3 Ways to File Your State Taxes for Free
You must file a state tax return along with your federal tax return in the 43 states where state income tax is collected.
The good news is that filing your state returns is as easy as checking an extra box if you use tax software to prepare your federal return. The bad news is that it's often expensive to file your state taxes this way. And there's a still a chance that there could be extra charges tacked on even if you use free software.
There are a few ways to save on fees when filing state taxes, however. Here are three strategies for filing taxes with your state in the cheapest way possible.
Go Straight to the State
Many states offer a way to file taxes directly through their state website or e-file system. Alabama, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Nebraska, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, Utah, and Wisconsin all offer some way for residents to file through the state. These programs come with quirks and rules, however, and some states impose restrictions on who can file for free.
Residents of the remaining states and Washington, D.C. might be able to file for free via state-provided forms or through their state's partnership with the Free File Alliance.
Oregon allows anyone to e-file for free, but there's very little guidance, and taxpayers will have to do much of the work on their own.
Use IRS Free File
The Free File Alliance is a partnership between states and tax software vendors that allows for free e-filing of federal taxes. It allows for e-filing state taxes, too, although a fee may apply.
Not everyone qualifies for IRS Free File. It's based on income, with lower-income filers prioritized for the program. You can use Free File software for the 2020 tax year (the return you'll file in 2021) if your adjusted gross income (AGI) is $72,000 or less.
You can use Free File Fillable Forms if your AGI is higher than $72,000, but the service doesn't include guidance. It would likely be difficult to use Free File Fillable Forms on your own unless you have some experience in preparing paper tax forms, and these forms don't cover state tax filing.
While the federal return is free under the Free File program, state returns may or may not be. Free File is run through vendor partners, so the details of your experience will depend on the partner you use. State returns are offered for free by some partners. Others might reduce the cost, while still others might charge the full state filing fee that they charge their usual customers outside of the Free File program alliance.
Get a Discount on Software
Tax software providers might offer free state filing for U.S. military members and reservists, or for taxpayers with very simple returns. Certain conditions typically apply for a taxpayer to receive free tax filing.
For example, TaxSlayer has free options for both state and federal returns, but only for basic 1040 returns, and you only get one free state filing. TurboTax will permit free state tax filing, and it can handle slightly more services such as W-2 income, Earned Income Tax Credit (EITC), and some dividends and interest payments (1099-INT and 1099-DIV). H&R Block permits free state tax filing for taxpayers with simple returns, and it covers W-2, 1099, and EITC situations.
Even if your state offers free e-filing directly, these services may be a more convenient option for those who qualify. The software will automatically populate your state form with data from your federal form, saving you time and effort.
Finally, Credit Karma Tax offers free state filing and accepts many different forms, including W-2s, 1095s, 1098s, 1099s, and much more. However, Credit Karma Tax only works with 40 states (and the District of Columbia). If you don't live in one of the states covered by this service, you'll have to find a different way to file your state returns.
If you need more sophisticated tax software, consider these paid options.