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FreeTaxUSA Review – Free Tax Filing & Online Return Preparation

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66.3K
At a Glance
freeta
4.1 / 5
Rating

Start Your Taxes Now

FreeTaxUSA

  • CPA Involvement: No; very limited support for complex situations
  • Plans: Free Edition, free for vast majority of tax situations, though functionality is limited; Deluxe Edition, $6.99 for vast majority of tax situations, with substantially improved capabilities and functionality
  • State Returns Included: No; $12.95 for each state return ($14.99 per prior-year state return)
  • Pay With Your Refund: Yes, $19.99 charge applies
  • Audit Defense: Yes; complimentary audit assistance (informational only) available to Deluxe users
  • Mobile Capabilities: Very limited

Nearly every online tax preparation software program advertises a free federal plan that allows users to prepare their federal tax return at no cost. But as legions of frustrated filers can attest, some programs’ supposedly free plans come with severe limitations (such as unsupported forms and schedules) that force users with more complex tax situations to upgrade to a paid plan.

FreeTaxUSA, which made our list of the top free online tax preparation services for precisely this reason, is not one of those programs. Its Free Edition supports the vast majority of IRS forms and schedules, making it usable for filers with tax situations of any complexity. That includes the self-employed, small business owners, landlords, and investors who must report capital gains or losses. There’s no cost to prepare your federal return with the Free Edition, and each state return costs just $12.95.

FreeTaxUSA’s higher-priced Deluxe Edition is a bargain as well: $6.99 to prepare your federal return and $12.95 per state, with some additional features thrown in to sweeten the deal. With such low plan prices, FreeTaxUSA is worth considering if you’re filing your taxes on a budget this year.

Plans, Pricing & Features

Interface and Flexibility

FreeTaxUSA has a fairly flexible interface. You need to fill out all your personal information before you can proceed on to the income and credits and deductions sections. But once in the income section, you can work on any topics you see fit, at any time.

In the actual return sections, FreeTaxUSA displays all applicable topics and can choose to work on whichever ones apply to you, skipping over any that don’t. (Within each topic, you can choose to follow an interview-style question-and-answer process, or enter data into fields, as you would if you were filling out your tax return by hand.) Even if you haven’t finished all the applicable topics in the income section, you can skip ahead to deductions and credits, then return to complete your income later.

Accuracy Checker

Throughout your entire return, FreeTaxUSA puts a responsive, real-time accuracy checker to work. If at any point you make a selection or enter information that doesn’t seem right to the program – for example, if you state that you’re a homeowner with a mortgage but choose not to itemize your deductions – FreeTaxUSA immediately alerts you that you could be leaving money on the table. The program helps you stay on the right track before you get too far into the weeds.

Customer Support and Add-ons

FreeTaxUSA isn’t the most novice-friendly tax filing program out there. Notably, it doesn’t have a comprehensive knowledge base or robust customer support infrastructure. In fact, its help section isn’t user-friendly at all – its search feature doesn’t seem to recognize synonyms or natural language queries, forcing you to browse through a slew of topics to find what you’re looking for.

FreeTaxUSA also charges extra for services that other free programs include for free, such as audit support, amended tax returns, and priority customer support. Then again, the $6.99 Deluxe pricetag is pretty manageable.

Importing Capabilities

FreeTaxUSA allows you to import a prior-year return prepared with TurboTax, H&R Block, or TaxAct. All you need to do beforehand is convert the return to PDF format, if that’s not already done. Returning FreeTaxUSA filers can import prior-year returns as well.

Unfortunately, that’s about where FreeTaxUSA’s importing capabilities end. You can’t automatically pull in data from a W-2, W-9, or brokerage statement. If you have a brokerage statement with lots of stock or ETF transactions (which need to be reported individually on your return), the inability to import could significantly lengthen your total filing time. If your tax situation is simpler, you might not notice the lack of importing features at all.

Accuracy and Maximum Refund Guarantee

Like most competing tax prep programs, FreeTaxUSA has an accuracy guarantee that reimburses filers without limit for any IRS tax liabilities or penalties incurred due to errors, omissions, or inaccuracies attributable to the platform’s software. However, state tax liabilities or penalties aren’t covered by this guarantee.

