What Is the Cheapest Way to Do Taxes?

Tax season often brings the challenge of finding an affordable way to file returns. Navigating tax preparation services can be both daunting and expensive. Understanding how to minimize costs while staying compliant is crucial for taxpayers seeking efficient solutions.

Exploring cost-effective options can lead to meaningful savings. From government-sponsored services to volunteer programs, there are various pathways tailored to different needs.

Filing Thresholds and Eligibility

Understanding filing thresholds is key to determining whether you need to file a tax return. These thresholds depend on income, filing status, and age. For 2024, the IRS has set income limits: single filers under 65 must file if their gross income exceeds $13,850, while those 65 or older have a threshold of $15,700. Married couples filing jointly must file if their combined income exceeds $27,700 if both are under 65, or $30,400 if both are over 65. These figures help clarify filing obligations.

Eligibility for tax credits and deductions also plays a role. Even if your income is below the threshold, filing may be worthwhile to claim refundable credits like the Earned Income Tax Credit (EITC) or the Child Tax Credit. For example, the EITC can provide significant financial relief, with maximum credits reaching up to $7,430 for families with three or more qualifying children in 2024.

Government-Sponsored Filing Services

Government-sponsored services provide cost-free filing options for many taxpayers. The IRS Free File program offers free online tax preparation for individuals with an adjusted gross income (AGI) of $73,000 or less in 2024. This initiative, in partnership with private tax software providers, enables eligible taxpayers to access professional-grade tools at no cost.

Additionally, the IRS provides Free File Fillable Forms, electronic versions of paper forms available to all taxpayers. These are ideal for those comfortable with handling their own calculations and are a no-cost option for straightforward tax situations.

State tax agencies often offer similar free filing services. For instance, California’s CalFile system allows eligible residents to file state taxes at no cost. Taxpayers should check their state’s Department of Revenue website for specific eligibility criteria and availability.

Volunteer Assistance Programs

Volunteer assistance programs are an excellent resource for taxpayers seeking free help. The Volunteer Income Tax Assistance (VITA) program offers free tax preparation for individuals earning $60,000 or less, as well as for people with disabilities and limited English proficiency. IRS-certified volunteers ensure accurate returns and help maximize refunds.

The Tax Counseling for the Elderly (TCE) program focuses on taxpayers aged 60 and older, providing specialized assistance with retirement-related tax issues, including Social Security benefits and required minimum distributions from retirement accounts.

Community organizations often partner with these programs to provide accessible locations for in-person assistance. Libraries, community centers, and nonprofits frequently host VITA and TCE sessions, making these services widely available.

Low-Cost Paper Filing Steps

For those opting to file taxes on paper, the process starts with obtaining the required forms, available on the IRS website or at local libraries or post offices. Selecting the correct forms and ensuring accuracy is crucial to avoid delays or penalties.

Preparation involves gathering all relevant documents, such as W-2s, 1099s, and records of deductions or credits. Accuracy is essential, as errors can result in audits or penalties. After completing the forms, double-check all entries and keep copies of your tax documents for at least three years, as recommended by the IRS.

Reducing Additional Filing Fees

Even when using affordable or free filing methods, additional fees can arise, particularly for state returns or expedited refund options. Many tax software providers charge for state filings even if federal filing is free. To avoid this, taxpayers can explore free state-specific filing options directly through their state’s Department of Revenue website.

Another common expense is the fee for expedited refunds or direct deposit services offered by third-party preparers. These fees, often $30 or more, can be avoided by opting for a standard refund via direct deposit through the IRS, which typically processes refunds within 21 days. Taxpayers should also avoid unnecessary add-ons, such as audit protection or identity theft monitoring, which can inflate costs. Instead, consider free IRS tools like the Identity Protection PIN (IP PIN) program to safeguard against tax-related identity theft.