FreeTaxUSA – Review and Analysis by a Tax Accountant
The year was 2008. A bright-eyed young freshman in college (blissfully ignorant about the fact that she would eventually become a tax accountant) frantically called her mother. “Mom, I have to do my taxes. HOW AM I SUPPOSED TO KNOW HOW TO DO TAXES?” She told me three little words – or really one word as they are all pushed together — that changed my tax life forever, FreeTaxUSA.
Five years later, I get paid to do the taxes for corporations and affluent individuals. We use expensive tax software and I have access to it for free. But I don’t use it. I go back to FreeTaxUSA every year. Why? Because it’s the bee’s knees.
What is FreeTaxUSA and Who Can Use It?
FreeTaxUSA is a tax software used to prepare and e-file your federal return for free and your state return for just $9.99! It is an original member of the IRS’ Free File Alliance, which is comprised of a group of tax software providers that allow individuals with an Adjusted Gross Income of $57,000 or less to file federal returns at no charge. The $57,000 threshold is the same for single and married filers, which begs the question: why do you hate married people, IRS? Why? Nevertheless, this $57,000 AGI limit encompasses 70% percent of all taxpayers. Can I get a “We are the 70%!”?
Why do I use it?
As I approach my third busy season, many of my colleagues find it strange that I choose to use such an “unsophisticated” software when I have access to the “biggest and the best”. But the unsophistication (not a word) is why I keep coming back to it year after year. Why?
- With interview style questions, it is the only tax return I do each year that I don’t have to think about. It is ridiculously easy and you don’t have to be a tax accountant or understand tax code to use it. Pro tip: Most tax accountants do not understand tax code either.
- Your information rolls over from year to year, allowing you to just update your numbers and go! A fairly uncomplicated return – one with a few W-2s and 1099s – can be completed start to finish in just 20 or 30 minutes.
- FreeTaxUSA offers 100% accuracy with built-in error checking. If an error occurs that causes you to owe interest and penalties to the IRS, FreeTaxUSA will pay them.
- As you enter each piece of information, your refund or tax due updates at the top of the screen. Money, money, money….MONEY! Unless you owe, then that sentiment was insensitive. Please adjust your withholding for next year.
- Free support gives you access to a plethora of frequently asked tax questions. Can’t find what you’re looking for? Call customer support 24/ 7 for free! (BONUS: All FreeTaxUSA representatives live and work in the United States.)
What’s the catch?
No catch, but as with anything else, there are downsides that may apply to you.
- As I said before, your AGI must be under $57,000 to enjoy these perks. Sorry 30%!
- In order to file a state return, you have to have lived in the same state for the entire year. FreeTaxUSA does not support part-year or nonresident state returns. However, you can still use the software to file your federal return free of charge!
- There are certain forms that are not supported by FreeTaxUSA (most of which do not affect taxpayers who are within the AGI limits). These forms include: Form 2555 (Foreign Wage Income), Schedule H (Household Employment Tax), Form 4835 (Farm Rental), Form 6252 (Installment Sales), Form 8615 (Tax for Children with Income over $1,900), Form 8801 (Prior Year Minimum Tax Credit), Form 8885 (Health Coverage Tax Credit), Form 8853 (Archer MSAs), and Form 6198 (At-Risk Limitations).
Does FreeTaxUSA have a premium program?
FreeTaxUSA offers a Deluxe Edition return for only $5.95! This includes a wonderful program called Audit Assist. If you happen to be audited by the IRS, the tax professionals at FreeTaxUSA will assist you in gathering the correct records for your audit, writing a response to you IRS notice, and preparing for the audit. If the outcome of your audit results in owing the IRS money, FreeTaxUSA will also help you understand the various options you have in settling your debt with the IRS. Six bucks have never gotten you more!
Anything else?
I would like to take this opportunity to give you some valuable information for your everyday life.
- The IRS is not scary. They have some of the nicest and most verbally abused representatives ever. Call them up today just to say hi.
- Most people really can do their own taxes. Unless your taxes are crazy complicated, software does most of the work for you. Don’t pay someone else to do it when all you have are a few W-2s. You can do this, I promise!
- If you are extending your return, you still have to pay any taxes due by April 15th. An extension to file is not an extension to pay.
Ready to file?
Gather up your tax documents and go! Federal is filed for free and there is no obligation to pay for your state return until you e-file. If you owe, you can pay by eCheck or any major credit card. You do not have to pay when you file, but make sure you get your payment in by April 15th!