FreeTaxUSA also has a maximum refund guarantee for both editions. If you get a bigger refund or lower tax liability when you prepare an identical return with a competitor, you’re entitled to a refund of your prep fees.

freetaxusa always free

1. Free Edition

By using this plan, you pay nothing to file your federal return, and $12.95 for each state return. Since it includes the vast majority of IRS forms and schedules, it’s ideal for tax situations of virtually any complexity. That said, because the Free Edition lacks priority customer support and audit assistance, it’s not a good option for novice filers and those who worry about the potential of an IRS or state audit.

FreeTaxUSA’s Free Edition includes:

  • All Supported IRS and State Forms. Free Edition users enjoy access to all the IRS and state forms supported by FreeTaxUSA, including Schedules A, B, C, D, E, and K. These forms cover a wide range of situations, from small business and freelance income to capital gains from the sale of a home or other valuable asset.
  • Previous-Year Return Importing and Data Transfer. If you’re a returning FreeTaxUSA customer, the program automatically populates your current-year return with demographic, income, and personal information from your previous return. You can also import from a handful of other online tax prep programs, including TaxAct, TurboTax, and H&R Block.
  • Customer Support. All FreeTaxUSA users can the company through its email address ([email protected]) or by opening an onsite support ticket. You access these resources via the right sidebar of your return-prep interface, or via the “Customer Support” button on the homepage tab. Support inquiries typically produce a response within 24 hours, even on weekends, and sometimes much sooner. It is important to note that FreeTaxUSA doesn’t have a customer support phone number. All help is provided by email or direct messaging.
  • Storage for Completed Returns. FreeTaxUSA stores completed returns in PDF format at no charge. Your entire return history is accessible – there’s no limit on how long FreeTaxUSA stores returns or how many of a particular user’s returns it can handle. If you prefer not to rely on FreeTaxUSA’s cloud storage, you can download or print completed returns yourself.

2. Deluxe Edition

With FreeTaxUSA’s Deluxe Edition, it costs $6.99 to file your federal return and $12.95 for each state return. Its main advantage is a suite of included no-cost support features (such as audit assistance and free priority customer service) that aren’t available with the Free Edition. Thanks to these features, the Deluxe Edition is a good choice for filers who need additional support and peace of mind without paying a whole lot extra for it.

FreeTaxUSA’s Deluxe Edition includes all the features available in the Free Edition, :

  • Free Priority Support. FreeTaxUSA used to charge Free Edition users for priority support – in other words, to get their queries pushed to the front of the line as soon as they emailed or opened an online support ticket. That is no longer the case. Instead, Free Edition users don’t have the option to get priority support. If you want FreeTaxUSA to answer your questions ahead of others, you need to upgrade to Deluxe.
  • Live Chat. FreeTaxUSA offers live chat support to Deluxe users only. You can reach a live person to handle your queries Monday through Saturday during extended business hours. This feature isn’t available on Sunday or overnights.
  • Free, Unlimited Amended Returns. With Deluxe, you can amend and re-file as many previous returns as you like for free.
  • Audit Assist. This free feature is only available with Deluxe. It provides access to on-staff audit specialists who provide complete, well-researched answers to questions about IRS correspondence and the audit process. Audit specialists personally review specific pieces of correspondence, ensuring hands-on, case-by-case support.

Additional Features

In addition to the features associated with each of its tax prep plans, FreeTaxUSA’s other features include:

DIY Help Topics

FreeTaxUSA has a wealth of help topics for filers and prospective filers. Customers who have already begun a return can access these resources from the right sidebar of the return-prep interface, while website visitors who haven’t yet begun a return can click the “Customer Support” button on the homepage’s upper tab and browse or search for help topics. However, there’s no user-generated knowledge base here, à la TurboTax. All help topics are created and answered by FreeTaxUSA’s staff.

