Free File can help people who have no filing requirement find overlooked tax credits

Free File allows almost all taxpayers to prepare their own federal tax return, e-file it and get a refund – all for free.

Get to know the IRS, its people and the issues that affect taxpayers

By Dietra Grant
CL-21-08, March 4, 2021

For nearly two decades, the Internal Revenue Service and the tax preparation industry have partnered to offer free online tax preparation options. The program is called Free File and the name says it all.

Free File allows almost all taxpayers to prepare their own federal tax return, e-file it and get a refund – all for free. If your income last year was $72,000 or less, and that’s 70 percent of taxpayers, you can generally find at least one Free File product to use. There are nine products in English and taxpayers can use a Spanish option as well.

But never has Free File been as important as it is right now. Last year, Congress passed two rounds of Economic Impact Payments to counter the terrible impact of the COVID-19 pandemic.

The first payments were up to $1,200 per person and $500 per qualifying child. The second payments were up to $600 per eligible person and $600 per qualifying child.

In 2021, eligible taxpayers who did not receive the full amount of the first or second payments can claim the additional amount they are due as the Recovery Rebate Credit when they file their 2020 tax return.

And that’s where Free File comes in. It’s a free way to claim the full amount of tax benefits, including the Recovery Rebate Credit, and ensure you get the refund you’re due.

Free File online is especially valuable for people often referred to as non-filers, who do not have a tax filing obligation.

These are people whose taxable income is below certain income levels. For example, single people with incomes below $12,400, the amount of the standard deduction, would have no filing obligation if they had no other special tax issues.

For eligible non-filers to claim any additional Economic Impact Payment amount they are due, they must file a 2020 tax return and claim the Recovery Rebate Credit.

Here’s a bonus: Non-filers using our nine traditional Free File products may find they are eligible for additional tax benefits such as the Earned Income Tax Credit, or EITC. Free File online uses easy interview-based software products to walk users through the tax filing process step-by-step to help ensure they get all the tax breaks they are due.

For example, people can have earned income from a job in 2020 but still fall below the filing threshold. They may be eligible for the EITC.  A single person who earned $15,820 or less last year may qualify for the EITC, and, depending on their income, could be eligible for up to $538 of EITC if they have no qualifying child.

EITC is just one of several tax credits related to family and dependent care that someone without a filing requirement may be eligible to receive. These are called refundable credits because you get all the refund you are due regardless of how much in taxes, if any, you paid.

So many people were adversely affected last year in the job market, and their income may be substantially different in 2020 than it was in 2019. Don’t leave money on the table: use Free File online to help.

And even if you don’t have a computer, if you have a smart phone, you can access Free File online and do your tax return.

Here’s how it works if you do not have a tax filing requirement:

1. Go to IRS.gov/FreeFile
2. Select “Choose an IRS Free File Offer” blue button
3. Select “Browse all offers” and look for a product that has no minimum income requirement
4. Select the product that best meets your needs and you will be automatically redirected to the company’s website
5. Answer the tax product questions to complete your tax return, accurately reporting your taxable income, if any  
6. If you have no taxable income, simply answer the questions including those requesting information needed to compute the Recovery Rebate Credit
7. Complete the information for your refund, sign the return and file it electronically

Free File also offers another platform that is best used by those people who are comfortable doing their own tax returns. This is the Free File Fillable Forms option. It is an electronic version of IRS paper forms. It will do the math calculations, but it will not help find additional benefits, or allow you to file a state tax return, and it is not recommended for non-filers who are filing solely to claim the Recovery Rebate Credit.

If you need more help than Free File can offer, we also have our Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) Programs. IRS-trained volunteers can help people file a tax return who don’t usually file. Please be advised that because of the pandemic, many sites are offering virtual services only. Additionally, military service members, qualifying family members and some veterans are eligible to use free MilTax services to prepare and electronically file their federal and state tax returns.

It’s important that everyone who is eligible to claim credits like the Earned Income Tax Credit and Recovery Rebate Credit know they must claim them by filing a tax return and they can do so at no cost. With Free File, you get what you need safely, quickly and easily.

Dietra Grant
Director, Customer Account Services