This tax season, investors may be eligible for free tax filing.

• Tax season begins on Jan. 27, and investors may have more free return filing options than in previous years with less than a week left.
• Capital gains and losses, dividends and capital gains distributions, and interest income are typically reported to investors through Form 1099-B, Form 1099-DIV, and Form 1099-INT, respectively.
• Some tax filing options may include Direct File, IRS Free File, and Volunteer Income Tax Assistance.

Tax season begins on Jan. 27, and investors may have more free return filing options than before.

Capital gains and losses are reported on Form 1099-B, while Form 1099-DIV is used for dividends and capital gains distributions. Form 1099-INT covers interest income from various sources.

Withdrawals from 401(k) plans, individual retirement accounts, pensions, and other distributions may result in retirees receiving Form 1099-R.

The IRS has announced the beginning of the 2025 tax season. The free tax filing option is described as 'fast and simple' by the IRS. Eligibility for the program is open to 30 million individuals.

Consider three free tax filing options this season based on your situation.

1. IRS Direct File

The IRS Direct File program, which is the agency's free filing service, has been expanded to 25 states this season. This expansion covers more than 30 million taxpayers across eligible states, according to estimates from the U.S. Department of the Treasury.

In a press release in October, former IRS Commissioner Danny Werfel expressed excitement about the enhancements to Direct File and the increased number of taxpayers who would become eligible to utilize the service this year.

In the 2025 filing season, the program will support interest above $1,500 and Alaska residents who receive the Alaska Permanent Fund dividend, in addition to simple returns including filings with interest of $1,500 or less, as covered during the pilot in 2024.

The program does not currently account for other sources of income, such as capital gains and dividends.

From March onwards, Direct File will enable distributions from a majority of corporate retirement plans, including 401(k)s, pensions, and more. However, the service cannot be utilized if funds have been withdrawn from an IRA.

2. IRS Free File

The IRS offers a public-private partnership with the Free File Alliance, a nonprofit coalition of tax software companies, as an alternative option for filing taxes.

If your AGI was $84,000 or less in 2024, you can use IRS Free File during this season.

The Free File Alliance, led by Tim Hugo, has announced that eight software partners will support the most widely used tax forms and schedules. These include Schedule B for interest and ordinary dividends, Schedule D for capital gains and losses, and forms such as 1099-INT over $1,500 and certain items from Forms 1099-B and 1099-DIV, which cover investing activities.

Hugo stated that it's an excellent tool, serving millions of Americans, yet it's largely unknown.

3. Volunteer Income Tax Assistance

If you want more guidance, you may also qualify for free tax prep from Volunteer Income Tax Assistance (VITA), a program managed by the IRS.

In 2025, you will be eligible for VITA if your adjusted gross income is $67,000 or less. The program covers various forms, including Forms 1099-INT, 1099-B, and 1099-DIV, with certain limitations. VITA also covers Form 1099-R for retirement income, but with some exclusions. However, cryptocurrency transactions will not be covered in 2024 filings.