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It sounds like a great production but I’m curious, are you able to do your “business” (blog) taxes though the program? How does it compare to TurboTax in your opinion?
I’ve been using TurboTax and while I’m not married to the program at all, it’s done me pretty well. Although I’ve got to say I do feel like I’m leaving some money on the table. I have yet to try it with my blog so I’m not so sure how TurboTax handles small business and big business together (I still have a full time job).
FreeTax supports 1099 Misc income and K-1 income (from LLC distributions). So they support sole-proprietor income forms.
If you go to the main website at freetaxusa.com, instead of going through the IRS free file, there are no income limits, or any limits to file a federal return for free.
I’ve used TaxUSA before, and I’ve had really good luck with it. I wish that they had more programs to educate college students on these topics. I was just helping my brother with the same thing, and I need to call him back and tell him to do it this way for sure! Thanks, Erin!
Hi Cat,
. I agree, taxes are intimidating if you’ve never done them on your own before. Thanks for reading!
You’re very welcome
This sounds a lot like the software I use in Canada called TurboTax, it’s so easy, I actually look forward to filling my taxes every year.
Yep, we have TurboTax here as well. As long as you’re getting a refund, taxes are enjoyable! Thanks for reading, Jordann!
Looks like a good bit of software, great job on the post!
It’s great software
. Thanks, Money Bulldog!
Sounds like a good program for most filers to me if they want to take a little bit of their time. I used to work for CPA firms and use the fancy software as well but I’ll be using turbo tax this year due to my first year as a schedule C. I’m sure I could do it right myself but I don’t mind the cost to save some time.
It absolutely depends on your situation and what you feel most comfortable with. Thanks for reading, Lance!
Wow – is there a UK version?
Hi John,
I honestly don’t know if there is a similar program in the U.K. I hope so, it is an awesome program!
Thanks for reading!
I’m not American but we can do our taxes free online as well similar to this concept. I think it’s all personal desire. I f you like it you like it, if you don’t you don’t.
I love being able to do my taxes online. So quick and easy!
Sounds like a great alternative for TuboTax! I’ve been looking for one to replace it and this might be it….
I highly recommend it! Thanks for reading!
I used FreeTaxUSA last year. I didn’t see any real difference between it and TuboTax or TaxAct, aside from the price! I can’t think of any reason why I wouldn’t use it again this year. However, fingers crossed, I won’t qualify for free file next year!
Yes, I do look forward to the day where I don’t qualify for free file
. Until then, FreeTaxUSA makes my life easier! Thanks for reading, Edward!
I’m sure it’s a simple program to use, but it’s probably just as easy to mess up using it as well. That’s my biggest issues with all of the DIY tax preparation tools out there. They give people too much credit and simply cannot ensure that everything is right with a return. I even said it in my review of Turbo Tax–none of these programs have enough safe-guards against user error or inexperience. And they are just after-the-fact solutions, so there is no guidance or planning which I think is a very bad thing for a lot of people.
Plus, I prefer my professional software so I don’t have to waste time with interview screens and the speed of the site at any given time. With my program, I’m in and out in 10 minutes or less depending on the complexity of the return.
Different strokes, I guess. I do think that most people with AGIs under $57,000 have simpler returns that can be done without sophisticated software or tax professionals. Some people don’t feel comfortable with that, and that’s fine too. That’s why I have a job
.
While FreeTaxUSA does have interview screens, it is easy to skip around to only the applicable sections. I have never had an issue navigating it, and I think it is extremely user-friendly. Thanks for reading, Eric!
Erin, I completely agree. Whenever I had problems with the IRS, I’d call the IRS! They were friendly and extremely knowledgeable and helpful. Thanks for the thoughtful review.
Absolutely, Average Joe! People are so afraid of the big, bad IRS. They really aren’t that scary!
Thanks for reading
.
I am scared to death of the IRS. I have nightmares about them. If I need to call them I’ll get you or Erin to do it for me!
Oh, Kim! They really aren’t scary. But I was afraid of them too. A month after I started working as a tax accountant, I got a letter from the IRS and I started freaking out! Turns out they were just verifying my preparer PIN. I felt so silly.
I’ll call them up for you anytime. They really are super nice
.
Thanks, Thad! Good luck with your 2012 taxes!
Great post. I had never heard of FreeTax USA. Certainly timely too! Thanks!