Is free tax filing really “free”?
During tax season, many taxpayers wonder if free file through tax preparation sites is a myth. It turns out, it’s true but it solely depends on your tax situation.
How taxpayers fall for advertising.
On the bright side, the best part about filing online is being able to file your taxes right from home. For one thing, you can avoid the hassle of waiting to see a tax accountant. On top of that, you even see options to file for free!
Unfortunately, not all tax sites who advertise for free tax filing can help taxpayers for free. Most tax sites will only allow you to file your taxes for free if you have a “simple” return; meaning taking the standard deduction.
As a reminder, if you’re itemizing the deductions below, you cannot file for free.
- Charitable donations
- Medical and dental expenses
- State and local taxes
- Other taxes
- Home mortgage interest
- Casualty and theft from a federally recognized disaster
- Unreimbursed job expenses for federal employees, members of the U.S. armed forces, and performing artists
Here’s how some tax sites advertise their free filing.
|Website||Requirements||Free federal and state?||Additional States||Customer Support|
|H&R Block||Income from W-2, Retirement and Social Security, Earned Income Credit, Child Tax Credit, Student Loan Interest, Standard Deduction||Free fed, $29.99 per state||$29.99 per state||Virtual assistant only for self-help directions for the site
You will need to purchase $39.99 to chat with a live tax representative.
|Tax Act||Single or married filing jointly, W-2 Income, and Non-taxable Retirement Income (No taxable amounts in box 2a of 1099-R), Standard Deduction||Yes||$19.95 per additional state tax return||Support via phone and email
Availability is limited based on package and call volume.
|Tax Slayer||Single or married filing jointly, W-2 Income, Student loan interest deduction, Education Credit, Standard Deduction||Yes||$29 per additional state tax return||Support via phone and email|
|TurboTax||Income from W-2, Limited interest and dividend, Earned Income Tax Credit (EIC), Child Tax Credits, Standard Deduction||Yes||$29.99 per additional state return||Access to self-help forum from the online community only
*You will need to purchase the TurboTax Live Basic package for $50 in order to receive assistance.
However, once you select income options, deductions or circumstances outside of these requirements, the website disqualifies you from the free package.
On the one hand, nothing sounds better than free. On the other hand, taxpayers face limitations based on their filing status, state situation, and even customer support.
Above all, customers become stuck choosing between filing for free or upgrade to other packages that allow them to qualify for the deductions or credits they already deserve to maximize their refund.
Most importantly, do your research. Prices may not be clear such as state e-file fees, additional fees and unavailability of certain states because they aren’t located on the website. We advise that you contact any free file site directly if you plan on using these options. Beware as prices go up as the tax season moves forward.
Not all Americans have a simple tax situation.
A majority of taxpayers look forward to claiming their business, homeowner and investor expenses come tax time. Nonetheless, these deductions are not free to file.
CEO of CreditRevo, Marshall Armond says, “Yes, you can file taxes for free, however, your options are limited. If you’re running a business, many free options will not be able to process your business deductions. So while you can file your taxes for free, they do come with many limitations and restrictions.”
As a reminder, business owners file a Schedule C to report their earnings, profits, losses and their business expenses. Homeowners can deduct mortgage interest, points, or receive the Mortgage Interest Credit. Investors report stocks and capital assets for their capital gains or losses on a Schedule D. Rental income and expenses are reported on a Schedule E.
That being said, let’s explore your tax filing options.
|Tax Preparation Website||Homeowners Pricing||Investments Pricing||Self-Employed / Business Taxes Pricing|
|RapidTax||$24.95||$34.95||$34.95 / $49.95|
We accommodate your tax situation.
If you meet the following circumstances, you can file for just $9.95 for each federal and state return for your current year tax return. (Prior year tax returns are required to be mailed and pricing packages differ)
- You’re filing single or married filing separately
- No dependents
- W-2 income
- Interest and dividends income
- Retirement income
- Unemployment income
- You qualify for the Earned Income Credit
*E-file is always free and additional states are $29.95.
Moreover, you receive free telephone, email and live chat assistance. It happens all before, during and after your filing process. Additionally, you have free access to download copies of your tax returns.
Qualify for a discount
You can also build points for each dollar you spend to qualify for a discount next year. Check out our pricing tiers for current, prior year tax returns, additional services like a professional review, and audit protection by clicking here!
Start your taxes today.
Our tax representatives are here to help every step of the way and there’s no surprise with our flat fees. Create an account now!