NC Answers: Can you file your NC and IRS income taxes for free? For most people, yes

Paul Woolverton
·3 min read
If your income is below $73,000, you can use a professional tax preparation service to calculate and file your state and federal income taxes for free. Yet most Americans who qualify for the free service are not using it.
If your income is below $73,000, you can use a professional tax preparation service to calculate and file your state and federal income taxes for free. Yet most Americans who qualify for the free service are not using it.

Question: The April 18 tax deadline is just days away. Is it true there are free ways to calculate and file my taxes? And does this include my North Carolina income taxes?

The short answer: Yes, you can use a professional tax service to figure and then file both your state and federal income taxes for free, provided that your adjusted gross income is $73,000 or less. The $73,000 figure also is the total allowed for a married couple filing jointly.

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How to file for free

North Carolina residents can find their free tax filing options for the 2021 income taxes on the N.C. Department of Revenue website.

Go to this link: NCDOR.gov/NCfreefile.

There you will see five companies that (as of April 5) provide the free tax services to North Carolina residents for both their federal income taxes and their North Carolina income taxes.

Note that while the maximum income for the free services in general is $73,000, some of these companies have their own restrictions. For example, some have lower income caps, some have age restrictions and some require the customer to qualify for the Earned Income Tax Credit. But all taxpayers under the $73,000 income limit should be able to find at least one of the services available to them.

Once you pick a service, get your tax documents together and the service will step you through the process. Generally, the services have you complete your federal taxes before you get to your state taxes.

When you finish figuring your federal taxes and get to your state taxes, look carefully to make sure you stay on the free filing track and that the software doesn’t move you to a pay option.

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Why would for-profit tax prep companies do my taxes for free instead of charging me?

For more than 20 years, the federal government has been working to boost the number of taxpayers filing their taxes electronically instead of with physical paperwork, which is more expensive to handle and more prone to errors. In the 1998 tax year, for example, only 23.5% of individual income taxes were filed electronically, says a report the Congressional Research Service published in March.

To encourage people to file electronically, the government in 2002 partnered with tax preparation companies in an organization called the Free File Alliance and in 2003 they launched the Free File Program for people with incomes below a set threshold to file their taxes for free. This threshold has risen over the years to $73,000 for the 2021 tax year.

Most taxpayers who qualify for the free service aren’t using it, the Congressional Research Service report says.

In the 2020 fiscal year, the report says, 4.2 million taxpayers — about 4% of those eligible — used the Free File Program to electronically file their taxes.

Senior North Carolina reporter Paul Woolverton can be reached at 910-261-4710 and pwoolverton@gannett.com.

This article originally appeared on The Fayetteville Observer: How to file your North Carolina and federal income taxes for free