#Irs free file free#
Current Free File partners are small companies that are unfamiliar to most tax filers: TaxAct, 1040Now, TaxSlayer, EZTaxReturn, Free 1040 Tax Return, OnLineTaxes, FileYourTaxes, and FreeTaxUSA.įree File is an example of how a well-meaning public-private partnership may fail to work out as intended. With low participation, the future of the Free File program looks dire. Legal battles over claims of consumer fraud are ongoing. The company allegedly steered tax filers away from its Free File option (“Freedom edition”) towards its retail products (including a “Free edition”) using a range of marketing and coding tactics. TurboTax’s departure from Free File followed years of controversies. TurboTax and H&R Block still offer no-cost tax prep, but not through the IRS Free File program. The non-profit newsroom ProPublica estimates that those two companies accounted for about two-thirds of all filings through the program. Both TurboTax and H&R Block, the two largest commercial US tax preparers, have quit the Free File Alliance.
#Irs free file for free#
Back in 2019, when I tried to access TurboTax’s Free File option (once called “Freedom edition”), I had to wade through a few pages of Google search results to find it.Īccording to the Treasury Inspector General for Tax Administration, at least 14 million tax filers who were eligible for Free File in 2019 may have paid fees to commercial preparers instead.Īnd participation is likely to decline further. Most tax filers must access Free File from the IRS website since the commercial tax preparers may not provide a direct link on their own sites. And outreach efforts by the IRS and others have failed to spread the word.Įven tax filers who have heard of the program may not find it. But many tax filers simply may be unaware that the service exists. Others may find even Free File too complicated. Why do so few eligible tax filers participate? Some may not meet the commercial tax preparers’ rules. That was the most in the last ten years but still only about 4 percent of those likely eligible (those with incomes below the 2020 threshold of $69,000, or about 70 percent of all tax filers). In 2020, 4.2 million tax returns were filed through Free File. The IRS estimates the program has saved tax filers more than $1.8 billion in filing costs, assuming they avoided $30 on average per return.
For example, some have restricted access to those whose incomes are lower than the IRS threshold (such as TaxSlayer’s $39,000 upper limit for tax year 2021).Īccording to the Free File Alliance, about 60 million federal tax returns have been filed through the program since its inception.
#Irs free file how to#
The program’s original memorandum of understanding prevented the IRS from creating its own tax prep software and e-filing services, though this condition was removed in December 2019.Īside from some restrictions, such as limits on their ability to advertise retail products to Free File users, commercial tax preparers have had flexibility over how to administer the program, including determining which customers can use it. The private-public consortium, led by the IRS since 2003, was established to provide no-cost online federal tax prep and electronic filing to households with low to moderate incomes (up to $73,000 for tax year 2021). It’s time to redesign Free File to ensure that households with low to moderate incomes can prepare and electronically file their tax returns without paying a tax preparer. Less than 5 percent of eligible tax filers use Free File and the two biggest tax prep companies that partnered with the IRS to operate it have quit the program. The Free File Program eased some of those burdens for a few million tax filers each year, including me.īut its future is uncertain. Most of us dread filing tax returns-it’s too complicated, too confusing, and often too expensive.
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