It’s been announced that January 24th is the official start of the tax filing season. This means it’s that time of year again to buy some pricey tax software and prepare your return on your own, hire a tax prep pro, or take advantage of the Free File Program from the IRS.
If you are one of the many American taxpayers who use the IRS Free File Program, though, the tax prep process will look a bit different in 2022. TurboTax—which has been criticized in the past for some questionable tactics—has exited the IRS Free File Program.
TurboTax is the second big brand name in the tax world to end its participation in the Free File Program in just two years, as H&R Block dropped out in October 2020. The news of TurboTax’s decision was actually released last summer. But since most people’s minds weren’t on taxes at that time, many taxpayers are learning about this surprising news now.
“Intuit has elected not to renew its participation in the IRS Free File Program and will no longer be offering IRS Free File Program delivered by TurboTax,” the website claimed.
What Is The IRS Free File Program?
The IRS Free File Program is a tax prep and filing option that gives eligible taxpayers access to brand name software programs–without the costly fees.
If you qualify, you can skip out on paying $50 or more for tax software to prepare your return. Instead, you get access to online software for free that prompts you with key tax questions, calculates the bill or the refund, and allows you to file your return electronically.
According to the IRS instructions, if your adjusted gross income was $73,000 or less in 2021 then you can use free software to prepare and electronically file your tax return. If you make more than $73,000, you still have the option of using free file forms.
According to USA Today, approximately 70 percent of American taxpayers qualify for at least some of the services offered by the IRS Free File Program. But, just a tiny fraction of those who qualify actually use the program.
IRS data showed that just 4.2 million taxpayers used one of their free online partner products that were available via the Free File Program in 2020. 4.2 million is a low number considering that year the IRS processed more than 150 million individual electronically filed returns.
Why Is Participation In The Free File Program So Low?
It’s been two decades since the IRS began partnering up with tax software companies for the Free File Program. In the special deal, the IRS agreed that it would not compete with these companies by offering up its own tax prep software. In exchange, the participating companies offered free tax return software to a percentage of the American tax-paying population.
Participation in the program has always been relatively low, though. Intuit’s TurboTax, H&R Block, and other partners of the Free File Program have faced criticism thanks to a 2019 ProPublica investigation.
This investigation detailed how TurboTax was limiting the reach of the program because they were making it difficult to find online. Instead, these companies were directing users to products that weren’t free. What’s more, the report revealed how Intuit added code to TurboTax’s Free File Program landing page that actually hid it from Google and other search engines.
In response to the ProPublica report, the IRS announced changes to the program. One of those changes was tax prep firms agreeing to no longer exclude “Free File” landing pages from internet searches.
How To File Your Taxes For Free
The IRS recommended that taxpayers use the term “IRS Free File Program delivered by (software provider)” when searching for the Free File Program. Or you can simply click here to access the IRS Free File Program and their fillable forms.
If you’ve used IRS Free File in the past, you will receive an email this tax season from the company you used. This email is required for returning customers and includes a link that will direct customers back to their official IRS Free File services.