5 Ways to Trim Your Tax-Prep Costs This Year

The IRS Free File program, no-cost tax software, free clinics, asking for discounts and DIYing it can save money.
Tina Orem
By Tina Orem 
Edited by Chris Hutchison

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As millions of Americans embark on the annual ritual of tax preparation this year, many will buy tax software or hire human tax preparers — and it probably won’t be cheap. Tax software can easily run $100 or more for many people, and human tax pros charge $203 on average to do a tax return, according to data from the National Association of Tax Professionals.

But there are ways to cut the cost of tax preparation, or even get it for free.

1. See if you qualify for Free File

According to NerdWallet’s 2021 tax study, 56% of filers will prepare their federal return themselves this year, and many will depend on tax software to get the job done. Not everyone has to pay for that software, though. People with an adjusted gross income of $73,000 or less can get access to guided tax preparation from brand-name companies through the IRS Free File program.

How to get it: IRS.gov.

2. Look for freebies on tax software websites

Tax software companies typically charge for their software, but many also offer a free version for people with simple tax returns. Each company’s definition of “simple” can vary, but in general, the free options are for people who don’t plan to itemize deductions and whose sources of income are mostly job-related rather than from investments, businesses or other means.

How to get it: Tax software providers’ websites.

3. Ask for a discount

If you want to hire a human to prepare your tax return, you don’t necessarily have to pay the $203 average fee. Most tax pros offer discounts. According to a 2020 NATP study, almost half of tax pros (46%) give breaks to clients’ family members, 40% reduce prices for students and 29% shrink the bill for senior citizens. Many tax pros also offer discounts to new clients, returning customers or people such as veterans, police or clergy members, according to the survey.

How to get it: Raise the topic with your tax preparer.

4. Find free tax clinics in your community

Federal grant programs fund free Volunteer Income Tax Assistance clinics across the country for people with disabilities, language barriers or incomes of $57,000 or less. There are also free Tax Counseling for the Elderly clinics aimed at those aged 60 or older, as well as free help through the Department of Defense MilTax program for active-duty military and some veterans. These clinics operate through a variety of community organizations in all 50 states. (Due to COVID-19, some sites may be closed, and others may be drop-off or virtual only.)

How to get it: Search irs.treasury.gov/freetaxprep or militaryonesource.mil for a local clinic.

5. DIY some of the other stuff

You don’t have to pay someone to find out how much you owe the IRS or get copies of old tax records; you can request that information directly from the IRS online. You can also get a filing extension for free by filing the one-page IRS Form 4868 and getting it to the IRS by April 18. And if you can’t pay your tax bill in full by the April 18 deadline, you can apply for an installment payment plan or even apply for an offer in compromise to settle your tax debt.

How to get it: IRS.gov.

  • Federal: $24.95 to $64.95. Free version available for simple tax returns only.

  • State: $39.95 to $44.95.

  • All filers get access to Xpert Assist for free.

Promotion: NerdWallet users get 25% off federal and state filing costs.

  • Federal: $55 to $110. Free version available for simple tax returns only.

  • State: $0 to $37 per state.

  • Online Assist add-on gets you on-demand tax help.

  • Federal: $59 to $119. Free version available for simple returns only; not all taxpayers qualify.

  • State: $0 to $59 per state.

  • Live Assisted Basic is free through March 31.

Promotion: NerdWallet users can save up to $15 on TurboTax.

  • Federal: $29.95 to $59.95 Free version available for simple tax returns only.

  • State: $0 to $39.95 per state.

  • On-demand tax help at Premium and Self-Employed tiers.

Promotion: NerdWallet users get 30% off federal filing costs. Use code NERD30.

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