FreeTaxUSA - Things to Know Before You Start
Review of FreeTaxUSA
FreeTaxUSA first appeared on archive.org in February 2003. Their homepage shows that they have filed over 9,000,000 free tax returns with the IRS. The software they provide is similar to other online providers (like TurboTax, TaxAct, or H&R Block). I filed my return on the top four tax preparation websites and my refund was the same on each site but there were some slight differences between each service. The price was the best on FreeTaxUSA and for 95% of taxpayers it could handle their taxes. The other thing that was refreshing was the lack of upgrade screens. The software felt intuitive and made something hard, like taxes, something attainable for the average Joe.
Other Reviews Have It Wrong - It's not just for simple returns
I've done a lot of research for this review and there is one thing almost all the other reviews get wrong... FreeTaxUSA supports all major federal forms for free (see the bottom of this page for a complete list). They support buying/selling a home, investment income, 1099 contractor income, and a just about any complex scenario a taxpayer might have. Other reviews say 'It's great for simple returns' but they support so much more than that. The nice thing is that you don't have to take my word for it because you can create a test account on their site and see if it supports your situation. Use a throwaway email account and take a test drive. While you're at it, contact their customer support and see how quickly you get a response. I sent a number of questions and I received a response within five minutes a few times and I received an answer within the hour for harder questions.
How it Works
Visitors prepare their taxes through an online interview process. Once the questions have been answered the software fills out the necessary tax forms. The forms can then be e-filed, or mailed, with the IRS. Users can print out the forms for their records or download a PDF of the completed forms.
The federal return is free for everyone. The federal service here is a beefy, full flavored federal return, not the watered down free federal other sites provide. The 'watered down' federal other sites provide only includes support for the 1040ez form or has income or age restrictions. However, the federal return on this site includes everything including buying/selling a home, investment income, rental income, 1099s, etc.
The state return is $12.95. When filing fed and state together this is the cheapest price I could find anywhere online for filing both. For being a small company the software has a lot of positive reviews. The screens are easy to understand and most people mention how fast the process is. Many reviews mention the 'no BS' or 'no gimmick' approach to pricing with no 'bait and switch' scams. I could go through the processes without worrying about upgrading or finding myself buying something I didn't know I was committing too, which was nice.
Will you be using FreeTaxUSA to file your taxes this year?
One of the biggest downsides is the lack of import features. Users will spend more time entering their W-2s, stock transactions, and other tax data because automatic importing isn't available. Since it takes about a minute to enter a W-2 manually an import feature seems a bit unnecessary, but for some people it might be important. On average you'll pay an additional $30-$100 to save a few minutes you would have saved importing things. For me, $100 is worth entering a couple W-2s by hand but if you have hundreds of stock transactions it might be worth the extra cost.
I had to dig for these other downsides but in the interest of being thorough I thought I'd list them here.
- They don't have specialty calculators for charitable contributions. They still support charitable contributions but a calculator to estimate the value of your contribution isn't provided.
- The software can't do advanced business taxes (corporate, LLC, partnerships, etc).
- They don't have a boxed product.
- They don't have retail offices so you can't walk in and have your taxes prepared by a person. Because the tax code is so complex CPAs and other tax experts all depend on software, software that is very similar to what FreeTaxUSA provides.
- The software doesn't support refund anticipation loans (RALs), cash cards, or selling gift cards. Instead, direct deposit and e-file are provided for tax refunds. This means customers keep all of their refund without additional fees.
- A common complaint is that the company doesn't have a phone number for customer support. There are reviews that mention that the customer support (which is email only) is quite good but there are some negative complaints as well.
- Some reviewers mention that it's difficult to sign in to their account and that they couldn't retrieve a new password easily.
"I just finished my return using FreeTaxUSA.com. It was the best filing experience I have had in 14 years! I usually use a different website but looked for something cheaper this year. I looked at several sites where federal e-file was free and state was $10-$20. FreeTaxUSA.com was the easiest, fastest and most efficient system I have ever used. No unnecessary questions, quick and to the point, and it still found more deductions for me than I found by myself. Thank you!!"
Source: the website's testimonial page
"This is my second year using FreeTaxusa and my last. You can never get back in on the username and password you have for it. I have tried to get in 10 times and I always have to get a new password. It is very annoying."
"I have used this software for about 6 years or so, and I haven't had any problems with it. I will state that my return is relatively simple so I'm pretty confident this software can handle that. My only issue is the support. They are not helpful to say the least. They haven't been rude or anything like that, just really unable to provide answers to what I thought were simple, straightforward questions. Mind you these were not tax questions but questions that should be able to be fielded by someone in tech support."
Reputation - Is FreeTaxUSA Safe to Use?
