FreeTaxUSA is a tax preparation software program that is exactly what the name implies – free.
At least it is for filing your federal income tax return. Like many other free tax prep services, they do charge a fee for e-filing state income tax returns.
They provide the free version of the program, but you can upgrade to the deluxe program for a ridiculously small fee.
What’s more, FreeTaxUSA can enable you to prepare your tax returns for free, even if they are more complicated. For example, many free tax prep software programs offer you the ability to file for free under certain very limited conditions. Free may only apply if you have only W2 income, minimal interest and dividend income, and only the most basic itemized deductions. If you have anything more complicated than that, free goes out the window, and you’re directed to a premium plan.
That’s not the case with FreeTaxUSA, and that’s why this software is well worth a close look.
FreeTaxUSA Features & Tools
FreeTaxUSA accommodates filing more complicated returns. This includes taxpayers who are self-employed, have rental income, have K-1 income from an LLC, partnership, or S corporation, or take a home office deduction. You can do any and all of these with FreeTaxUSA, even with the free version.
FreeTaxUSA Refund Maximizer. This is a tool that double checks your work on a return filed with another tax prep software program. You enter the information from that return, and the maximizer will analyze it to determine if you could have gotten a bigger refund with FreeTaxUSA. If you can, then you can file an amended return for that tax year. And as noted above, you can file an amended federal return for free.
Also, you can import prior year’s tax returns from TurboTax, H&R Block, and TaxAct.
Free state filing for taxpayers under 22. If you are under the age of 22 as of the end of the calendar tax year, you are eligible for this benefit. FreeTaxUSA normally charges a small fee to e-file state income tax returns, but they are waived if you’re under 22. This can be a real savings for taxpayers who have teenage or young adult children who have sufficient income to require filing a tax return.
Accuracy Checker. FreeTaxUSA uses a real-time accuracy Checker to check your work throughout the preparation process. If the program determines that you may have made a mistake or an omission, you’ll be alerted. This will help to keep you on track throughout the process.
Accuracy guarantee. FreeTaxUSA guarantees the accuracy of your return as filed. You will be reimbursed for IRS imposed penalties and interest for any errors, omissions or other misinformation that is the result of the program software. (Penalties and interest on state income tax returns is not covered under this guarantee.)
Customer support. Available Monday through Friday, 10:00 AM to 7:00 PM Eastern time.
FreeTaxUSA Free Version
The Free Version offers most of the features and tools that you can get with the Deluxe version. It’s free to e-file your federal income tax return, but you will be charged a fee of $12.95 for each state tax return that you need to file. This is very common among free tax software packages. That’s because while there is just one e-file process for federal, there are dozens for state income tax returns – one for each and every state.
Once again, one of the major advantages to using FreeTaxUSA is that supports virtually any type of income tax return. That’s a very unusual benefit of using this program.
For the free version, customer support is available by email, but not by live chat.
Returns are stored in PDF format. There’s no limit on how many returns you can store, and no charge for doing so. You can also download and either store or print your returns on your own computer.
FreeTaxUSA Deluxe Version
The FreeTaxUSA Deluxe Version has all of the functionality of the free version, but it adds several important premium features. Adding those features as well worth the price. The paid version costs $6.99 for your federal income tax return only. And like the free version, there is also a fee of $12.95 for each state income tax return filed.
Those added features include:
Live Chat. During tax season, customer contact is available from 9:00 AM to 11:00 PM Eastern time. That gives you an extra five hours each day to access support. Like the free version, customer support is not available on weekends or holidays.
Free amended tax returns. You can file amended federal income tax returns for free. However, if you need to file an amended state income tax return, FreeTaxUSA charges a fee of $14.99 per return.
Priority Support. This feature enables you to get a priority on your inquiries. That means that your email questions will be moved to the front of the line. That will put you ahead of users who are working only with the free version.
FreeTaxUSA Audit Assist. This feature gives you access to audit specialists who can help you in the event that you receive a notice from the IRS about an error, or notification of a pending audit. The staff will help you to prepare for the audit, though they cannot actually represent you in person.
Support will include helping you to interpret IRS notices, and determining necessary documentation for your response or in preparation for an audit. They will also provide you with options in the event that you are unable to pay a tax liability.
A Few Things to Be Aware Of…
Limited hours for customer support. Customer support is only available on weekdays until 7:00 PM Eastern time – which means that it cuts off at 6 PM central time, 5 PM Mountain time, and 4 PM Pacific time. It’s completely unavailable on weekends and holidays. It’s probable that “after hours” will be the most likely time that you will be preparing your taxes.
Data importing limitations. The program is unable to import basic data, including information from W-2s and 1099s. This can be especially problematic in the case of investment brokerage statements. If you are an active stock trader, you may have several pages of trades that need to be entered as capital transactions. These will have to be done manually, which may require considerable time and effort.
Inability to pay the program fees out of your tax refund. Most tax-preparation software programs allow you to do this, but FreeTaxUSA does not. But unless you will have to pay filing fees for several state income tax returns, it’s unlikely to be a major problem since the fees are so low to begin with.
Will FreeTaxUSA Work for You?
Despite a few program limitations, FreeTaxUSA is well worth using. It has far greater functionality than other free tax preparation software programs, and even the Deluxe version costs just a fraction of what it does with other popular paid programs.
Due to the lack of importing capability, you must expect to spend more preparation time with this program then you will with TurboTax, but you will also be saving a considerable amount of money on the program fee.
The ability of FreeTaxUSA to accommodate even the most complicated tax returns is virtually a built-in advantage. Most competing free tax software programs can only do the most basic returns. If you have anything more complicated, you’ll have to move up to a premium version.
Even the popular paid programs use a graduated service level. For example, you may pay $50 for a program that does basic returns, but then be required to pay $100 if you operate a small business. There are no such up-charges with FreeTaxUSA.
If you want more information, or if you want to sign up for the program, check out the FreeTaxUSA website.