Free File supports preparation of Federal tax returns. However, many companies also offer state tax preparation though fees may apply.
Free tax preparation and e-filing if your adjusted gross income is $56,000 or less in 2008.
Free File Home - Your Link to Free Federal Online Filing
Instructions .. http://www.irs.gov/efile/article/0,,id=118992,00.html
Step 1. How to Get Started: From the "Free File Home – Your link to Free Online Filing" page, click on the "I Will Find a Company" button at the bottom of the page. You will go to an IRS.gov Free File page where you may start your search for a Free File company.
Step 2. Determine Your Eligibility: You must first determine your eligibility for using a particular company. Each company has a simple description of their eligibility criteria for using their free service.
Step 3. Link to Free File Company Service: After choosing a company, click on the company's name, which sends you directly to the company's web site (you will be notified you are leaving IRS.gov and being sent to a commercial web site). You may then begin the preparation of your tax return.
You have two options for selecting a Free File company on IRS.gov:
A. Review the complete list of companies and their descriptions of services. Scan the listing of Free File companies on the IRS.gov page after clicking on the "Start Now" button on the Free File Home page. Upon determining eligibility for a free service, you may link directly to the company's web site by clicking on the company's name. Upon doing so, you will be notified that you are leaving the IRS.gov web site and entering the company's web site. You will be located on the company's web site and you may want to start the process of preparing your federal income tax return. You will also find a description of a company's service under "more details" on the IRS.gov free file page.
B. Alternatively, if you are having trouble choosing a company by scanning the list of Free File companies, you may want to use the interactive help tool, "Guide Me To A Company" to narrow down the possible companies offering free preparation and e-filing for you. Click on the button "Guide Me To A Company" to start searching for the companies that may provide free services for you.
If you are uncertain about your answers for the questions contained, you may want to view the complete list of companies and their services. The accuracy of the results is dependent on the accuracy of the information you provide the "Guide Me To A Company" tool.
Step 4. You may exceed eligibility criteria after selecting a company
You may determine after you start preparing your tax return with a particular company you are not eligible for the company's Free File service and you may be subject to a fee.
If this notification occurs you have the following options:
Return back to the IRS' Free File homepage and review the list of companies and their services and select another company you may qualify for;
Continue completing your return but take note of the fee displayed on the company's website; or
Visit the IRS e-file Solutions for Taxpayers web page to view additional low-cost e-file opportunities.
If your income was above $56,000 you can still use the Free File Fillable Forms tool to complete your tax return and file it electronically.
For example, if you select a company whose free services are provided to individuals with an Adjusted Gross Income (AGI) of $26,000 or less and, based on your tax data, the company determines your AGI exceeds the $26,000 limit, you will be notified you may be subject to a fee. It is important you understand each of the company's eligibility criteria before selecting a company.
Step 5. Prepare and e-file Your Federal Income Tax Return: The company's software prepares and e-files your income tax returns using proprietary processes and systems. Electronically filed returns are transmitted by the company to the IRS using the established e-file system. An acknowledgment file, notifying you that the return has been either accepted or rejected, is sent via email from the company.