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Getting Started: Free or low-cost options for filing your tax return online

For one, some tax software companies are offering free returns for individuals with simple tax situations — likely the case for many 20-somethings — as long as you file early.

The April 15 tax deadline may be months away, but it can pay to get started on your return now.

For one, some tax software companies are offering free returns for individuals with simple tax situations — likely the case for many 20-somethings — as long as you file early.

You may also want to get a jump-start if you bought exchange-based health insurance in 2014 and received financial help with your monthly premiums. Based on your return, if you overpaid on your premiums, you could be due a refund. If you underpaid, you’ll owe Uncle Sam money.

Here’s how to get started.

Free File Alliance. Since 2003, the Internal Revenue Service has partnered with tax software companies to provide free federal tax return prep and e-filing to low- and middle-income individuals. The program is known as Free File, and households with an adjusted gross income of $60,000 or less in 2014 — up from $58,000 the year before — qualify.

According to Tim Hugo, executive director of the Free File Alliance, which runs the program, some 70 percent of taxpayers, or 100 million people, are eligible to use Free File.

“There is something there for almost everybody,” he said, noting the program is particularly popular with singles, young families and recent college graduates.

More than a dozen tax software companies participate in Free File, including well-known names such as H&R Block, Jackson Hewitt and TurboTax. Which one you use will depend on your state of residence and age, among other things. State returns are an additional cost. To determine which program you’re eligible for, go to irs.gov/freefile and click on “Help me find Free File software.”

All participating Free File members must offer about 30 core IRS forms. Included this year are Forms 8962 and 8965, which you’ll need to file if you claimed a health care premium tax credit or a qualifying exemption if you did not have health insurance last year.

Earn more than $60,000 in 2014? You can still file a federal return for free using Free Fillable Forms (also available at irs.gov/freefile. The forms essentially are an electronic version of a paper tax return. They will do calculations for you but not offer any guidance on how to complete your return (unlike tax software, which walks you through the return in a question-and-answer format). So use this option only if you’re experienced with completing a federal tax return.

Discounted tax software. If you earn too much to qualify for Free File, you can still find low-cost options available directly from tax-prep software companies. But act soon.

H&R Block, for example, is offering free federal returns and charging only $9.99 for each state return through Feb. 15. (After Feb. 15, the price for state returns goes up to $36.99.)

TaxAct has free federal and state returns if you use its app, TaxAct Express, available for Android and iOS mobile devices. The app is designed for individuals with simple tax situations who claim only a few deductions, say, for education expenses, as well as for working families who qualify for the earned income tax credit.

TurboTax also offers free federal and state returns for individuals whose tax situation is simple and file the 1040A or 1040EZ. Colleen Gatlin, a company spokeswoman, says it has not been decided yet how long the deal will last.

Free help. Have questions about your federal or state return? Each year, the IRS coordinates the Volunteer Income Tax Assistance program, which provides free in-person tax prep assistance. To qualify, you must earn generally $53,000 or less or have a disability, among other things.

To find a volunteer location near you, go to irs.gov.

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ABOUT THE WRITER

Carolyn Bigda writes Getting Started for the Chicago Tribune. yourmoney@tribune.com.

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