Thursday, March 30, 2023

The IRS "Free Tax" scam and the hilarious reason why Turbo Tax is the only good free solution.

I wrote this for Facebook friends but I keep seeing people praising the "Free Tax" program and dissing Turbo Tax -- without any actual knowledge. So reprinting it here:

We did B's tax returns for 2022 using the IRS "Free Tax" program. This being America is kind of a scam. Sharing this as a guide to the unwary.

We used "TaxAct". She had state income tax forms for MN and CO. At the very end of the process you learn it costs $40 to print each state return. (Be careful when navigating, at first it seemed Federal eFile was not free; if you defer the state returns you just completed then the free option is available.)

MN is supposed to support Free File [1] but even after we removed Colorado from her form TaxAct still wanted $40 to print the state return. So reentering on the paper form.[2]

[1] Free File program are Arkansas, Arizona, Georgia, Idaho, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Mississippi, Montana, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, Vermont, Virginia and West Virginia, plus the District of Columbia.

[2] If you start at the MN site they don't include TaxAct on their list of FreeFile options. So if one chooses a vendor from MN site you might get a better results.

Hilariously, if you hunt around you can find the free and effective Turbo Tax program for simple returns. It's free because Intuit is in litigation and need to keep it free until that's done

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