Best Free Tax Software

Free tax software: no tricks, no gimmicks

TaxACT Free Edition 2012 is terrific tax software, experts say, and it's free for federal returns. It works just like paid tax software but without some of the bells and whistles. It's open to everyone, with no income cap. "There's no catch," says Kathy Yakal at PCMag.com. "It just happens to be free."

TurboTax and H&R Block At Home offer free versions, too, but they leave out important forms. Forget about filing Schedule C for self-employment income, Schedule E for rental and royalty income or Schedule F for farm income, for example. They also charge more than TaxACT ($28 versus $15) for filing a state return.

TaxACT Free includes every e-fileable tax form, so you can do even the most complicated return. Federal e-filing is free, and preparing and e-filing your state return costs $15. TaxACT's Free Edition 2012 includes unlimited e-mail tax help from experts, and you can buy unlimited phone tax help for an extra $8. You can work on your taxes online, or download or order a CD of the software for free.

A cheap upgrade, TaxACT Online Deluxe 2012 (*Est. $10) is nearly as good as the top-rated TurboTax software, Yakal says. TaxACT Online Ultimate 2012 (*Est. $20) includes Deluxe plus a free state return; read more in our Best for Simple Returns section.

"It's for this reason that I said last year and will say again this year: The TaxACT site should be your first stop when you're getting ready to endure your annual tax ordeal," Yakal says. Jump to your most complex topics and try it out, she recommends. If you like TaxACT, "you don't have to look any further."

IRS Free File

The IRS has a Free File program, but it comes with lots of restrictions; TaxACT Free Edition has zero restrictions. Your adjusted gross income has to be $57,000 or less, and you must follow the link through the IRS website or it won't be free.

Fifteen companies including TaxACT, TurboTax and H&R Block offer Free File through the IRS. You use their software to complete just about every common federal tax form, then print or e-file exactly as if you had paid for the privilege. However, TaxACT Free Edition offers the same deal to everyone, with no income cap. You can even download the software onto your computer or get a free CD if you prefer doing your taxes offline. That's why experts say TaxACT Free Edition is by far the best, simplest way to do your federal taxes for free.