- FreeTaxUSA is a TaxHawk Inc company. The BBB has a rating of A+ for the company.
- The company is an authorized e-file provider. The IRS has a rigorous application process for authorized e-file providers. These steps include submission of fingerprints from all owners of the company, a credit check; a tax compliance check; a criminal background check; and a check for prior non-compliance with IRS e-file requirements. Getting approved is not easy and the IRS reviews compliance each year. In the IRS's own words "The application process is not simple, but as a tax professional, you understand these steps are necessary to protect the integrity and security of the electronic filing system. We all have a stake in maintaining the highest standards for e-file providers."
- The company has filed millions of tax returns; according to their homepage.
- They have been around for quite a while; at least 11 years according to Archive.org.
Screenshot from the Software
Supported Forms & Schedules
Supported Federal Forms NOTE: Click here for supported state forms
- The following types of income are supported when using FreeTaxUSA:
- Wages and salaries (Form W-2)
- Unemployment compensation (Form 1099-G)
- Interest and dividend income (Form 1099-INT and Form 1099-DIV)
- Capital gain distributions (Form 1099-DIV)
- Sales of stocks and mutual funds (Form 1099-B)
- IRA and pension distributions (Form 1099-R)
- Social security benefits (Form SSA-1099)
- Gambling income or losses (Form W-2G)
- Self-employment income (Form 1099-MISC and Schedule C)
- Rental real estate income (Schedule E)
- Royalty income (Schedule E)
- Partnership or S corporation income (Schedule K-1)
- Estate and trust income (Schedule K-1)
- Farm income (Schedule F)
- Self-employment taxes (Schedule SE)
- Alimony received
- Taxable state or local refunds (Form 1099-G)
- Scholarships and grants
- Unreported tip income (Form 4137)
- Sale of business property (Form 4797)
- Cancellation of debt income (Form 1099-C or Form 1099-A)
- Sale of home
- Tuition program distributions (Form 1099-Q)
- Original Issue Discount income (Form 1099-OID)
- Seller-financed loan interest income
- Household employee wages
- Net Operating Loss carryover
- Capital loss carryover
- Jury duty fees
- Prizes and miscellaneous income
- Alaska Permanent Fund dividends
- Child and Dependent Care Credit (Form 2441)
- Child Tax Credit
- Additional Child Tax Credit (Form 8812)
- Education Credits - American Opportunity and Lifetime Learning Credits (Form 8863)
- Refundable American Opportunity Credit
- Earned Income Credit (Schedule EIC)
- First-time Home Buyer Credit
- Move up/Repeat Home Buyer Credit
- Retirement Savings Contribution Credit (Form 8880)
- Excess Social Security Credit
- Home Energy Credits
- Electric Vehicle Credit
- Elderly Credit (Schedule R)
- Foreign Tax Credit (Form 1116)
- Adoption Credit (Form 8839)
- General Business Credits (Form 3800)
- Education expenses (Form 1098-T)
- Home mortgage interest, points, and insurance (Form 1098)
- Student loan interest (Form 1098-E)
- IRA deduction
- Educator expenses
- Moving expenses (Form 3903)
- Alimony paid
- Medical expenses (Schedule A)
- State and local taxes (Schedule A)
- Real estate taxes (Schedule A)
- Personal property taxes (Schedule A)
- Donations to charities (Schedule A and Form 8283)
- Job expenses (Form 2106)
- Tax preparation fees (Schedule A)
- Investment expenses (Schedule A)
- Gambling losses (Schedule A)
- Casualty losses (Form 4684)
- Depreciation expense (Form 4562)
- Margin loan interest (Form 4952)
- Penalty paid on early withdrawal of savings
- Deduction for health savings account
- Sales tax
- Self-employed retirement contributions
- Jury duty repayments
All Federal Supported Forms
- Form 1040 (Including Form 1040EZ and Form 1040A)
- Form 1040X
- Schedule A
- Schedule B
- Schedule C
- Schedule D
- Schedule E
- Schedule EIC
- Schedule F
- Schedule R
- Schedule SE
- Form 982
- Form 1116
- Form 1310
- Form 2106
- Form 2120
- Form 2441
- Form 3800
- Form 3903
- Form 4137
- Form 4562
- Form 4684
- Form 4797
- Form 4868
- Form 4952
- Form 5329
- Form 5405
- Form 5695
- Form 6251
- Form 6781
- Form 8283
- Form 8379
- Form 8453
- Form 8582
- Form 8582-CR
- Form 8606
- Form 8812
- Form 8829
- Form 8834
- Form 8839
- Form 8862
- Form 8863
- Form 8867
- Form 8880
- Form 8888
- Form 8889
- Form 8910
- Form 8917
- Form 8936
- Form 8941
- Form 8949
- Form 9465