IRS Free File

Free File is a service available through the Internal Revenue Service (IRS) which allows U.S. taxpayers to prepare and e-file their federal tax returns for free. Free File provides two options to tax payers: Free File Software (filed through brand-name software, adjusted gross income must be less than $66,000), or Free File Fillable Forms (any income level, filed through online fillable forms). Both the Free File Software and Free File Fillable Forms services are managed and operated by the Free File Alliance, a consortium of private tax-preparation companies. The service is available through the IRS's website at www.irs.gov/freefile. Although the service is accessed via the IRS website, the service is not managed or operated by the IRS.

More than 46 million people have used Free File since its debut in 2003. For 2016, IRS Free File will be available January 15 through October 15.

In November 2001, the U.S. Office of Management and Budget's (OMB) Quicksilver Task Force established 24 e-government initiatives that were a part of the President's Management Agenda. These initiatives were designed to improve Government to Government, Government to Business, and Government to Citizen electronic capabilities.

One initiative, IRS Free File, instructed the IRS to provide free and secure online tax return preparation and filing services to taxpayers. In accordance with this OMB directive, the IRS began working in partnership with the tax software industry to develop a solution. The result was the formation of the Free File Alliance, LLC, a group of tax software companies who provide free commercial online tax preparation and electronic filing services.

The Free File Alliance is a consortium of 13 commercial tax preparation software providers who offer their brand-name tax software products for free. Each member is allowed to set eligibility requirements for their software products. However, the cumulative offers must allow 70 percent of U.S. taxpayers - approximately 100 million people - to be eligible for at least one product. Each year, the income limit for eligibility is adjusted to reach 70 percent of the taxpayers. The income limit for 2016 is set at $62,000. Agreements between the IRS and the Free File Alliance are publicly available. The latest Memorandum of Understanding was signed in 2015 and runs through 2020.

One component of Free File is the Free File Software program, which allows lower-income tax payers to use name-brand tax preparation software to prepare and file tax forms for free.

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