Because the IRS has made major changes to Form 1040 for 2018, TurboTax has had to change what tax situations are included in Free Edition. Some of the things that used to be included are no longer included.
The IRS has simplified Form 1040 by moving many of the entries that used to be on Form 1040 to a set of six separate schedules. There are no short forms 1040A or 1040EZ for 2018. All 2018 tax returns will be filed on Form 1040. TurboTax Free Edition for 2018 will only prepare simple tax returns that can be completed with Form 1040 itself. Anything that requires one of the six new schedules requires an upgrade.
Credits reduce your total tax. A nonrefundable credit is a credit that could, if it were large enough, reduce your tax to zero. But your total nonrefundable credits cannot be more than your total tax. They cannot give you a refund that is more than the amount of tax you paid during the year in withholding and estimated tax.
The only nonrefundable credits that can be claimed on Form 1040 without Schedule 3 are the child tax credit and the credit for other dependents.
All the other nonrefundable credits that were on Form 1040 in previous years have been moved to Schedule 3. These include the following. If you claim any of these credits, you have to upgrade.
- Foreign tax credit
- Child and dependent care credit
- The nonrefundable portion of the American Opportunity Credit
- Lifetime Learning Credit
- Retirement savings contributions credit ("Saver's Credit")
You might be able to use the TurboTax Free File Program instead of Free Edition. See the FAQ at the link below for information about TurboTax Free File Program, including the requirements to be able to use it. (Ignore the sentence in the FAQ that says to come back in mid January. The Free File Program is available now.)