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Taxes 2021: What you need to know about IRS Free File

For many people, filing taxes shouldn't cost money. 

Low- and moderate-income Americans — especially those who don't usually file a tax return — can use the Free File program from the Internal Revenue Service to e-file their federal tax returns and get their refunds for free.

Here's what to know.

Who can use Free File?

Free File gives access to major tax preparation software at no cost to individuals who earn $72,000 or less. Those experiencing homelessness, students on their own, low-and moderate-income families and others can access Free File. Already, over 2.96 million individuals and couples have used this online service this year to file their taxes.

How do you access Free File?

Free File can be accessed by computer or similar device. If you don't have a computer, you can also access by mobile phone.

Why should I file my taxes if I don't usually?

Close up of a young woman doing her home finances in the evening
(Photo: Getty)

The IRS distributed two rounds of stimulus checks to eligible people that you can claim on your 2020 federal tax returns if you didn't receive a payment or you didn't get the full amount. Those payments will be added to your tax refund. You can claim those payments as the Recovery Rebate Credit.

The first stimulus check was worth up to $1,200 per eligible person and $500 per qualifying child. The second payment was up to $600 per person and $600 per child.

See the special section on IRS.gov - Claiming the 2020 Recovery Rebate Credit if you aren't required to file a tax return – for more information.

Additionally, there are two other tax benefits — the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) — that could help put money in the pockets of American families. Those workers who were laid off in 2020 still qualify for these credits under a special pandemic rule, the IRS said. That's because they can use either their 2019 income to calculate these credits.

Who might especially benefit from Free File?

Word Tax 2021 on calculator. Glasses, pen and the calculator on documents. The concept of financial stability,Income Statement
(Photo: Getty)

The IRS encourage everyone to look into Free File as option, but especially the following people who may not realize the full benefits. This includes:

  • Those experiencing homelessness: If no one can claim you as a dependent on their tax return, you'll likely qualify for the Recovery Rebate Credit even if you have little or no income. Look for a Free File product with "no minimum income."

  • Individuals claimed as a dependent in 2018 or 2019, such as college students: If no one can claim you as a dependent on their 2020 tax return, may now be eligible to claim the Recovery Rebate Credit by filing a 2020 tax return.

  • One spouse with an ITIN: Now joint filers can be eligible for a partial credit when one spouse has a valid Social Security number for employment, thanks to a new law passed in December. They may be eligible to claim a 2020 Recovery Rebate Credit if they didn not get a stimulus check by filing a 2020 tax return. 

  • Qualifying child: Parents who had a baby or adopted a child in 2020 and did not get a first or second payment for that qualifying child can claim a 2020 Recovery Rebate Credit by filing their 2020 tax returns.

  • Those who don't usually file: Low- and moderate-income workers and working families who don't normally file a return may want to this year and in the future to take advantage of the EITC and ACTC.

How do I find Free File?

Visit the IRS Free File page here that shows the major tax software providers that offer free online services as part of a 19-year partnership with the IRS. There are nine products in English and one in Spanish. Additionally, MilTax —available at no cost from the Department of Defense — provides similar online tax-preparation services to military members.

What other benefits are there to Free File?

Because Free File returns are filed electronically, your tax returns are processed faster than paper ones. If you choose direct deposit for you tax refund, you'll get that faster than waiting for a mailed check. 

When do I need to file taxes by?

This year's federal tax filing deadline for individuals is Monday, May 17.

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Janna is an editor for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @JannaHerron.

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