Attention early tax return filers. The 2021 tax filing season now is officially, although only partially, open.
UPDATE, Jan. 15, 11:20 a.m.: The full 2021 filing season will start on Feb. 12. Details to come shortly in a separate post.
UPDATE, Jan. 15, 4:00 p.m.: The IRS opened up its Free File site on Jan. 15. It also announced that it will officially open the full 2021 tax filing season on Feb. 12. That's when the IRS will start accepting and processing all 2020 tax returns, regardless of how they are filed.
The Internal Revenue Service announced today that eligible taxpayers now can use Free File.
The overnight launch of the online filing option means eager taxpayers whose adjusted gross income (AGI) last year was $72,000 regardless of filing status now can get to work on completing and e-filing their 2020 taxes for, as the name says, free.
Free File 2021 companies: When Free File began in 19 years ago, online tax activity was still new. Now the IRS partnership with the tax software industry, represented by Free File Inc., is an expected part of millions of taxpayers' annual Form 1040 filing lives.
For the 2021 tax-filing season, the IRS says there are nine software companies participating in Free File. They are:
- Intuit (TurboTax)
- On-Line Taxes (OLT.com)
- TaxHawk (FreeTaxUSA)
Two of the companies, ezTaxReturn.com and TaxSlayer, offer Free File products in Spanish. Note, however, that TaxSlayer's Spanish language option won't be available until Monday, Jan. 18.
A couple of notes because, as the hubby says, I'm always looking for…something. OK, he says trouble, but that's an issue for he and I to work out on our own later. Now back to Free File.
First, there are only eight software companies listed right now at the page showing Free File provider options. TaxAct is missing. I've reached out to the IRS and the company about this mismatch. UPDATE, Jan. 18, 2021: TaxAct's link is now on the select a provider page.
Also, H&R Block, a long-time participant in the program, isn't on the list. Again, I've contacted the company and the IRS.
As soon as I get clarification, I'll let you know by updating this post.
Early free filing as usual: As in prior recent tax seasons, opening Free File before the full start of tax season is not unusual. The process actually works well for filers, software companies and the IRS.
In advance of the official date on which the IRS actually starts accepting and processing returns — that will likely be later this month, since 2021 so far seems to pretty much be following the 2020 filing time table — eager taxpayers who have all the information they need to file can get that task out of the way.
The software companies will take those Free File returns and hold them until the IRS is ready to take them. On that date, it will ship them to the IRS for processing.
And the IRS has the time to get all its systems ready for the annual influx of 1040 forms.
Free File eligibility requirements: While the IRS and its Free File partners have worked over the years to make it available to as many taxpayers as possible, there still are some eligibility requirements.
Notably, there's the earnings limit.
Again, to use the 2021 Free File programs, the AGI limit has been bumped up to $72,000. That's $3,000 more than last year. Note, too, that the earnings amount applies to all returns, whether they are filed by single, married or head of household taxpayers.
Smart Free File shopping: While Free File is for the most part true to its name, taxpayers still need to be careful shoppers in selecting the program they want to use.
Taxpayers will find among the participating software companies at least one free tax prep product they can use. However, each Free File partner also can set its own eligibility standards. These requirements generally are based on income, age and state residency.
Free Filers' Rights
Some tax software companies were accused in 2019 of guiding Free File eligible taxpayers to paid filing options. In response, the IRS and Free File Inc. agreed to a new deal that makes it easier for consumers to find the companies' Free File options.
The IRS also announced taxpayer protections under the Free File program. They are:
Some Free File companies also usually offer special deals to active-duty military personnel. However, service members also will want to check out MilTax, the online tax services program for the military offered through the Department of Defense.
MilTax online software will be available on Tuesday, Jan. 19.
State tax alert: Careful inspection of the product offerings also is crucial if you live in one of the 43 states or District of Columbia that require tax returns from at least some of their residents.
Some Free File providers do offer state tax return preparation. And some do include the added filing at no cost. But others charge a fee for the additional filings.
So while Free File might not cost you any dollars to do and e-file your taxes, be prepared to spend some time reviewing the options before making your final selection.
Free option for higher earners: Even if you made more than $72,000 last year, you still can use a version of Free File.
Once again, the IRS is offering Free File Fillable Forms. This is the electronic version of IRS paper forms and is open to any taxpayer regardless of income.
Here, the IRS takes the most commonly used tax forms and makes them online accessible. You select your Free Fillable Forms, fill them out at your computer and then, like the full Free File set-up, electronically submit them to the IRS at no cost.
Remember, though, there is no programmed tax software component in Free Fillable Forms.
Users of Free Fillable Forms must not only complete the forms themselves, but also have some knowledge of the tax laws so that they can do so correctly. If you're comfortable doing that and aren't eligible for the full Free File option, then Free Fillable Forms is a good alternative.
Free File Fillable Forms, however, is not yet available. Access to those forms will start when the 2021 filing season begins. Again, that should be later this month.
Free File steps: Using Free File is pretty self-explanatory at the webpage.
But if you'd like a quick primer before clicking over there, here goes:
- Go to IRS.gov and click on the link to open the Free File page.
- Browse each of the offers or use the online Lookup Tool to help you find the product that's right for your tax situation.
- Select a provider and follow the links to their web page to begin a tax return.
- Complete and e-File a tax return.
You can use Free File from any digital device. This includes your personal computer, tablet or smart phone.
And while Free File is now available, you don't have to rush to use it. The no-cost online tax prep and e-filing products will be available through October for any filers who decide as April 15 nears that they need to get an extension.
You also might find these items of interest:
- 5 tax tips for Free File users
- Where to find your perfect tax preparer
- 9 ways the IRS reform bill will help taxpayers