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Tax guide 2014: The best online services for tackling your 1040

Yardena Arar | March 18, 2014
Need help filing your federal and state income taxes? More than a dozen online services are vying for your business, promising to keep your refunds high and time investment low.

Need help filing your federal and state income taxes? More than a dozen online services are vying for your business, promising to keep your refunds high and time investment low.

While you may still see stacks of tax software at big-box and office supply stores, most people who use computers to do their taxes are doing it on the web these days. The user interfaces are basically identical to their software counterparts, and ease of access from computer (and most tablet) browsers has trumped security worries for new and younger users. A growing number of vendors also provide mobile apps with built-in optical character recognition capability that can capture data from W-2 and other forms photographed with your smartphone camera.

All of the online services should get the job done, in some cases free of charge. But as usual, you'll pay more for services that cater to complicated tax situations, provide more guidance and help, and automate at least some data entry. Some services also offer extra inducements, such as TurboTax's splashy offer to convert some or all of any refund money to Amazon gift cards with 5 or 10 percent bonuses.

Here's a quick look at what's out there for different types of filers.

Filing for Free

The IRS's FreeFile program, intended to encourage e-filing by low-income and entry-level taxpayers, makes commercial software from 14 participating vendors available free of charge to people with adjusted gross income of $58,000 or less. Vendors have divvied up this lower-income pool by setting additional eligibility criteria such as state of residence, age, military service, and so on. You could check out the eligibility criteria for each service yourself, or you can save some time by filling out the FreeFile wizard questionnaire, which returns a list of ready and willing vendors.

Either way, be sure to click through to the vendor from the FreeFile website, since it gets you to a start page that usually isn't available by simply navigating to a service on your own.

Even if you don't qualify for the FreeFile program, the IRS provides a full range of online forms for taxpayers willing to go it alone, using only the IRS manuals and instructions people used to get on paper at the post office. You can fill out these forms and e-file them on the IRS site completely free of charge.

That's not to say, however, that you can get free service only through the IRS. As you probably have surmised from the many ads at this time of year, several tax-prep services offer free returns and e-filing independent of the FreeFile program. Intuit's TurboTax, for example, sets no income limit on its free federal return so long as your tax situation is simple enough — no Schedule A deductions such as mortgage interest, for instance. H&R Block and TaxAct, the other two major players in this market, and many of the smaller services also offer free federal filing for people with straightforward returns involving W-2 income and few or no deductions.

 

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