PSA: Everyone (regardless of income) can e-file Federal Returns for Free

[johnny847]

I've seen this misconception quite a few times on this forum, so I'm writing this as its own topic. Everyone can file their federal returns electronically for free: https://www.irs.gov/uac/free-file-do-your-federal-taxes-for-free

What some people seem to get confused by is the stated income requirement. The income requirement qualifies you for the tax software which helps you figure out your tax returns. However, regardless of income, you can always use the Free File Fillable Forms, which doesn't include any software. That means no questionnaire to figure out your taxes. You're literally just filling out a digital version of your 1040 and other necessary forms. It will do very basic math for you, like adding up lines 7 to 21 to fill in line 22 for total income, but it won't help you figure out what to put in each line.

[Ambergris]

It's also worth noting that the income number on the free file (many below 64k) is your AGI, I believe, so this is your income after deductions like 401k contributions. More people may qualify than they realize.

[Sean Og]

I use this every year for Federal and works well. If you want added reassurance you can always run the numbers into turbotax etc.

[Drifterrider]

It has always been "free" to file your tax return.  It has not been "free" to electronically file your tax return.

There is a difference.  I've been filing my federal return "free" for 38 years :)

[threefive]

This is the first year I haven't used TurboTax. Just finished filing with the free fillable forms, and it was actually surprisingly easy and bug free. I tried to use TurboTax, but I had such a different tax situation this year that I was spending more time looking for workarounds for TurboTax than I thought necessary, and I had already basically taught myself during the year to prepare anyway. I had a foreign fellowship (foreign countries don't send W2s or withhold), un-reimbursed employee expenses from that trip, and consulting income and expenses that TurboTax couldn't get its head around (or, at least it couldn't handle the fellowship).

Taxes are actually pretty easy to DIY, and I feel like I have a better handle on how to "play the tax game" now. For example, since I was already itemizing due to the large un-reimbursed expenses, I realized I could pay my property tax in December instead of February like usual. This allowed double the deduction. Same with personal property tax. I probably won't be itemizing next year, so it works. I learned about the residential energy credit, so when my water heater was going this winter, it was an easy decision to replace it with a heat pump water heater ($300 tax credit + $400 rebate from the power company = total cost less than a regular electric water heater, and my electric bill is $40/month lower.)

I also have a significantly greater appreciation for just how badass tax-advantaged accounts really are. 15% federal + 7% state is a 22% return on every dollar I shove into my 401a, 457, and my wife and my IRAs. Didn't even know about the spousal IRA provision (spouse is SAHM) until this year. TurboTax never mentioned it!

I was looking at >$100 for the deluxe TurboTax. I paid nothing, instead. I'm now converted 100% to DIY taxes, especially since my taxes will be significantly easier next year. Just a W2 with no side-hustle income that I'm planning on. Effective federal tax rate of 3.5% on about $120k of gross income. I call that a win. Next year, I've gotten my tax-advantaged contributions in line to get that down to a 0.5% effective federal rate.

[teen persuasion]

Federal yes, state no for me.

I'd love to skip the Q&A and just fill out the forms directly.  My state started developing their own version of fillable forms a few years ago, but neglected to include any forms related to children (CTC, EITC, college credits, etc.).  This year they've apparently abandoned the effort altogether; there's just the option to use free SW.  If I have to do that, I have to do the federal first thru it anyways to transfer everything to state forms.  And the state essentially insists everyone e-file unless they file everything on paper.  I'm not sure if they will send any paper forms to my library; I've received limited federal forms (they're trickling in) but heard nothing from the state at all to date.

[johnny847]

This is the first year I haven't used TurboTax. Just finished filing with the free fillable forms, and it was actually surprisingly easy and bug free. I tried to use TurboTax, but I had such a different tax situation this year that I was spending more time looking for workarounds for TurboTax than I thought necessary, and I had already basically taught myself during the year to prepare anyway. I had a foreign fellowship (foreign countries don't send W2s or withhold), un-reimbursed employee expenses from that trip, and consulting income and expenses that TurboTax couldn't get its head around (or, at least it couldn't handle the fellowship).

Taxes are actually pretty easy to DIY, and I feel like I have a better handle on how to "play the tax game" now. For example, since I was already itemizing due to the large un-reimbursed expenses, I realized I could pay my property tax in December instead of February like usual. This allowed double the deduction. Same with personal property tax. I probably won't be itemizing next year, so it works. I learned about the residential energy credit, so when my water heater was going this winter, it was an easy decision to replace it with a heat pump water heater ($300 tax credit + $400 rebate from the power company = total cost less than a regular electric water heater, and my electric bill is $40/month lower.)

Preaching to the choir here on the merits of doing taxes yourself =)

I also have a significantly greater appreciation for just how badass tax-advantaged accounts really are. 15% federal + 7% state is a 22% return on every dollar I shove into my 401a, 457, and my wife and my IRAs.

Not quite. Your return is the difference in taxes avoided now and taxes paid in the future.

Side note, you have a 401a and a 457b but not a 401k or a 403b?

Didn't even know about the spousal IRA provision (spouse is SAHM) until this year. TurboTax never mentioned it!

Yeah using tax software doesn't teach you shit about taxes....but some people still fail to see the merits of doing your taxes by hand (even if you double check with tax software later).

I was looking at >$100 for the deluxe TurboTax. I paid nothing, instead. I'm now converted 100% to DIY taxes, especially since my taxes will be significantly easier next year. Just a W2 with no side-hustle income that I'm planning on. Effective federal tax rate of 3.5% on about $120k of gross income. I call that a win. Next year, I've gotten my tax-advantaged contributions in line to get that down to a 0.5% effective federal rate.

*high five*

[johnny847]

Federal yes, state no for me.

