tl;dr: Use Free File for federal. For state, there's likely a completely free method via your state's tax website.
For some reason this information is a bit "fringe", which I think speaks volumes about the amount of fuckery that the tax preparation and tax software industries are doing to the American society. As if the overcomplicated tax code wasn't bad enough, it seems the average person doesn't know that they can file their taxes for free ("free" as in "don't pay any service fee to actually file the tax return"). I've seen many friends get conned into paying stupid and unnecessary fees when using proprietary tax software, and it doesn't have to be that way.
Remember:
- Don't use TurboTax, no matter how "free" you may believe it is.
- Don't use TaxAct, no matter how "free" you may believe it is.
- Don't use {insert proprietary tax software here}, no matter how "free" you may believe it is, at least not directly—that is, make sure you arrive at one of those services via Free File (if you qualify—see below).
- Don't hire a tax preparer. Doing your taxes is something you should do yourself, no matter how complicated you may think it is. While it's true that the tax preparation industry has single-handedly lobbied for a more and more complex tax code, that's not necessarily a reason to hire an overpriced tax professional (unless your tax situation is so complicated that you need their assistance, which is arguably not the case for most people). I am not a financial advisor nor an expert on tax code. This is not financial or tax advice.
Start here: irs.gov/freefile. You're presented with a decision to make:
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If you made less money than some arbitrary cutoff (canonically $79k at the time of this writing, but it may differ from tax prep offer to offer) in the tax year then you can use an IRS Free File Offer. This gives you a plethora of offers to choose from which are proprietary wizard-based tax prep software. This is provided by companies (like Intuit, who makes TurboTax) that participate in the Free File Alliance to satisfy an agreement with the IRS to provide an actually free way to file taxes. It's been shown that Intuit tried to hide this free offering's existence from the web! They really don't want you to use it... So, use it! Browsing the offers should look something like this:
If you made more money than the arbitrary cutoff, then you'll have to use "fillable forms". However, I argue you should use "fillable forms" anyway because it's best to fill the forms out yourself, so you understand exactly what's going on with your taxes.
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If you can't (or don't want to) use a Free File offer of a wizard-based tax prep software above, then use freefilefillableforms.com. Go there and start the process. You have to make an account, which self-destructs by the end of the year (so even if you've made an account before, you'll likely have to make a new one). The landing page should look something like this:
This website is the only official, truly free way for those who make more than the arbitrary cutoff ($79k at the time of this writing) to file their taxes in a somewhat modern way (as opposed to filling out the forms in ink and mailing them). Essentially, you're just filling out a raw 1040 PDF (and any additional forms) but in such a way that you're able to e-file for free when you're done.
Note: the same people who make TurboTax, TaxAct, etc. maintain this website, so they probably collect data. If data privacy is your number one concern, it's recommended to fill out your taxes with paper and ink and mail them directly to the IRS.
It helps if you have your previous tax forms handy (which you probably need anyway) to use as a reference when filling out what is essentially the raw 1040 (and any additional forms you add along the way).
Note: after e-filing with Free File Fillable Forms, if there was an immediate rejection due to a validation issue (e.g. the previous year's AGI or PIN code are incorrect, etc.) it's possible you will not receive a notification email. After filing, make sure to check back often to see the status of your tax return.
If your state requires filing state income taxes, as most do, you'd normally file them after completing the federal form 1040 first. Even if you did not follow the above, but instead stumbled upon a "free" way to e-file your federal tax return using proprietary services, moving onto the state portion is often where such a service may require you to pay an unnecessary fee. Don't fall for their trick! Most states have a completely free way to file your state income taxes too, so abandon that proprietary service at this juncture even if you've already e-filed the federal portion through them.
Note: Some states, like Idaho, may not offer a completely free and state-provided way to electronically file your state income tax return, and may instead require you to use a third-party service if you wish to e-file. Further, you may have to e-file your federal and state income taxes both through the same service.
After you've e-filed your federal taxes, use your state's companion to Free File (if offered). For California, that's CalFile, which is part of the Franchise Tax Board (FTB). Go there and make a "basic" account, which should be enough to get the job done. Or, if you already have an account (from a previous year) log into that existing account—MyFTB accounts are not self-destructing like Free File Fillable Forms accounts are. The landing page should look something like this:
Once you're in, it's intuitive to fill out the form (540 in the case of California) with a "wizard" workflow and it e-file it when you're done.
Here are some state websites where you should be able to file your state taxes for free.
Note: I've only dealt with California, so I haven't verified most of these.
| State | Website |
|---|---|
| Arizona | https://www.aztaxes.gov |
| California | https://www.ftb.ca.gov/file/ways-to-file/online/calfile/index.asp |
| Oregon | https://www.oregon.gov/dor/programs/individuals/Pages/direct_file_OR.aspx |
| Utah | http://tap.utah.gov |
| Washington | https://secure.dor.wa.gov/home/ |
| ... |