Happy end of March, financial enthusiasts. If you are new here, welcome! At Finances with Carolina we focus on achieving realistic personal finance goals through graduate school and beyond. If you are a stan, thank you for being part of this community. Today’s newsletter is going to focus on taxes which are due on April 15th, 2025.

Before anybody thinks about suing me, nothing in here is tax advice. All of this content is for educational purposes only and based on my personal experience. Sue your grandma not me.

Use the IRS free file program if you are a US citizen. If you are a grad student or a postdoc, it is very likely that you are eligible.

The IRS basically has deals with tax preparation software that they subsidize for anybody that has an adjusted gross income (AGI) equal or less than 84K. Learn how to calculate your AGI here. A simple rule of thumb is to look at box 11 on your previous year tax return (form 1040). To use the IRS direct file program, go directly to the IRS and select the “Find a trusted partner.” 

The website will ask you some questions about your household including your filing status, age, state, and military status, and your AGI which you calculated earlier. For graduate students and postdocs without a side hustle, your AGI is your stipend minus the standard deduction. If you continue the prompts then you get to the following page:

My experience with FreeTaxUSA✅

This newsletter is not sponsored and I do not have affiliate links to any of the software recommended here. Myself and my loved ones have used FreeTaxUSA for the past couple of years.

The reasons why I recommend this software

Price: If you are under the AGI threshold both federal and state returns are FREE. If you are not under the threshold, the state return is $15. I have confirmation from family or friends that state returns for WI, IL, and CA returns were $15 in 2023.

Software flow: It looks exactly like any other tax preparation software, it walks you through all the possible questions and makes suggestions based on your answers.

Can handle “other income”:  Students and postdocs that receive training grant or fellowship income can include such income in their return.

Quotes from other users...

I am an international student, what about a nonresident return (1040-NR)?

From the same IRS website, some partners can handle nonresident returns such as 1040.com and OTL. I have not personally filed with any of this softwares as I was not an international student during graduate school. If you or a loved one has used this softwares, please let me know so I can include your example next tax season

Some schools have specific online preparation software to handle 1040-NR such as Glacier for UW-Madison. On the other hand, there are schools that have a referral code system for their international students such as Emory with Sprintax. Please check with your university to determine if there are free resources available to you. 

Free File is not the same as Direct File. They are two separate programs.

This newsletter has focused on the IRS Free File program which uses third party partners like FreeTaxUSA and where you can do a federal and state return for free if you are under an income threshold of $84K in 2024 (for 2025 filling). 

In 2024, the IRS launched the Direct File Program for 12 states. This program is a IRS tax preparation software that allows you to file federal returns, this year the list of eligible taxpayers has expanded to 25 states. This option still does not prepare state returns. If you need to file a state return, Direct File will connect you to a free state-supported preparation and filing tool after you finish your federal return. There are some restrictions on the type of income, deductions, and credits you can take. Funded students via a training grant, fellowship, or other “non-compensatory” income are not eligible for this service at this time. If you live in an eligible state and are eligible based on your income type, give it a shot and tell me how it went

Some schools have specific online preparation software to handle 1040-NR such as Glacier for UW-Madison. On the other hand, there are schools that have a referral code system for their international students such as Emory with Sprintax. Please check with your university to determine if there are free resources available to you. 

Thank you for coming to my TED talk ♡

We do not want any of these programs to go away. Each year the income threshold is set so 70% of taxpayers are eligible to use the Free File program. Thus far, the direct file seems to be a success and it has increased from 12 to 25 states. According to the most recent available data, only 2.2% of taxpayers used the IRS Free File program in 2022. Do not leave any of your hard earned/taxed money at the table. If you are eligible for the IRS Free File program, please use it. If you want to learn more about the IRS Free File Program, this nerdwallet article is worth your time.