Money doesn't actually talk. We do.

Free File: Winnowing Out the Best Free Sites for Filing Your Tax Returns

A few weeks ago we promised to review all of the free federal tax software that the Internal Revenue Service and 19 tax companies provide taxpayers who make $54,000 or less a year. True to our word, three FiLifers who qualified for the Free File service gathered together their tax forms, rolled up their sleeves and got down to some serious tax fun.

Some of the software made tax preparation deliciously simple, while other programs made our heads hurt and our necks tight. Check out the chart after the break to see our ratings.

All told, the Free File Alliance delivers on its promise to taxpayers who make $54,000 or less. Though it turns out that each participating tax company has slightly different eligibility requirements (don’t ask why, it’s complicated), it seems that everyone, whether English or Spanish-speaking, qualifies for one of the tax-prep programs that we liked best.

OK – so Free File is worth your time. Now here’s some advice on how best to use it.

First, you can only access the Free File software via the IRS website. So go here first. Then use the IRS tool “Guide me to a Program” to see which companies’ eligibility requirements you meet.

Here is where it gets tricky. It’s likely that you qualify to use a number of services that vary widely in terms of quality. And while it’s free to use these programs for federal tax returns, the sites can (and do) charge (different) amounts to handle your state returns.

Start by checking out our ratings chart. You should stick with our highest-rated programs if you are unfamiliar with basic tax terms or if your tax situation is somewhat complicated (maybe because you have investments, went to school last year or were self-employed).

Our top picks guided us through life events from the past year and helped us figure out which forms we needed to file. They asked us questions that we didn’t even know we needed to answer. Best of all, they used language that we understood. And we never had a technical snafu.

If you are reasonably comfortable with tax terms and your tax situation, then you might consider the programs in our second tier. We thought the designs of these sites were a bit cruder, and they were not as rich with tax advice. Still, they got the job done.

As far as your state returns go, many of the programs automatically fill them out using information you provide for your federal return. This feature is a huge time-saver.

But not every company provides the tax forms for every state. Also, only a few companies, like TaxAct and TaxSlayer, offer the special forms you need if you were a part-time resident of a state. Most importantly, the companies charge different prices for state returns. Some offer state returns for free, while others charge up to $29.95. See our chart below to see who does what (there’s a link on the bottom to make it bigger).

If the software of your choice doesn’t provide your state’s tax forms or charges a lot for it, you can still use its service as a sort of trial run. For instance, we like H&R Block’s site a lot. But its $29.95 fee for filing a state-tax return is absurd.

So here’s the workaround: Use H&R Block’s software to get familiar with the terms and figures you’ll need to input and the forms you’ll need to use. But don’t use Block to file either your state or federal return. Instead, once you’ve used its software as a worksheet, in effect, use a site that offers a better deal to actually file your returns. Take it from someone who prepared her taxes six times this year: It gets easier and faster the more you do it.

Click here for larger chart image and footnotes.

Design/Clarity: We looked at the overall site layout, organization, language and ease of use.

Tax Tips: We determined how much tax information and guidance the site offered via tax questions, pop-up help, FAQs, glossaries and user support.

State File Price: We recorded how much the site charged for state returns via the Free File program. You may have to file your federal tax returns through the service in order to get these state-tax prices.

Accuracy: We cross-checked the results of each site against one another and found that there were some outliers. Sure, the errors may be due to mistakes that we made when inputting our data. But the designs of sites with the odd results were confusing. It was too easy for us to make mistakes, so we dinged their accuracy scores.

– Kristen Sullivan, Irina Aleksander and Mary Pilon