A detailed review of FreeTaxUSA, a low cost tax preparation software for both federal and state tax returns. Is it really free? We have the answers.
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FreeTaxUSA is an online tax preparation website that enables you to prepare, print, and e-file your taxes for free. At least that’s true in regards to filing your Federal income tax return. This appears to be a pretty solid, if not spectacular, online tax preparation software.
Let’s take a closer look in this FreeTaxUSA review.
Who and What is FreeTaxUSA?
The company is owned by TaxHawk, Inc. It started in 2001 and was founded by a CPA and a team of professional software developers. The company is an original member of the IRS Free File Alliance and an authorized IRS e-file provider. It has securely filed millions of federal tax returns with the IRS.
Each year a team of tax analysts update the software to incorporate the most recent changes in federal and state tax codes. When the software is updated, it goes through rigorous testing and an approval process with both the IRS and each state.
The site claims that it grows by promoting itself mostly by word-of-mouth. Filers keep coming back since there are no charges for the roll-over of prior year tax data. In addition, the pricing is straightforward and has no hidden fees.
Still another advantage is that FreeTaxUSA has only two versions—Free and Deluxe. This is in contrast to other popular tax preparation software companies that typically have four, five, or even more versions. Filers may find the higher number of versions and their associated add-on fees to be both confusing and intimidating. None of that exists with FreeTaxUSA.
FreeTaxUSA Pros and Cons
Price: FreeTaxUSA is extremely inexpensive compared to it's competitors
Add on the ability to get help from a tax expert for only $7.99
Quick and easy software
No Audit Assistance
No phone support, even for paid plan
Email only support for the free plan
FreeTaxUSA Pricing and Plan
FreeTaxUSA comes in two editions, Free and Deluxe:
$0 for federal and $14.99 for each state return
FreeTaxUSA offers a lot in their free plans. Technically, there are three versions of the free plan; Basic, Premium, and Self-Employed. However, they all cost the exact same. So, no matter what your tax situation is you’ll be able to file your federal return for free and your state returns for $14.99 each.
What you won’t get on the free version is audit assist or the ability to speak to a tax professional. If you need to make an amendment to your return that will also cost $15.98.
Related: The Most Common Tax Deductions—What You Need to Know
$7.99 for federal and $14.99 for each state return
The Deluxe edition includes all of the services of the Free Edition, plus the ability to live chat with a tax expert.
It also includes unlimited amendments, which you have to pay extra for with the Free Edition.
There are reports online that the Deluxe edition also includes Audit Assist but I’m unable to verify this on the FreeTaxUSA website. This leads me to believe this feature has been removed for 2022 tax returns. If Audit Assist is important to you contact FreeTaxUSA and confirm if this option is available.
There are a few add-ons available if you need them.
- File an extension - $0
- Professionally Printed Tax Return -$7.97
- Printed & Bound Tax Return - $15.99
We can presume that these last two features might be desirable if you needed to present your tax returns for business or borrowing purposes. But it’s unlikely that they are anything you’d need to have in the normal course of life.
Here are the basic benefits of using FreeTaxUSAS to prepare and e-file your income tax returns.
Even Complicated Tax Situations Are Covered By Both Editions
With competing tax preparation tax software programs, you usually have to buy a premium version in order to handle self-employment (Schedule C), rental real estate (Schedule E), capital gains transactions (Schedule D), and the various types of K-1 related income sources. But FreeTaxUSA can handle all of those on both the Free and Deluxe editions.
Unlike with most of the other major players in the tax software game, the forms you can access with FreeTaxUSA don't vary by version. The upgraded version is all about additional support rather than additional forms. This means you can likely get all the tax forms you need filed through the free option.
Like other online tax preparation software programs, FreeTaxUSA guarantees the accuracy of their tax calculations. They will pay the interest and penalties if you’re assessed by the IRS due to a calculation error in their software.
FreeTaxUSA is an authorized IRS e-file provider. They encrypt your personal information on their site. In addition, they conduct security and privacy verifications through Truste, Norton, and SecurityMetrics.
Online Backup and Account Rollover
FreeTaxUSA will back up your completed returns online, even with the free version. The free version will also automatically carry last year's information over to your current year's taxes if you use the software two years in a row.
Even if you didn't file with FreeTaxUSA last year, you may be able to import some of your tax information from another service. This year, the software rolled out a new feature that allows for a PDF import of your prior year's tax returns.
