3 Ways to File Your State Taxes for Free
In the 43 states where state income tax is collected, you must file a state tax return along with your federal tax return.
The good news is, if you use tax software to prepare your federal return, filing your state returns is as easy as checking an extra box. The bad news is that it's often expensive to file your state taxes this way. Even if you use free tax software for your federal return, adding state returns might tack on extra fees.
However, there are a few ways to save on fees when filing state taxes. 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. However, these programs come with quirks and rules, and some states may impose restrictions on who can file for free.
Residents of the remaining states and Washington, D.C. may be able to file for free via state-provided forms or through their state's partnership with the Free File Alliance.
For example, Oregon allows anyone to e-file for free, but there is 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. In the 2020 tax year (taxes you'll file in 2021), you can use Free File software if your adjusted gross income (AGI) is $72,000 or less.
If your AGI is more than that, you can use Free File Fillable Forms, but the service won't include guidance. Unless you have some experience in preparing paper tax forms, it will likely be difficult to use Free File Fillable Forms on your own. Also, these forms do not 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 end up using. With some partners, state returns are offered for free. Other partners may reduce the cost. Others may charge the full state filing fee that they charge their usual customers outside of the Free File program partnership.
Get a Discount on Software
Tax software providers may offer free state filing for U.S. military members and reservists, or for taxpayers with very simple returns. Certain conditions may apply for a taxpayer to receive free tax filing.
For example, Tax Slayer has free options for both state and federal returns, but only for basic 1040 returns, and you only get one free state filing. Turbo Tax will permit for 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.