Tax Season is Around the Corner: Explore Your Free Filing Options
With tax season just a week away, investors are gearing up to file their returns. Typically, this process requires gathering various tax forms, including Form 1099-B for capital gains and losses, Form 1099-DIV for dividends and capital gains distributions, and Form 1099-INT for interest income. Retirees also need to report withdrawals from 401(k) plans, individual retirement accounts, and pensions using Form 1099-R.
IRS Direct File: A Game-Changer for Eligible Taxpayers
This season, the IRS’s free filing program, Direct File, has expanded to 25 states, covering over 30 million taxpayers. The program, which initially supported simple returns with interest of $1,500 or less, now accommodates interest above $1,500 and Alaska residents who receive the Alaska Permanent Fund dividend. While it doesn’t currently cover other investment income, such as capital gains and dividends, it will support distributions from most company retirement plans starting in March.
IRS Free File: A Public-Private Partnership
Another option for taxpayers is IRS Free File, a collaboration between the IRS and the Free File Alliance, a nonprofit coalition of tax software companies. This season, you can use IRS Free File if your adjusted gross income (AGI) was $84,000 or less in 2024. Eight software partners will accept the most commonly used tax forms and schedules, including Schedule B for interest and ordinary dividends and Schedule D for capital gains and losses.
Volunteer Income Tax Assistance (VITA): Free Tax Prep for Eligible Taxpayers
If you need more guidance, you may qualify for free tax prep from VITA, a program managed by the IRS. For the 2025 season, you’ll qualify for VITA with an AGI of $67,000 or less. The program covers investors, including Forms 1099-INT, 1099-B, and 1099-DIV, with certain limitations. VITA also covers Form 1099-R for retirement income, excluding cryptocurrency transactions for 2024 filings.
Take Advantage of Free Tax Filing Options
With these three free tax filing options, investors have more choices than ever before. Whether you’re eligible for Direct File, IRS Free File, or VITA, make sure to explore your options and take advantage of the resources available to you.
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