I tried the PDF import option when checking out this year's software. It was simple to use and smoothly uploaded my personal information and previous employer information. This definitely saves some time.
Cheap State Returns
As with many tax preparation software services, you'll have to pay extra to e-file your state tax return. This isn't uncommon. But the price of filing state returns with FreeTaxUSA is relatively low. You'll only have to pay $14.99 to file your state returns based on your federal tax return information and additional information you provide this year.
Interface and Ease of Use
The interface for FreeTaxUSA is less fancy than that of some other, more expensive softwares. It has the same basic features, though, including a tracker for your estimated refund as you go and tabs for the various portions of your return.
Unlike with some other software options, FreeTaxUSA won’t allow you to bounce ahead of the process. You’ll have to go in order, though once you enter some information in a section, you can go back to a previous section to make changes or additions.
This isn't a big deal as long as you plan to file your taxes all at once. If you're like me, though, you may prefer to put in each form as you receive it. You'd have a much harder time doing this efficiently with FreeTaxUSA. But at least you wouldn't miss any sections on your taxes.
FreeTaxUSA does not advertise itself as being all things to all people. Here is a list of the tax situations that they don’t support, taken directly from their website:
- Foreign employment income (Form 2555)
- Nonresident alien returns (Form 1040NR)
- Customers or preparers living outside the United States when they file their taxes
- At-risk limitations (Form 6198)
- Casualty or theft gain or loss for business or income producing property
- Donations of high value property over $5,000 such as collectibles, equipment, or real estate*
For what it’s worth, I give the company a lot of credit for publishing a list of the tax situations that they don’t support, and considering how inexpensive this software is to use, the list is short.
Limited Customer Support
Based on my review, I would say that FreeTaxUSA provides limited direct customer support.
With the free version of this software, you can email support, or get your question answered in the online forum. If you upgrade to the Deluxe version, you’ll get access to online chat support.
You can also search for support topics on the Customer Support page.
Pay to Amend
Many of FreeTaxUSA’s additional services cost extra, though the costs are small. You’ll have to pay extra to correct a mistake or omission on your tax return if you go through the Free version. In fact, you’ll have to pay $14.99 for unlimited amendments if you file using the Free version. However, if you filed originally under the Deluxe version, you’ll get unlimited amendments for free.
Resource: What to Do If You Make a Mistake on Your Taxes
Like FreeTaxUSA TaxSlayer has easy-to-understand plans. They offer a free plan, that is free for both federal and one state returns, but it’s limited to simple tax returns only. This means it’s best suited to those who only have W-2 income and want to take the standard deduction.
Their Classic plan covers all other tax situations and costs $19.95 for federal and $39.95 for each state return.
Neither of these plans will provide audit assistance or will give you access to a tax expert. If you want a tax expert, you’ll have to upgrade to their Premium plan at $39.95 for federal and $39.95 for each state return. They also offer a self-employed version for $49.95 for federal and $39.95 for each state return.
TaxSlayer offers limited audit assistance. It is only available on the Premium plan and even then it’s only Q and A style help. They will advise on what the letters you get mean but will not respond on your behalf.
Check out our full review of TaxSlayer.
TaxAct offers four plans, Free, Deluxe, Premier, and Self-Employed. They are priced as follows:
- Free: $0 for federal and $39.95 for each state return
- Deluxe: $24.95 for federal and $44.95 for each state return
- Premier: $34.95 for federal and $44.95 for each state return
- Self-Employed: $64.95 for federal and $44.95 for each state return
As you can see, even the free plan costs for state returns. One thing TaxAct does offer is access to a tax professional on all their plans, including the free version.
They have limited audit assistance with all their plans and the option to upgrade to full audit support for a fee. With full audit support you can have a representative contact the IRS on your behalf.
Check out our full review on TaxAct.
CashApp Taxes offers completely free tax returns for all tax situations. That’s it. They only offer one plan and it’s totally free.
They offer full-service audit support through a third party called “Tax Protection Plus”. It doesn’t state the price on the website but online reports state that it is free. Which is surprising as Tax Protection Plus is likely charging something and full audit support is not cheap to provide as they will represent you with the IRS, not just answer questions.
There is no access to tax pros, even for an additional fee.
Check out our full review on CashApp Taxes.
Overall, FreeTaxUSA is a decent online tax preparation software package, and the price is certainly one of the best in the field. Just be aware of the program’s limitations, such as the lack of phone support, the limited nature of audit assistance, and the tax situations that it doesn’t support.