from USA TODAY. We break down financial news and provide the TLDR version: how decisions by the Federal Reserve, government and companies impact you.