Best free tax software for Federal returns with W2 and 1099 options?

Does Cash App Taxes handle crypto transactions? I have a few of those plus some 1099-NECs from freelancing. Also wondering about audit protection - do any of the free options include that?

Cash App Taxes does support crypto transactions, though if you have a large number of them, you might want a more specialized solution. They provide basic reporting for crypto, but it's not as detailed as some paid options. Regarding audit protection, most truly free tax services don't include comprehensive audit protection. FreeTaxUSA offers audit assistance (not full representation) for about $7 extra. The completely free options typically don't include audit support, which is one way they keep their services free. If audit protection is important to you, you might consider that as a worthwhile add-on.

How does taxr.ai handle things like crypto or investment income? I have a bunch of 1099-Bs from my trading account that are always a nightmare to enter manually.

Wait, so you just upload your docs and it does everything? That sounds too good to be true. Is there some catch with the pricing? Most "free" tax software I've tried ends up trying to charge me once I get to the 1099 section.

For crypto and investment income, it handles most 1099-Bs really well. I had about 15 stock trades last year and it captured all the details correctly, including the basis information. For crypto, it can process the standard forms from major exchanges, but if you have really complex crypto activities, you might need to verify a few things. The way it works is you just upload your documents (or even take pictures with your phone) and the system reads and categorizes everything. It's basically using the same document scanning technology that big accounting firms use. You still review everything and confirm it's correct, but you don't have to do all the manual data entry. And no, there's no hidden pricing trick - it really did handle all my 1099 forms without upgrading to a paid tier.

How does this even work? The IRS phone system is notorious for making people wait. Do they have some special access or something?

This sounds like BS. Nobody can magically skip the IRS phone queue. I've been calling for weeks about my missing refund and always get the "high call volume" message.

It works by using an automated system that navigates the IRS phone tree and waits on hold for you. When they reach a live agent, they call you and connect you directly. It's not "special access" - they're just taking the waiting part out of the equation. The system keeps dialing back if it gets disconnected, which happens a lot with the IRS. It essentially acts like a virtual assistant that's persistent with the calls so you don't have to be. I was skeptical too until I tried it - went from spending 3+ hours on multiple failed attempts to getting through in under 10 minutes.

Do they have any kind of import functionality for 1099s? Manually entering all those boxes is such a pain, especially when you have multiple forms.

Unfortunately FreeTaxUSA doesn't have automatic import for 1099 forms - that's one of the trade-offs for the free service. You do have to manually enter all the information from your forms. It's straightforward enough with their guided interface, but I agree it can be tedious if you have multiple forms with lots of entries. If automatic document import is important to you, that might be a feature worth paying for with one of the premium services, or trying one of the newer document-scanning options that others have mentioned.

I'm in one of the test states and tried it. It's pretty basic but works well for simple returns. The problem is it has limitations - it doesn't support all forms of income yet. I believe it handles W2s fine but has restrictions on some 1099 situations. If you have self-employment income or certain investment situations, it might tell you you're not eligible.

This is a great suggestion! I used VITA a few years ago when I was just starting to deal with 1099 income and it was super helpful. The volunteer I worked with was really patient and explained everything as we went through it. They also caught a deduction I would have missed completely. One thing to note is that VITA sites can get busy during tax season, so it's worth calling ahead to make an appointment if possible. Some locations also have specific days/hours when they're available, so check the schedule before heading over. But if you qualify income-wise and want the peace of mind of having someone knowledgeable review your return, it's definitely worth considering alongside the software options everyone's mentioned.

I second TaxAct! Used it this year for the first time after getting burned by TurboTax's surprise fees last year. Had a W2 plus three different 1099 forms (NEC, MISC, and a K from some gig work) and sailed right through without any upgrade prompts. The interface definitely looks a bit dated compared to some others, but honestly I prefer that to flashy interfaces that are constantly trying to sell me things I don't need. The step-by-step process was really helpful for someone like me who gets anxious about tax stuff. It clearly explained what each 1099 form was for and walked me through entering everything correctly. Definitely keeping this in my back pocket for next year!

Great question about estimated taxes! Most of the software options mentioned (FreeTaxUSA, TaxAct, Cash App Taxes) do include estimated tax calculators that will help you figure out what to pay quarterly next year based on your current year's income. They'll usually suggest amounts and give you vouchers you can print out or set up online payments. VITA volunteers are also trained to help with estimated tax planning - that's actually one of the really valuable things about going that route since they can walk you through the whole process and explain why you might need to make quarterly payments. If you end up going with the document scanning route (taxr.ai), I'd double-check that they include estimated tax planning in their free version. The traditional software providers usually include this as a standard feature, but newer services sometimes focus more on the current year filing and less on planning ahead. Either way, definitely worth setting up those quarterly payments if you're expecting similar 1099 income next year - learned that lesson the hard way my first year freelancing!