Refund Maximizer

FreeTaxUSA has a handy “refund maximizer” wizard that you can use to double-check your work on a return filed with another tax prep program. The wizard is an abbreviated FreeTaxUSA return – you enter the pertinent information from your existing return in the fields provided (unfortunately, there’s no option to upload an existing return, so using the wizard can take some time).

Upon competion, you’re shown the refund (or tax liability) you would have gotten had you filed with FreeTaxUSA. If it’s greater (or, in the case of a liability, less) than the other program’s, you can file an amended prior-year return with either edition of FreeTaxUSA.

Real-Time Refund/Liability Display

The right sidebar of your FreeTaxUSA return-prep interface includes a handy real-time display of the dollar amount of your expected refund or tax liability. This display updates automatically with each new piece of information you enter, allowing you to keep close track of your status and make connections between particular actions and the size of your refund or liability.

Prior-Year Return Filing

If you need to prepare and file prior-year tax returns for any reason, you can use year-specific FreeTaxUSA software to do so. You can file old federal returns at no charge going back seven tax years, and state returns back seven years for $14.99 per state (subject to change).

Pay With Your Refund

If you’ve incurred a fee to file with FreeTaxUSA, you can pay it with your tax refund, provided you’re eligible. Eligibility requirements are as follows:

  • Your refund is greater than your total FreeTaxUSA fee, the $19.99 payment processing fee
  • You’re receiving your refund via direct deposit
  • You have a U.S. address
  • You haven’t yet filed your tax return

Some other eligibility requirements may apply. Bear in mind that while the fee to pay with your refund is usually $19.99, it’s subject to change and may be waived at FreeTaxUSA’s discretion.

Advantages

1. Extremely Affordable Pricing
FreeTaxUSA’s most expensive federal tax prep option (Deluxe) costs just $6.99. Current-year state returns always cost $12.95 each (prior-year state returns are $14.99 each, subject to change), regardless of which plan you select. And since the vast majority of IRS forms and schedules are supported by the Free Edition, it can be used for tax situations of any complexity.

By contrast, TurboTax and H&R Block Online both have limited free versions that can’t support complex tax situations. More comprehensive plans can be pricey, ranging up to $199.99 federal and $36.99 per state for TurboTax’s most comprehensive individual plan (Self-Employed), and $94.99 federal and $39.99 per state for H&R Block’s most comprehensive individual plan (Self-Employed).

2. The System Provides Immediate Alerts About Questionable Entries
As you fill out your FreeTaxUSA return, the program’s accuracy checker works quietly in the background to ensure that you’re not making any preventable mistakes. When you enter information that could qualify as such a mistake, you’re shown an alert that outlines the issue and suggests how to correct it.

In some cases, these warnings won’t lead you to change your entries. But it’s nice to receive them in real time before your return is completed and you’re ready to check out. Other tax prep programs, such as TaxAct, wait until you’re done with your return to display warnings, alerts, and potential conflicts.

3. Handy, Highly Visible Bookmarks Within Returns
FreeTaxUSA has a convenient bookmark system that lets you mark individual pages within your return for easy future reference. This is particularly useful if you aren’t sure that the information you’ve entered on a particular page is entirely correct, but want to keep the ball rolling and get on with the parts of your return that you know you can handle. By bookmarking that problem page, you can return to it later.

Though they have more flexible navigation systems, programs like TurboTax and H&R Block don’t have such useful, clearly marked bookmarks.

4. You Can Move Between Income Topics at Will
The income portion of the FreeTaxUSA interface is highly flexible. It allows you to choose the topics you want to work on at your leisure. This is useful if you want to be able to complete your return in multiple sittings, focusing on different parts (not necessarily in order) each time. By contrast, H&R Block doesn’t allow you to skip over any topics or sections that don’t pertain to your return.

5. You Can Pay Filing Fees With Your Refund
If you qualify, you may be able to pay FreeTaxUSA’s modest filing fees with your federal or state tax refund. FreeTaxUSA didn’t offer this capability before the mid-2010s, but now that it does, it’s yet another mark in its favor over more expensive, full-service products like TaxSlayer, TurboTaxH&R Block, and TaxAct – all of which allow filers to pay much heftier filing fees with their refunds.

