Tax Preparation Costs and Available Resources
The IRS Taxpayer Advocate Office reports that Americans typically spend around $240 annually on tax preparation and filing. It’s a complicated process, and surprisingly, about 1 million eligible taxpayers miss out on claiming refunds, resulting in the U.S. Treasury keeping over $1 billion of their money.
Luckily, many taxpayers can receive free assistance for preparing and filing their returns. Here’s a breakdown of the services available, who can access them, and tips on avoiding scams.
Most of these preparation options involve some document tracking and data entry. Fortunately, navigating these websites is usually straightforward. Instead of wading through dense forms, you might just answer simple questions like, “Do you have any children living with you?” or “Did you receive interest income?”
A word of caution: avoid searching online with phrases like “File your taxes for free.” You could end up on a scam site or a reputable service that charges high fees. It’s better to use the resources linked in this article or go directly to Irs.gov.
Direct File Program Concluded by the Trump Administration
The IRS established the Direct File program to enable individuals with simpler tax situations to file online without third-party software. Sadly, the Trump administration announced it would end this initiative, which could have streamlined tax filing for many Americans while being free.
Consumer advocates are puzzled by this decision. Despite a successful pilot in 2024, the program is currently available to taxpayers in 25 states for the 2025 tax season. Users reported a 94% satisfaction rate, and the program could significantly simplify tax preparation because it integrates existing IRS data. This method is already adopted in several other countries.
The Treasury claims that the program was shut down due to low usage. However, this reasoning seems flawed; it had only recently become widely accessible last year, and the Treasury had directed officials to stop promoting it, meaning many taxpayers likely didn’t know it was an option.
It’s no surprise that the for-profit tax prep industry invested millions to lobby against such free services.
CashApp’s Free Tax Preparation Service
In terms of accessibility, CashApp stands out by providing free tax preparation software and e-filing for everyone, with no paid options. Most taxpayers can complete their returns with the CashApp platform, which supports various forms like 1099, but its user interface may require more manual entry than other software providers.
Keep in mind that CashApp users who are married and filing separately or who need multi-state filings may not use its services. Plus, you must create a CashApp account beforehand.
While the platform lacks direct support from staff for inquiries, it could be a good fit if your tax return is straightforward, and you don’t need additional help.
Free Services from Multiple Tax Preparation Companies
Several tax preparation companies link up with the IRS to provide free online resources to low- and moderate-income earners (Direct File was open to households earning under $200,000 for individuals and $250,000 for couples). The “Free File” initiative, established through a partnership between the IRS and eight companies, offers free tax preparation and filing for those with an adjusted gross income of $89,000 or less.
This year, participating firms include 1040.com, 1040NOW.net, ezTaxReturn.com, and more. Each firm can have specific eligibility requirements based on factors like age and residency. Some may even charge for state return preparation.
Notably, while popular software providers like H&R Block and TurboTax do not participate in the IRS’s Free File program, they do offer their own free online filing options for simpler tax returns. Typically, if you’re earning a wage shown on a W-2, have one job, and qualify for standard deductions like the Child Tax Credit, these services could be available for you. H&R Block claims this option is available to about 55% of all taxpayers, while TurboTax estimates around 37%.
Low-Income Tax Assistance
The Volunteer Income Tax Assistance (VITA) Program offers free, basic tax preparation services through IRS-certified volunteers, primarily targeting households earning $67,000 or less. Some programs specifically focus on individuals with limited English skills.
VITA sites often have workstations where taxpayers can enter their information and file returns electronically, either independently or with volunteer assistance. You can find VITA help centers through a searchable database.
VITA also collaborates with GetYourRefund.org, offering free tax software for individuals and families under the adjusted gross income limit of $89,000. Users can upload tax documents for volunteers to manage returns remotely.
Tax Support for Seniors
Similar to VITA, the Tax Counseling for the Elderly (TCE) Program helps local nonprofits provide free tax assistance to individuals aged 60 and over, although some locations assist people as young as 50 with lower incomes. Many sites offer specialized training on pensions and retirement. You can locate nearby assistance through AARP’s website, particularly during the tax season.
Some TCE locations enable individuals to prepare and file their returns using tax software directly until April 15.
Tax Assistance for Military Members and Veterans
The MilTax program offers free tax preparation and e-filing for service members, eligible family members, and recent veterans within a year of separation. This includes assistance with various tax issues like deployment and housing.
Protecting Yourself from Tax Fraud
Each year, numerous Americans fall victim to tax-related identity theft. With personal information often leaked during data breaches, the risk increases significantly. Resolving tax return theft can take nearly two years on average.
To safeguard yourself, avoid responding to unsolicited communications claiming to be from the IRS; they only send official notifications via mail. Look out for warning signs, such as receiving IRS letters about multiple filings with your Social Security number.
A proactive step to prevent identity theft is to request an Identity Protection PIN (IP PIN) from the IRS. This unique number is essential for ensuring that no one can file a return using your Social Security number. Setting up an IP PIN can be a quick process, requiring either an online IRS account or an in-person visit to a tax assistance center.
Also, parents should consider obtaining an IP PIN for their children to prevent potential misuse during tax filing. For minors, an adult must apply in person.
If you suspect fraud, the first course of action is to file a claim with the IRS, although the subsequent process can be long and complicated. You can also reach out to resources like the AARP Fraud Monitoring Network or the Identity Theft Resource Center for assistance.
Opting Out of Data Sharing
IRS Free File Providers are strictly limited in how they can use the information submitted during tax preparation, ensuring that it remains confidential unless consent is given. Other tax prep firms might request data sharing, so it’s wise to opt out to protect your privacy and reduce unwanted marketing offers.
Conclusion
As this tax filing season approaches, it’s crucial to know your options and take advantage of available resources. Whether seeking free help or safeguarding your information, being informed can make a significant difference.
