FreeTaxUSA Review – DIY Tax Filing Made Easy
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For those who are new to filing taxes, FreeTaxUSA is a great software to start with because of its low cost, relative ease of use, and ability to cover most tax situations.
9/10
Cost
9/10
Features
9/10
Ease of use
9/10
Services
8/10
What do you do when you don’t make enough money to be able to afford a tax preparer easily, but you don’t want to shell out your hard-earned money for software to guide you through the process when you could print off tax forms from the IRS and make it your next DIY project?
Well, attempting to DIY taxes could have various results. You could do it perfectly…or it could be a disaster. From personal experience, the pen-and-paper route takes just as long, if not longer, than any software I’ve used since I decided it was time to pay for help. And, there’s the fear that you did it wrong, that the mail will get lost, that you’ll get audited, and… and… and… the worries never seem to end.
But when you don’t owe any money and expect a minimal refund, shelling out upwards of $70 or more to file federal and state taxes makes your inner penny pincher cry. Luckily FreeTaxUSA has a free federal option plus a very affordable state tax option. Read on to learn more.
Jump To
What is FreeTaxUSA?
FreeTaxUSA is an online tax preparation software that lets you file your federal tax return with the IRS completely free. After your federal return, you can copy the details to your state return and file that for $14.99.
Novice and experienced tax filers alike will have no problem navigating their way through the software. Your responses to the questions guide you through all of the necessary tax forms.
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How does FreeTaxUSA work?
Much like their competitors, getting started with using FreeTaxUSA is easy. To make the signup process easier, have your address, telephone number, birth date, and Social Security Number for you, your spouse, and any children or dependents on hand.
First, you’ll create a free account. For this, you need your name, a valid email address, and to create a strong password. Even if you decide that this isn’t the right tax filing program for you, it won’t cost you anything to get started.
Upon successful account setup, you will receive a welcome email with a link to activate your account. You don’t actually need to do this immediately because you can continue. However, it’s a good idea to take two minutes to open your inbox, find the email, and click the link.
Then it asks if you want to import your prior years' taxes.
At the top of every page, you’ll see the various sections of your tax return. It’s a bit clunky, and you can’t move easily between sections. You’ll go through your free Federal e-file in this order:
- Personal
- Income
- Deductions and Credits
- Miscellaneous
- Summary
- State tax return
- File your taxes
From this top part of your screen, you can access your account information and prior years’ tax returns, search, contact the customer support team, and log out of your account.
On the right-hand side of the screen, and visible as you progress through the questions related to your tax return, are support options, links to help topics, and a link to guide you through filing a tax extension for your 2023 federal and state taxes if you won’t be able to finish them in time.
Now it’s time to get busy typing and filling in personal information for yourself, your partner (if any), and your children or other dependents (if any). This page focuses on you, but you’ll need the other information after a few more screens.
Notice the blue question marks inside a circle and blue underlined text—if you’re unsure about how to answer or have a question, click those, and you’ll get a pop-up that provides helpful information.
From there, you’ll be asked about your filing status. If you’re unsure, three blue links will give you more information to help you make your choice.
If your selection includes a spouse, the next screen will prompt you to add your spouse's information, including their occupation and SSN.
Next up are dependents. For most people, this will mean children, but it may extend to non-family who you support. It shows you three commonly asked questions if you too, have those questions.
The next screen will ask for information about all of your dependents, one by one.
On this screenshot, notice, in the top right-hand corner of this screenshot, the three icons. Here’s what they mean:
- The bookmark (left) Clicking allows you to save your progress and return to it later.
- The clock (center) will show you your application history, including when you filled out specific info.
- The bullet point list (right): When you click on this, you can see an expandable list of every section and which ones you have already filled out.
One thing to note with FreeTaxUSA is that jumping around between sections is not easy. Since this is not the best software for my needs, I didn’t complete all the screens. Unlike with TurboTax, I couldn’t skip to other pages to see what they were like.
While some filers may like to sit at their computer and go through it from start to finish, I’m not one of them. I like to start on tax prep early, so I don’t always have all the information available. And sometimes, I realize that I forgot something related to my self-employment income and need to go back to add it in, which would not be easy to do with FreeTaxUSA.
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How much does FreeTaxUSA cost?
As its name suggests, FreeTaxUSA is free. Well, mostly free. They offer free federal filing for most all common tax situations.
The free edition to file federal taxes is $0. Filing state tax returns cost $14.99 per state.
There are two optional add-ons for those who want more support. The Deluxe edition costs just $7.99 and gives you priority access to a free live chat with a tax professional, unlimited amendments, and audit assistance.
So how does FreeTaxUSA actually make money since they offer their products at such low costs? They offer several extra services, each with a nominal fee.
Other optional add-on services that FreeTaxUSA offers are unlimited amendments for those who use the free version. FreeTaxUSA allows you to file the prior year's federal tax returns for free, but there is a $17.99 fee for both amended returns on prior years' taxes and filing prior years’ state returns.
Unfortunately, FreeTaxUSA does not support tax filers who are:
- Non-resident tax filers
- Have foreign-earned income
- American citizens that reside outside of the USA
FreeTaxUSA features
Access to all tax forms
With FreeTaxUSA, everyone can access the same tax forms; there’s no need to upgrade just because you need to claim rental income. There’s no need to upgrade to the Deluxe Edition if you don’t need extra professional support.
No surprising upsells
What you see is what you get. There are less than 10 services that require payment, and some of them may be totally unnecessary, like filing a previous year’s state return or wanting a printed copy of your tax return (you can do it yourself with the free PDF download).