Disadvantages

1. Customer Service Is Lacking
FreeTaxUSA’s customer service features are lacking. For starters, the platform doesn’t include phone support, a significant oversight. It does offer priority support, which provides near-real-time answers to emailed and form-submitted questions, at no charge for Deluxe filers. It also offers live chat during extended tax season business hours. However, this is still a bad deal for Free Edition filers at any time, and Deluxe filers who prepare their taxes after hours or on weekends (when the live chat feature isn’t operational).

By contrast, TurboTax has responsive phone support during tax season (early January through mid-April). Most other online tax prep programs have a customer support phone number and extended-hours live chat.

2. No Physical Branches or Infrastructure
FreeTaxUSA doesn’t have any physical branches that you can turn to if you become stuck on your tax return and want hands-on help from a live person. By contrast, H&R Block has a network of more than 10,000 physical branches throughout North America, providing peace of mind to filers who want to know that they’re not totally on their own.

3. Lack of Automatic Importing Tools
FreeTaxUSA has a distinct lack of automatic importing tools. With no automatic importing for stock transactions, interest statements, and income statements, preparing a complex tax return can be a tedious, time-consuming process.

FreeTaxUSA’s prior-year importing capabilities aren’t great either. If your most recent return wasn’t filed with TurboTax, H&R Block, TaxAct, or FreeTaxUSA, even starting a tax return requires some time and effort. Many other programs, including TurboTax and TaxAct, offer robust importing tools that save time.

4. Not a Great Choice for Novice Filers
FreeTaxUSA’s actual tax prep interface is pretty user-friendly, but the program’s poor help infrastructure is a big drawback for novice filers. Though I didn’t need to use the help topics while filing, I did conduct a few mock searches, and also browsed through topics on my own.

Overall, I found it tough to locate relevant information – many of the answers that appear higher up in the platform’s search results deal with concepts that are highly specific, such as a particular state’s arcane tax credit. Moreover, the help has needed major cleanup for years now. Duplicate topics and outdated information abound.

Perhaps worst of all, the help section is marred by an archaic search engine that doesn’t appear to recognize natural language or word variations. For example, when I searched “importing,” I got exactly zero results, despite there being many help topics that included the word “imported.” This stands in stark contrast to TurboTax, which has a browsable, easily searched help section, as well as a user-generated knowledge base.

If I’d been a less experienced filer who needed an answer to complete my return, I might have given up using FreeTaxUSA in frustration. TurboTax, though much pricier, seems set up to shepherd novice filers through the preparation process, with clear, well-explained help topics and a responsive customer support infrastructure to fall back on.

Final Word

FreeTaxUSA is living proof of the old truism: “Time is money.” This program is extremely affordable for all filers, regardless of the complexity of a particular tax situation. But its low cost comes with some trade-offs, notably the inability to import information from a previous return filed with another program, information on a W-2, and information on brokerage statements. Depending on your tax situation, particularly if you have lots of stock transactions that need to be reported individually, this limitation could lengthen your filing time.

So if completing a relatively complex tax return as quickly as possible is more important to you than spending as little as possible to do so, FreeTaxUSA might not be for you. On the other hand, if you’re on a tight budget or just love saving money (and who doesn’t?), you’d be hard-pressed to find a more affordable option.

For more options, check out our full list of top free online tax preparation services.

Verdict
freeta
4.1 / 5
Rating

Start Your Taxes Now

FreeTaxUSA

FreeTaxUSA deftly blends DIY elements with a surprisingly accommodating return-preparation interface. And with access to the vast majority of IRS forms and schedules at a very reasonable cost, it’s truly a budget-friendly option for many filers, regardless of the complexity of their tax situation. But nearly limited importing features and thin customer support could give convenience-minded and novice filers pause.

FreeTaxUSA is great if your top concern is paying as little as possible to prepare your return. A flexible interface, helpful alerts, and useful bookmarks are great too. Disadvantages include limited importing capabilities and poor customer service.

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Brian Martucci
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Greekalphabets readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

Comments Disclosure: The below responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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