Free File: The IRS's System for Doing Your Taxes Online for Free

One of the drawbacks to e-filing one's taxes in the past was the cost. Whether one paid a professional tax preparer service or bought tax software to do it oneself, e-filing, while perhaps not hugely expensive, certainly cost more than the stamp it would take to mail one's return.

But the Internal Revenue Service (IRS) has expanded its "Free File" program to where now almost everyone has the opportunity to e-file for free.

The Free File program is two-tiered. There is one level that provides a more full service experience, and one that is bare bones.

The Free File Alliance LLC is a group of private sector tax software companies that has partnered with the IRS to provide taxpayers free e-filing, with extensive assistance. By clicking through to one of the Free File Alliance companies through the IRS site, the taxpayer is walked through his or her online return step by step, with questions and guidance to help fill it out accurately.

This is available only to taxpayers with adjusted gross income of $57,000 or less. Some of the Free File Alliance companies have additional restrictions. Turbo Tax, for instance, caps adjusted gross income at $31,000, though all or almost all of the other participating companies use the full IRS limit of $57,000. The software provided by these companies for free filers may not include the less common forms and schedules, and may have limited capacity to deal with complex tax situations.

The bare bones version of Free File, though, has no income restrictions. It has almost all forms and schedules, though there are still a small number not available. Other than the very few people needing one of these unavailable items, all taxpayers can e-file for free with this option. Unlike with the fuller service version of e-filing offered through the Free File Alliance, this manner of e-filing pretty much just provides you with online versions of the forms, which you then need to figure out how to fill out on your own, much like if you were filling out a conventional tax form with a pen. It does, though, check your math, so that's one advantage.

E-filing can be an especially appealing option for those expecting refunds on their taxes, as it speeds up the process considerably, meaning you'll get your money quite a bit faster than if you mail in your return.