PORTLAND, Ore. — It's tax season, and this year, Oregonians in particular have a strong incentive to hurry up and file their taxes: the sooner they get it done, the sooner they'll get their cut of the state's record-breaking $5.61 billion kicker.
But it's easy to understand why many taxpayers tend to wait until the last minute; the filing process is a perennial pain, with a pile of numbers and paperwork that can quickly become confusing for people without a background in accounting. In many cases it can come with the added frustration of having to pay a fee to a commercial tax preparation service.
Promises of free tax filing options pop up every year, but sometimes they don't seem to work out; one VERIFY reader recently wrote in to recount a frustrating fee experience and asked if there's a fee to file state taxes in Oregon.
THE QUESTION
Is it possible to file taxes for free in Oregon?
THE SOURCES
THE ANSWER
Yes, there is a free filing system for state taxes available to all Oregonians. It may be impractical for users that need to fill out certain uncommon forms, and it doesn't process federal taxes — but there are separate services for federal returns that are available for free to users below a certain income level.
WHAT WE FOUND
To get this out of the way up front: There are two different ways of filing taxes online. The federal Internal Revenue Service and Oregon Department of Revenue both offer Free Fillable Forms, which are simply digital versions of the paper forms that users would fill out and mail in if they were doing their taxes offline.
The digital forms are completely free and available to everyone, but the catch is that users have to know exactly what they're doing — there's no accompanying software to crunch the numbers and explain how to track down all the necessary information for each filer's unique tax situation.
Many taxpayers instead use what the IRS refers to as Guided Tax Software, programs like TurboTax that walk filers through the process and fill out the digital forms on their behalf. Guided Tax Software platforms are typically commercial products that filers need to pay to use, which is a source of controversy and frustration for U.S. taxpayers.
So, when most people ask the question, "Can I file my taxes for free?," they're likely not thinking of Free Fillable Forms — what they probably mean is, "Is there a Guided Tax Software service that I can use for free?"
For federal taxes, the answer to that question is yes, if you're below a certain income level. Several third-party Guided Tax Software companies partner with the IRS to make their commercial software available for free to low-income taxpayers as part of a program called IRS Free File. The cutoff this year is $79,000.
The free option only covers federal taxes. Some of the commercial services may also allow users to file their state taxes for free, but others might add a fee for that work. But starting this year, Oregonians have another option if they're looking for a way to file their state taxes for free.
In recent years, the IRS has begun developing its own Guided Tax Software platform called IRS Direct File, with the intention of eventually providing a free alternative to the commercial offerings. IRS Direct File launched as a pilot program this year.
The Oregon Department of Revenue has also launched its own version for state taxes called Direct File Oregon. It's available to all Oregon taxpayers and can guide them through the process of filling out their main form OR-40.
There are a couple caveats, however. First: Direct File Oregon's website warns that it's still a work in progress with more functionality scheduled to be added down the road, so while it should be enough for the average taxpayer, users with uncommon income situations who need to fill out more obscure forms might still need to seek out a commercial option.
And just to make it more confusing, the IRS Direct File pilot program is currently only available to residents in 12 states. Washington is one of them, but Oregon isn't.
So that's the second caveat: in practice, Oregon users don't necessarily have a free guided option to file their federal and state taxes all in one shot. They'll need to file their federal taxes first, which will be free if they made below $79,000, and then they can separately use Direct File Oregon to file their state taxes for free.
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