Free File Software.
The Free File program provides free federal income tax preparation and electronic filing for eligible taxpayers through a partnership between the Internal Revenue Service and Free File Alliance LLC, a group of private sector tax software companies to get their tax return online. Many companies offer free or paid state tax preparation and e filing services. Some companies may not offer state tax preparation and e file services for all states.
There are basically two ways to file the online tax return in this way.
Traditional Free File
In the traditional way the tax software gives step by step help to file the tax return and to fill in the details. However this service is free only for individuals whose gross adjusted income is $57,000 or less in the year 2009. Hence you can avail this service if your gross income is less than or equal to $57000. The free filing software will ask you simple questions and will automatically put the answers on the right forms. It will do all the mathematical calculations for you on its own. It also checks the forms for accuracy and common errors. You get quick access to most commonly filed tax forms and schedules easily with this software. Some software companies may also offer state tax preparation; but fees may apply for these.
Free File Fillable Forms.
Here you can fill tax forms and file them online without the use of any tax software. There is no income limitation here. It looks like blank paper IRS forms and you can e-file your 1040, 1040 A and 1040EZ returns here. It also includes basic calculation capability. It does not support state e-file.