The average cost of hiring an accountant to do your taxes is $273, while a national tax preparation company such as H&R Block will set you back $154, on average. You can cut your tax-preparation expenses dramatically by using commercial software to do your own taxes, which costs about $69 for the average tax return.
However, if you made less than $64,000 in 2016, there's an IRS program that could allow you to use top-selling tax-prep software absolutely free.
IRS Free File
According to a survey by personal finance website NerdWallet, more than one-third of U.S. taxpayers who make less than $50,000 per year hire a tax professional or a national tax prep company.
However, thanks to the IRS Free File program, these people may qualify to do their taxes absolutely free with well-known software like TurboTax and TaxAct.
If your adjusted gross income (AGI) for 2016 was $64,000 or less, you qualify for the IRS's Free File program. Depending on your income, age, state of residence, and tax situation, you'll have at least one free software option you can use, and probably more. According to the IRS, this includes 70% of all taxpayers -- meaning that 100 million people are eligible to do their taxes for free.
What software can you get for free?
As of this writing, there are a dozen software programs listed on the IRS Free File website, although not all of these are available to all taxpayers who meet the sub-$64,000 income requirement. Each individual program has its own requirements to qualify for a free return. Some will also allow you to file your state return for free, while there is a fee involved with others.
Here's a quick guide to the software programs that participate in Free File, and the requirement of each. Or, you can input your information and see all of your options with this IRS tool.
Before you get started, be sure to gather the following information:
- A copy of last year's tax return. You'll need your 2015 AGI to verify your identity.
- Income documentation, including Social Security and unemployment benefits, if applicable. This could mean W-2s, 1099s, or other forms of documentation.
- A valid email address.
Why spend money to get your taxes done if you don't have to?
It may seem silly to pay for tax preparation if you don't have to, but that's exactly what millions of Americans do.
Check out the IRS Free File program if you make less than $64,000. You may be surprised at how easy some of these software programs make doing your own taxes, and it could put extra money in your pocket when your refund arrives.
The $6,269 tax bonus millions of Americans completely overlook
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