I have been using TaxAct for years to calculate and file my taxes. At first I would pay to download the software and run that, but as prices went up for the download I would use the online software. TaxAct was always cheaper than TurboTax and others and you could import the previous year’s information which helped speed things up. It was usually extra to get the state version, so I would fill in my own state forms and mail them in, which was so easy it wasn’t worth $10 extra. Then they started having the deluxe version for maybe $5 more which included state as well as state electronic filing, so I was getting that for around $12-15 total. They would run specials in November or December offering the best prices for next year’s taxes. This year the price structure changed and it was now $14.99 for federal and $14.99 for state (and the sale was only 25% off, maybe just the federal version). I felt like that was too much and I needed to check out other options.
I found a page at Georgia’s Department of Revenue that suggested some different companies’ offerings that were free or highly discounted, usually for people with lower incomes. Some allowed higher incomes as long as you weren’t doing anything complicated like itemizing deductions or filing capital gains (which I always need to do). But a couple of them didn’t seem to care. I always thought my income would have been too high to do that, but they go off of the adjusted gross income, which doesn’t include the significant chunk of my income that now goes to my 401k and deferred compensation plans. That and getting virtually no raises at work for the last 10 years get me under the upper limit of $62,000 (the IRS raises the cap for free filing every year, but my employers do not adjust my salary for inflation; counting inflation I am making 13% less today than 10 years ago; I should never have done that calculation). The only thing was you had to follow the link from Georgia’s website because none of these companies would mention the deal on their own websites (unless you were doing 1040Z and had pretty low income, a teaser to get people interested). The bad thing is that Georgia’s page is out of date. The good news is the limits generally have gone up. Then I found the IRS website for free filing. They ask you a few questions like your age, income, and state and then provide you with a list of websites you can use to file free, including state. For Georgia I had choices of TaxSlayer, H&R Block, and OLT.com. Before I started using TaxAct, I had bought H&R Block’s Tax Cut software a few times, so I chose H&R Block. Again, you have to go through IRS, not directly to the Block’s website.
But I was leery that there would be a catch based on the type of return I file. To test it out, even though I haven’t gotten all my forms yet (and won’t until the end of February), I went ahead and started a return. They had me upload a PDF of last year’s taxes done by TaxAct, but it only seemed to capture my name, address, and social security number. I filled in my W-2 information and tried to jump ahead to itemized deductions, but you have to follow their sequence so I had to pretty much do everything, even though I just didn’t tell them about some of the investment income (I can add it later). Then I did some itemized deductions. And then I was able to do the final review of my forms, including inputting my IRS Identity Protection PIN (a great feature for Georgia, Florida and DC residents that gives you a PIN that only you will know that prevents crooks from filing taxes using your social security number; this is great for me since I can’t file until late February and apparently my state is filled with crooks) and it looks like it will go through and I really don’t have to pay anything. I don’t know how long I have qualified for something like this (probably only since I started paying more into my retirement plans once I paid off the house in 2012), but it sure beats paying money to do this. I wonder if the IRS pays them for each free file given that it is much easier for the IRS to process electronic files than paper ones?