Free File Alliance

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The Free File Alliance is a group of tax preparation companies which operate a public-private partnership with the Internal Revenue Service (IRS) to provide free electronic tax filing services to United States tax payers meeting certain guidelines.[1] The IRS stipulates filers must have an adjusted gross income (AGI) of $72,000 or less for tax year 2020,[1] but participating companies can set their own requirements and restrictions.[2] The IRS Free File program is a compromise which allows lower and middle-income filers to file their taxes for free without the IRS having to produce their own tax preparation software that would compete with private, for-profit tax software companies.

Free File Alliance is a 501(c)(4) organization registered as Free File, Inc., and based in Clifton, Virginia. Its executive director is Tim Hugo.[3]

While many of the Free File Companies offer free state income tax returns, some companies do charge additional fees of $10 to $30 to electronically file state returns.[4]

Current Alliance members[edit]

For tax year 2020, there are 9 participating Alliance members with the following requirements to qualify to use their software for free under the Free File program:[5]

  • TurboTax.com, AGI of $39,000 or less. Free state return included.
  • TaxAct.com, AGI of $63,000 or less, and age 56 or younger. Free state return included.
  • TaxSlayer.com, AGI of $72,000 or less, and age 51 or younger. Free state return in certain states.
  • OnLineTaxes.com, AGI between $16,000 and $72,000. Free state return included.
  • FileYourTaxes.com, AGI between $9,500 and $72,000, and age 65 or younger. Free state return in certain states.
  • Free1040TaxReturn.com, AGI of $72,000 or less. No free state returns.
  • ezTaxReturn.com, AGI of $72,000 or less. No free state returns.
  • 1040NOW.com, AGI of $71,000 or less. No free state returns.
  • FreeTaxUSA.com, AGI of $39,000 or less. No free state returns.

For tax year 2020, when accessing FreeTaxUSA.com's website directly, users with AGI of more than $39,000 can file federal taxes for free.

In addition to the Free File Alliance members listed above, United Way's MyFreeTaxes and Cash App's CreditKarma.com also offers free state and federal tax filing.[6][7]

Criticism[edit]

The Free File Alliance was largely organized by Intuit, and guided by a former lobbyist for the company. In 2019, the Free File Alliance was accused by ProPublica of serving as a bulwark against the IRS providing more affordable options or return-free filing, arguing that tax companies have lobbied to instead offer Free File options where they can push users to their paid services.[8]

In 2007, Alliance members agreed to remove controversial ancillary offerings such as refund anticipation loans from the program, after half of Free File users making ancillary purchases stated their purchases were not intended.[9][10]

Members of the FFA have seldom publicized their Free File options, with Intuit deliberately hiding their Free File options from online search results.[11]

In exchange for Intuit, H&R Block, and other members providing Free File options, the IRS was restricted from providing its own free filing tool. In 2020, this rule was lifted, and providers were prohibited from hiding Free File options from search results.[12]

See also[edit]

References[edit]

  1. ^ a b "Free File: Do your Federal Taxes for Free". Internal Revenue Service. Retrieved 2021-02-25.
  2. ^ phuong_cat_le (March 20, 2008). "File your taxes free, but read carefully". seattlepi.com. Retrieved April 12, 2019.
  3. ^ EIN 452609992
  4. ^ Perez, William (August 5, 2016). "Reviews of Free Tax Preparation Programs". thebalance.comaccess-date=2016-09-04.
  5. ^ https://apps.irs.gov/app/freeFile/browse-all-offers
  6. ^ "MyFreeTaxes". MyFreeTaxes.com. Retrieved 2021-04-21.
  7. ^ "Cash App Announces Definitive Agreement to Acquire Credit Karma Tax". Square. Retrieved 2021-04-21.
  8. ^ Kiel, Justin Elliott,Paul. "Inside TurboTax's 20-Year Fight to Stop Americans From Filing Their Taxes for Free". ProPublica. Retrieved 2021-01-10.
  9. ^ Press, The Associated (2006-12-06). "No More Loan Solicitations in Free Tax-Filing Program". The New York Times. ISSN 0362-4331. Retrieved 2021-02-25.
  10. ^ "RALs Removed on Free File; 93 Million Eligible for Program" (PDF). Internal Revenue Service. 5 December 2006. Retrieved 25 February 2021.
  11. ^ Elliott, Justin. "TurboTax Deliberately Hid Its Free File Page From Search Engines". ProPublica. Retrieved 2021-01-10.
  12. ^ Chaudhry, Aliya (2020-01-01). "The IRS is done letting TurboTax easily steer you away from filing taxes for free". The Verge. Retrieved 2021-01-10.

External links[edit]