- Many online tax software programs advertise
that you can file your taxes for free.
Except a lot of people end up spending an hour
or two inputting their tax forms
only to find out that the tax forms
that they've input bumps them up to the paid version.
So if you truly want to file your taxes
for free in 2021,
stick around in this video I'm covering
the best free tax software to file your 2020 tax return.
(soft music)
Hey guys, it's Justine with the College Investor
Investing and Personal Finance for Millennials,
and I bet something that's top of mind
for you right now is figuring out
how to file your taxes and do it completely free.
So if you've been researching
what tax software programs to use,
I have a couple of quick tips for you
to go through those pricing packages
to make sure you are absolutely getting the free version.
Okay, two big questions that you should ask yourself
before you sign up for a tax software program
is if the state return is included in the free version?
So oftentimes tax software programs will say
that the federal return is for free
but the state return is an additional cost.
And sometimes that can be a tune
of 30 to $40 for the state return.
So if that's the case
make sure that you are understanding exactly
whether or not federal and state returns are included.
The second question that you should ask yourself
is what type of deductions are included in the free version?
So oftentimes only your W2 is included in the free version.
However, some tax software programs
are including certain deductions
like the earned income tax credit
or student loan interest in the free version.
But sometimes those exact same things in another software
including retirement contributions
or HSA contributions could bump you
up into the paid version.
So those are two questions to ask yourself.
One is a state return included in the free version,
and two what types of deductions are included
in that free version.
Okay, so you're probably wondering
what specific tax software companies
are truly offering free filing situations for 2021.
Let's go over this top list
that we have pulled together for you.
The first one is H&R Block,
and you can file your federal and state returns for free.
This includes unemployment income, student loan interest,
educational expenses,
and the child tax credit.
That's all included in the free version.
The things that you need to watch out for
is if you have any HSA contribution or childcare expenses
plus if you qualify for the Retirement Savers Credit,
you may have to upgrade into their paid version.
The second company that's offering both free federal
and state returns is TurboTax.
Now, this also includes unemployment income
and dependent credit for free.
Now, watch out if you have student loan interest
and you claim any HSA contributions
or childcare expenses,
you'll need to bump up into that paid version.
So you can see how one tax software like H&R Block
is including student loan interest,
and then TurboTax is not including that
and you'd have to bump up.
That's why it's super important to look over
what tax forms you have in hand,
and then compare the pricing packages
for each of these tax software companies.
And let's keep going through the list.
The next one is TaxAct.
TaxAct offers child tax credit in the free tier.
And you can file your federal and state returns for free.
However, if you have unemployment income,
student loan interest, child or dependent care expenses,
or those HSA contributions
then you are going to have to bump up into the paid version.
The next one is Credit Karma Tax.
Credit Karma Tax is truly a 100% free.
They are the only tax software in 2021
that we've found that's offering a truly free experience.
Now, if you have complex filing situation,
such as you are inputting a schedule J Form,
or you have earned foreign income
that you were wanting to report on your tax return
those things would not be included in the free version.
The next tax software that is offering both federal
and state returns for free is TaxSlayer.
So you can also report student loan interest
in educational expenses.
However, if you have any dependents,
HSA contributions, IRA contributions,
or other situations you may need to upgrade with TaxSlayer.
So I'm sure you've seen a lot of advertising
with these different tax software programs
that you can file your taxes for free online
and do it very easily.
However, you really have to look at the fine print
and look at those gotchas because ordinary things
like HSA contributions, outside investing,
or even student loan interest
oftentimes can bump you up into the paid version.
But sometimes the paid version is most likely what you need
and you can find a lot of good bargain software
that is going to fit your needs.
Now, remember the only truly free experience
we found for 2021 is Credit Karma Tax,
but if it ends up not being a good fit for you,
bump over to another tax software program
that may be including a paid version.
Now, if you need help making a decision
be sure to check out all of our complete thorough reviews
and tax software walkthrough videos
and blog posts right here at the collegeinvestor.com