A class action lawsuit filed this week in California has added to the legal woes for Intuit over its free file options. The company is already under pressure from Congress and the State of New York over its website and search engine practices with regard to its free file products. In all cases it is alleged that Intuit has hidden its Freedom Edition tax preparation cloud software, which allows taxpayers with under $66,000 for military filers or $34,000 for all others to file their tax returns at no cost. Instead it is alleged Intuit directs consumers to its Free File Edition, which is a hobbled version of its regular software that requires upgrading for all but the most basic filers.
Intuit is required to offer a free file version by the IRS, which has agreed not to compete against tax preparation software companies in exchange for their hosting free filing on their own websites. H&R Block and TaxACT (Blucora) are the number two and three companies that must similarly offer a free file option.
We do recommend tax preparation software for taxpayers with just W-2 income from a single state and that are likely to not itemize deductions. Check the IRS website first (avoid the commercial sites) at https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free to see if you are eligible for free filing. If you determine that you are not eligible after perusing the IRS-provided option, you can then approach a commercial website knowing that you did due diligence.
Intuit, H&R Block, and TaxACT are terrific options for W-2 income earners over $66K of income with a lot of 1099 interest, dividends, and capital gains forms, but whom are unlike to itemize, or need a simple way to track nanny taxes or child care deductions. Tax returns can often be prepared in a single evening session.
If you are self-employed, received 1099-MISC tax forms, receive income from multiple states, are a partner that receives (or needs) K-1 forms, have complex investment instruments, have foreign income, or need a business tax return in addition to your personal return, we recommend avoiding commercial tax software and instead hire a CPA firm to help you. The Big Three tax preparation software firms do offer options to address these areas, but at a price level and complexity that makes CPA fees as an expertise trade-off much more sensible.
Need tax help for 2018 or 2019? Email us at firstname.lastname@example.org to ask questions or set up an appointment, or call us at 301-841-0209.