Is TurboTax free? Kinda yes … but sorta no One reporter spent 2021 freelancing, giving her just the kind of low-paying tax mess that TurboTax’s innovative services or the IRS Free File program should be able to help with. Her foray into ‘easy’ tax prep tools proved otherwise. BY BR OOKE STEP HENSON , P R OP U BL I C A
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f you watch TV, you’ve likely been inundated with ads about tax prep services that promise to meet your every need or let you file for free. It’s the time of year when people open search engines and ask: “Is TurboTax free?” ProPublica has been asking similar questions since 2013, when we first reported on how Intuit, TurboTax’s parent company, fought to keep the government from setting up a free, simple tax filing process. In the intervening years, our reporters have stayed on the story, uncovering the company’s sweeping history of lobbying and “dark pattern” customer tricks, which have helped it fend off a free government tax-filing option and create a multibillion-dollar software franchise. Last year, we wrote a guide presenting several ways people could file their taxes for free. But this year a few things have changed: For one, TurboTax is no longer participating in the IRS Free File program, a public-private partnership that it helped construct. Under Free File, tax prep companies agreed to provide free online filing to tens of millions of 12
lower-income taxpayers, and in exchange the government agreed not to offer its own free filing tools. In 2019 and earlier years, TurboTax and H&R Block together accounted for around two-thirds of all filings through the program, according to ProPublica’s analysis. But H&R Block left the program in 2020, and now, Intuit wrote in a blog post, it too is leaving “to focus on further innovating in ways not allowable under the current Free File guidelines.” A spokesperson for Intuit said the company was “at all times clear and fair with its customers” and has upheld its obligations to the IRS under the Free File program. Despite the departure of the two major players, the IRS Free File program will still let you file your federal taxes for free if you make less than $73,000 a year. You can browse the list of the remaining providers yourself, or you can answer a couple questions and have the lookup tool connect you with the providers you are eligible to use. Wait, in case you missed that: If you get nothing else from this story, please remember that you can file your federal taxes FOR FREE.
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Still, TurboTax’s departure made me wonder: What are these amazing innovations it’s offering that aren’t “allowable” under IRS guidelines? Are they worth the cost of dealing with TurboTax? A TurboTax spokesperson said, “The Free File Program rules did not allow Intuit to provide all of the benefits we can deliver to help consumers with their complete financial health, not just in tax, but beyond.” Leaving the program would, for example, allow TurboTax to offer customers access to tax experts and other financial services, he said. I decided to run a little test. Even though it has dropped out of the IRS Free File program, the company still offers its own “free” version and pours millions into marketing it. To see how TurboTax’s “free” version measured up, I went through the steps to file my taxes through TurboTax’s service as well as through an IRS Free File provider. I’ve actually used both before — TurboTax on my first few years of income, and IRS providers starting in 2019, after I read reporting by ProPublica and commentary by the comedian Hasan Minhaj. The IRS claims that 70% of Americans can file their taxes for free through Free File, but in reality, only about 1% of those who are eligible actually use the service. And we reported in 2019 that in recent years, the IRS had spent no money at all to advertise the program. On top of that, participating companies often set up roadblocks to genuinely free filing for the folks who do find the service. Free File only requires that the partner companies offer free federal returns, so it may be difficult or impossible to file your state taxes for free, depending on your income bracket. And while the state return is the most common source of a tacked-on charge, providers can also pitch loans, “audit defense” scans or even products that have nothing to do with taxes to Free File users. Some companies are advertised as free on the IRS website, but then require taxpayers with certain tax documents, like 1099s, to pay for a much more expensive service.
