TurboTax is discontinuing the IRS Free File program after 2 many years. What which means for you

Angela Lang / CNET

Intuit, the company behind the Tax return software TurboTax announced in a blog post on July 15 that it was no longer part of the IRS Free File Alliance, an IRS-tax filing software industry partnership that offers free tax software to Americans earning $ 72,000 or less.

Intuit cited “limitations of the Free File program” and a desire to “focus on further innovation in ways that current Free File guidelines do not allow” within the free program as a catalyst for its exit. According to the agreement that governs the program, participating companies are prohibited from marketing paid products to those who use free file services.

In addition to tax services, the company says it focuses on pilot programs that can help customers save money, pay off debts and increase their income. An Intuit spokesperson told CNET that the company “has a duty to continue offering free tax preparation while accelerating innovation to address all consumer financial problems TurboTax Free Edition is the most widely used free tax preparation offering in the industry and will continue to be available to more than 50 million people filing simple tax returns. “

While we don’t have all of the implications of Intuit’s exit from the Free File Alliance on existing Free File customers, the IRS program, or the 2021 tax season (coming in 2022), we have received some details from the company. Read on for the Free File Alliance backstory, what’s changing for Intuit’s Free File users, and the remaining options in the IRS Free File program.

What is the Free Filing Alliance?

Before leaving, Intuit was a member of the Free File Alliance for nearly two decades. During this time the company worked with H&R block and other members of the alliance have campaigned aggressively for Congress to prevent the IRS from creating its own free tax return system. Members of the Free File Alliance argued that competing with the IRS would “present an ongoing competitive threat to our business” that “could potentially have material and adverse effects on revenue”.

Their efforts paid off in April 2019 when the US House Ways and Means Committee passed the Taxpayer First Act, in which the IRS agreed not to create its own system – as long as the group of tax filing firms provided free services to qualified taxpayers.

The bill was passed following the publication of an April 2019 ProPublica article that reported that Intuit had deliberately used misleading marketing and website designs known as “dark pattern” Internet tactics to distract taxpayers from the free file program and towards paid products. In December, the IRS presented a new tax return agreement that prevented companies from disguising free products when doing internet research. It also lifted the ban on allowing the IRS to create your own Tax return system. “This updated agreement is part of a larger effort by the IRS to help taxpayers meet their tax obligations,” said IRS Commissioner Chuck Rettig in a press release. intuition publicly supported the changes.

Yet only a fraction of legitimate taxpayers use free services. According to a state review, fewer than 3 million people used the Free File program in 2019, even though more than 100 million taxpayers were eligible.

If the TurboTax Free Edition is still available, what exactly has changed?

In an email, an Intuit spokesperson told CNET that the company plans to expand the benefits of using its TurboTax Free Edition to “complete financial health in taxation and beyond.” According to Intuit, such an extension of the services was not possible under the IRS Free File rules.

“TurboTax Free Edition is a different product than what TurboTax donates through the Free File program for free tax preparation,” the spokesman said. “Intuit’s Free File program offering is called IRS Free File, which is provided by TurboTax. They are pretty similar, but the Free File Program’s guidelines do not allow us to provide our filers with a completely free advance payment on their refunds when they need money faster to pay bills. “

I filed taxes using the IRS Free File provided by TurboTax. What happens to my data now?

Intuit did not immediately respond to CNET’s questions about user data for 2020 returns submitted through the Free File program. The company’s website describes how to request copies of personal information, change your marketing preferences, and delete your information from its servers.

What are my free tax software options now?

A number of leading tax software providers offer free tax filing services if your income is below a certain threshold and it’s easy to return. Credit Karma Tax offers free state and state filing for 2021, and H&R block offers a free option for W-2 taxpayers and those who have earned unemployment benefits in the past year.

Despite Intuit’s exit from the program, there are still a number of Free File options available taxpayer with an annual adjusted income of $ 72,000 or less. The IRS program now includes eight participants:

And if you’re making more than $ 72,000 a year, you’re eligible to use the program’s free fillable forms – electronic versions of IRS paper forms – though they don’t include prep assistance.

What other free tax preparation resources are available?

Depending on your income, age, and other factors, you may qualify for free tax preparation and filing from one of these federal programs:

  • Voluntary income tax assistance. VITA is a federal grant program that provides free tax preparation services to low and middle income applicants earning $ 57,000 or less per year for people with disabilities and limited English language skills.
  • Tax advice for the elderly. The TCE program offers seniors over 60 free tax returns and tax assistance related to pensions and retirement tax issues.
  • The Ministry of Defense provides Service members and their families with free tax revenue, including software from H&R blockas well as financial and legal advice. MilTax participates in the VITA program and advisors are available by phone, live chat or in person at the nearest military base.

The IRS oversees the VITA and TCE programs, which are staffed by IRS partners and certified volunteers who are required to complete tax law training that meets or exceeds IRS standards. Tax returns receive a quality review from the IRS prior to filing.

The editorial content of this page is based solely on objective, independent reviews by our authors and is not influenced by advertising or partnerships. It was not provided or commissioned by third parties. However, we may receive compensation if you click on links to our partners’ products or services.