Many taxpayers missing out on chance to file for free, analysis finds
Bankrate: 105 million tax refunds were issued in 2024
(InvestigateTV) — NerdWallet reported that, despite 70% of Americans qualifying for free federal income tax filing, less than 1.9% did in 2023.
Elizabeth Renter, a senior economist with NerdWallet, said there are many reasons people are missing out.
“I think the shortfall is due to several factors, number one I think it’s a lack of awareness, but I also think people are inundated by the number of options available to them right now,” Renter shared. “Also, understanding qualifications standards for programs like this can be complicated and difficult.”
The Internal Revenue Service (IRS) said to qualify for Free File the taxpayer’s adjusted gross income must be $84,000 or less.
The IRS updates the income qualifications each year. The different private tax software providers within the Free File Alliance program may have additional standards as well.
Renter warned that searching “How can I file my federal taxes for free?” could lead you to a tax software provider that isn’t part of the IRS’s official free filing program.
“One thing that is different this year is the direct file program,” she explained. “So, last year the direct file program was a pilot program, it was offered on a very limited basis. This year it’s expanded to 25 states who allow people to by the middleman so they’re not using the tax software provider and instead are using software provided by the IRS.”
To find free filing options go to the IRS Free File webpage. From there, click on “Explore Free Guided Tax Software” to use the free guided tax preparation. The site will walk through choosing a provider that is part of the Free File Alliance.
The provider will ask questions about age and location, and then steer the filer into a provider which ensures they will not pay to create they federal tax return, if they quality.
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