Published Fri, Jul 16 2021 12:33 PM EDTUpdated Fri, Jul 16 2021 8:16 PM EDT
- Intuit announced Thursday that it will no longer participate in the IRS Free File program.
- IRS Free File helps millions of Americans file federal tax returns at no cost.
- People who still need to file their taxes and qualify for Free File can use Intuit's platform with the program through October.
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Intuit, the company behind popular tax filing software TurboTax, announced that it will no longer participate in the IRS Free File program, which helps millions of Americans submit tax returns at no cost.
"With the Free File program surpassing its founding goals of e-file and free tax preparation, and due to the limitations of the Free File program and conflicting demands from those outside the program, we are not able to continue in the program and deliver all of the benefits that can help consumers make more money, save more, and invest for the future," the company wrote in a blog post Thursday.
Intuit did not immediately respond to a request for further comment.
The IRS Free File program is a public-private partnership between the agency and the Free File Alliance, a group of tax preparation companies with online software such as TurboTax, TaxAct, FreeTaxUSA and more. Americans with adjusted gross income of less than $72,000 are eligible to use the program to file federal taxes with no cost. Intuit has been a part of the program for nearly 20 years.
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Part of Intuit's reasoning for leaving the program is its success.
"Today, over 90% of all taxpayers e-file their taxes and free tax preparation is currently available to 100% of American taxpayers through a combination of commercial, philanthropic and IRS-sponsored methods," the company wrote. "We are proud that Intuit's participation in the Free File program has helped the organization exceed its charter of increasing electronic filing to 80% and making free tax preparation available to 70% of filers."
In the last tax season, Intuit delivered 17 million free tax filings, including roughly 3 million through IRS Free File, according to the company. For the last eight years, nearly 90% of the approximately 100 million free filings done through the company have been outside Free File, it said.
Not working with the IRS program will mean fewer constraints going forward, Intuit said.
"This decision will allow us to focus on further innovating in ways not allowable under the current Free File guidelines and to better serve the complete financial health of all Americans through all of our products and services, in tax preparation and beyond," the company wrote in its blog post.
To be sure, Americans who still need to file 2020 tax returns and are eligible for the IRS Free File program can continue to select Intuit's software through October, when the tax season ends. The company will not offer services with Free File next year.
The IRS didn't respond to CNBC's request for comment.
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If you're among the millions of Americans who rely on TurboTax to file their annual income taxes, you could be in for an unpleasant surprise this spring.
For the first time in years, Intuit-owned TurboTax is not part of the IRS Free File program. Free File is a partnership between the government and several tax prep services that allows people to draw up and, in some cases, submit their federal tax returns online for free. Though Free File is notoriously underutilized, it's typically stacked with name-brand offers from recognizable companies — TurboTax included.
Until now.
Why isn't TurboTax part of IRS Free File anymore?
TurboTax announced in a blog post last July that it was not renewing its role with IRS Free File due to its limitations and "conflicting demands from those outside the program" that leave it unable to continue participating while still delivering "all of the benefits that can help consumers make more money, save more, and invest for the future."
However, the company vowed not to give up on free tax filing options. TurboTax said it processed 17 million free tax filings last season; of that, only 3 million came through the Free File program.
"Moving forward, Intuit is committed to continuing to offer free tax preparation while accelerating innovation to address all of consumers’ financial problems," it added.
It's worth noting that TurboTax came under fire a few years ago for using code that hid its Free File page from Google results, as reported by ProPublica. It later changed the code.
How to file taxes with TurboTax for free
Even though TurboTax has left the IRS Free File project, it does still have no-cost options. It is possible to file for free through TurboTax — but there are a slew of requirements you must meet.
For example, TurboTax Free Edition, TurboTax Live Basic, and TurboTax Live Full Service Basic are all free right now — if your return is simple. (TurboTax defines "simple" is defined as "Form 1040 only.") These cover W-2 income, limited interest and dividend income, the standard deduction, the earned income and child tax credits, and student loan deduction.
If your taxes are more complex, including items like unemployment income, stock sales or rental properties, you'll likely have to upgrade.
Assuming your situation is simple enough, you can file one federal and one state tax return without charge, but you have to move fast. TurboTax Live Full Service Basic — in which a tax expert does your taxes for you — is only free until Feb. 15. The free TurboTax Live Basic offer — which comes with live, on-demand expert help — lasts through March 31.
If you're fine to file DIY, the TurboTax Free Edition will be "available the entire season," according to a news release.
The deadline for most Americans to file their taxes this year is April 18.
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TurboTax isn't the only service to drop out of IRS Free File recently. H&R Block left the project in 2020.
Even so, IRS Free File is still plugging along. If your adjusted gross income is $73,000 or less, you're eligible for free guided tax prep from options like Tax Slayer, FileYourTaxes.com and TaxAct. If your income exceeds that, you qualify for free fillable forms (but you'll have to actually file them on your own).
Experts generally recommend starting your taxes early so as to avoid software snafus, refund delays and identity thieves. If you're not opting for IRS Free File, there's also a financial reason to avoid procrastinating: Tax prep fees tend to rise the closer Tax Day gets.
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