I'd love to skip the Q&A and just fill out the forms directly.  My state started developing their own version of fillable forms a few years ago, but neglected to include any forms related to children (CTC, EITC, college credits, etc.).  This year they've apparently abandoned the effort altogether; there's just the option to use free SW.  If I have to do that, I have to do the federal first thru it anyways to transfer everything to state forms.  And the state essentially insists everyone e-file unless they file everything on paper.  I'm not sure if they will send any paper forms to my library; I've received limited federal forms (they're trickling in) but heard nothing from the state at all to date.

I'm in a similar boat. My state (Georgia), as best as I can tell, doesn't have a free file fillable forms available through them directly. They direct me instead to third party offerings from the likes of H&R Block, which as you found, force you to file your federal return with them in order to file your state return with them. (I do understand why they do this - they do want to verify your federal returns before starting your state returns).

I end up filing both my federal and state returns with paper actually. Federal because I recharacterize my IRA contributions every year such that I fill up the 15% bracket and don't spill into the 25% bracket (yes I understand that taxes are on the marginal dollar, but I think it's worth it to pay taxes now to put money into a Roth that was taxed at 15% but not at 25%), and doing so requires you to attach a statement stating you rechar'd $X dollars from your <traditional/Roth> IRA to your <Roth/traditional> IRA. The Free File Fillable Forms doesn't give you the option of uploading a miscellaneous attachment. And then as mentioned previously, I can't file electronically through a third party for my state returns because I didn't file my federal returns electronically with them.

[johnny847]

It has always been "free" to file your tax return.  It has not been "free" to electronically file your tax return.

There is a difference.  I've been filing my federal return "free" for 38 years :)

Yes it has. Go read my original post again.

[threefive]

I also have a significantly greater appreciation for just how badass tax-advantaged accounts really are. 15% federal + 7% state is a 22% return on every dollar I shove into my 401a, 457, and my wife and my IRAs.

Not quite. Your return is the difference in taxes avoided now and taxes paid in the future.

Side note, you have a 401a and a 457b but not a 401k or a 403b?

Sure. But I can retire and move to a state that doesn't tax income. Then, I have the standard deduction and exemptions to get past before I start paying 10% (or whatever the hell the tax rate is then.) So maybe not 15% in the end, but by that point I'm hoping to be sitting on enough to not care all that much.

I have a forced defined contribution (401a) that requires 8% employee with 5% match and no means of contributing more. Then, I have access to a 457, 401k, and a 403b. The 401k and 403b have a combined $18k limit. The 457 has a separate 18k limit. That means I have $36k of fillable space on top of the forced 8% contribution. My wife has $5,500 limit on the IRA, and my IRA limit may start to see a big drop if my income keeps climbing. Just skirted under the line this year.

Now, if I could only fill all of that space and still live this cushy upper middle-class lifestyle, then that would be nice. I'm going to try getting that 457 maxed before worrying about the 401k. However, it may not be worth it to start filling the 401k. I'm probably going to make less money (last year was a fluke), and its looking like I can get my entire federal tax liability to zero with just the 401a, 457, and spousal IRA, which means my usual IRA contribution can go towards Roth. No need to reduce taxes to below zero.

Again, the tax game in action. TurboTax would have never told me that, or would have told me after the fact.

[johnny847]

I also have a significantly greater appreciation for just how badass tax-advantaged accounts really are. 15% federal + 7% state is a 22% return on every dollar I shove into my 401a, 457, and my wife and my IRAs.

Not quite. Your return is the difference in taxes avoided now and taxes paid in the future.

Side note, you have a 401a and a 457b but not a 401k or a 403b?

Sure. But I can retire and move to a state that doesn't tax income. Then, I have the standard deduction and exemptions to get past before I start paying 10% (or whatever the hell the tax rate is then.) So maybe not 15% in the end, but by that point I'm hoping to be sitting on enough to not care all that much.

My point exactly. You can manipulate it to be not much more than 0, but so long as you're withdrawing more than the standard deduction + exemption, you're paying taxes on it, meaning your return isn't 22%.

I have a forced defined contribution (401a) that requires 8% employee with 5% match and no means of contributing more. Then, I have access to a 457, 401k, and a 403b. The 401k and 403b have a combined $18k limit. The 457 has a separate 18k limit. That means I have $36k of fillable space on top of the forced 8% contribution. My wife has $5,500 limit on the IRA, and my IRA limit may start to see a big drop if my income keeps climbing. Just skirted under the line this year.

Now, if I could only fill all of that space and still live this cushy upper middle-class lifestyle, then that would be nice. I'm going to try getting that 457 maxed before worrying about the 401k. However, it may not be worth it to start filling the 401k. I'm probably going to make less money (last year was a fluke), and its looking like I can get my entire federal tax liability to zero with just the 401a, 457, and spousal IRA, which means my usual IRA contribution can go towards Roth. No need to reduce taxes to below zero.

Again, the tax game in action. TurboTax would have never told me that, or would have told me after the fact.

You don't have a Roth 401k option?

And I do hope that 457b is a governmental one, as if it isn't it's not held in trust on your behalf nor can you use the penalty free early withdrawal exception.

[threefive]

I get that it's not 22%. It just makes me feel better to think about it that way, since the real answer is completely and absolutely unknown, as President Chelsea Clinton could conspire with House Speaker Ivanka Trump to raise rates to 45% on retirement distributions (or drop them to 0%). It costs me $880 to save $1000 right now. I'll take that all day long and worry about the other side when I have the information.

The 457 is a government plan (with low-cost investment options and tiny admin fees!). I have a Roth option in both the 401k and 457 but I just don't make enough to start worrying about greater than $5,500 Roth IRA contributions after eliminating taxes.