Guarantees accuracy
There’s no need to doubt the accuracy of your return because the software meets state and federal standards and performs calculations correctly. Should a problem arise once the IRS receives your return, FreeTaxUSA will make it right by reimbursing you for penalties and interest incurred due to their error.
Easy-to-use and intuitive
From creating your account to entering your payment information, the system guides you every step of the way. When in doubt, click the blue text or question marks for more info.
Imports last year's data from other platforms for free
Switching from another platform is easy since your previous years' data can be imported from competitors — for free!
Free Audit Assist with the Deluxe edition
The thought of getting audited is scary, but you can rest assured that FreeTaxUSA will be there with assistance if your federal returns are audited (state returns are not included). This service is reserved for people who use the Deluxe edition, and while they will not talk to the IRS on your behalf, they will be there to guide you through the next steps of the audit.
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Who is FreeTaxUSA best for?
FreeTaxUSA is best for people who don’t want to pay much for their tax preparation but don’t qualify for the free or lower-tier options from other companies. With FreeTaxUSA, everyone can file federal taxes for free. Whether you only need to report your W-2 income and retirement account contributions or want to itemize, get credits for your children, and report the income from your rental property, FreeTaxUSA is for you.
Who shouldn’t use FreeTaxUSA?
While FreeTaxUSA is a great choice for many people, a few groups of tax filers cannot use it since the software doesn’t include the required tax forms.
- Non-resident tax filers. Citizens of other countries, who are engaged in business with American companies and consumers, should file form 1040NR. Unfortunately, FreeTaxUSA doesn’t support this form.
- People with foreign-earned income. Americans engaged in employment abroad need to file form 2555 to account for their earnings outside of the USA. Again, this format isn’t supported on this platform. Note that this is not the same as investment earnings from foreign companies.
- Americans who aren’t living in the USA. While there may be an overlap with the previous category, this applies to people who consider themselves digital nomads.
If you fit into one of these categories, scroll down to see which other tax filing program will fit your needs.
Related: Money Moves to Make Before April 15
Pros and cons
Still on the fence about whether or not FreeTaxUSA is right for you? Here’s a look at the pros and cons. Consider them carefully before deciding. What may be a pro could be a drawback for another person and vice versa.
Pros
- A low-cost option for those who don’t qualify for free versions with other filing services. Let’s be honest, no one likes paying to get assistance to file their taxes, especially if you don’t owe anything. And if you do owe taxes, spending even more for tax software is downright depressing. So it is amazing that FreeTaxUSA makes their service mostly free (because most people will also need to spend the $14.99 to file state taxes). And unlike most of the competition, the free version covers student loan interest, plus Schedule C (self-employment), Schedule D (capital gains and losses), and Schedule E (rental property).
- FreeTaxUSA is easy to use, even for new tax filers. Full of functionality, FreeTaxUSA is easy to start with, even for young people filing taxes for the first time. Creating an account is easy, and the program guides you every step of the way. You can easily see how much income tax you’ve paid and whether you owe money or if you’ll get a tax refund.
- The additional filing support is very affordable. Since there is no difference between the tax forms available in the free version and the Deluxe Edition, which is only $7.99, it’s an easy upgrade to have priority access to email and chat support.
Cons
- Neither the Free edition nor the Deluxe edition includes all tax forms. Unlike most competition, paying more for a higher version does not give you access to more tax forms. The Free edition and Deluxe edition give you the same forms. The only difference is your access to professional support and unlimited amendment.
- The software does not support the import of documents. Another area where FreeTaxUSA falls short is its ability to import documents automatically. For example, programs like TurboTax allow you to select a bank and key in your login credentials to pull in documents and data needed for your tax return. Be sure to double and triple-check your numbers as you input them because while FreeTaxUSA has an accuracy guarantee, that only covers their calculations, not user error.
- There are limited customer service support options. FreeTaxUSA offers a useful knowledge base, but all customer service is handled by email or messages within the platform. They do not provide phone support.
FreeTaxUSA vs. competitors
Platform | Federal | State |
FreeTaxUSA | $0 | $14.99 |
TurboTax | $0 to $169 | $0 to $49 |
TaxHawk | $0 | $14.99 |
TaxSlayer | $0 to $52.95 | $0 to $35.95 |
TaxAct | $0 to $64.99 | $39.99 to $44.99 |
TurboTax
A household name, TurboTax is highly regarded as one of the easiest tax filing services to use. This ease comes with a price tag; it will be hard to find higher fees. They offer three service tiers, and some may qualify for free filing. Add-ons are available to get live help filling out your return, or you can let one of their professionals handle everything for you.
TaxHawk
From the same parent company as FreeTaxUSA, TaxHawk is very similar in almost every way. The only noticeable difference is that with TaxHawk, you can choose to pay for Pro Support. For $44.99, you’ll have access to personal tax advice via phone, and you can share your screen during live chats with a tax pro.
TaxSlayer
Family-owned and operated TaxSlayer has helped Americans file their taxes for over 50 years. Everyone receives free, unlimited phone and email support though it can take up to 48 hours to get a reply.
TaxSlayer has a variety of products, with the lowest tier being free.
TaxAct
Only individuals or couples with the simplest tax situations qualify for TaxAct's $0 federal filing fee, with the state ones starting at $39.99. The Deluxe, Premium, and Self-Employed tiers offer access to additional tax forms. A notable benefit is that all tiers can access Xpert Assist for free and cover both state and federal tax forms.
FAQs
Does FreeTaxUSA support the Advance Child Tax Credit Payments?
Yes, FreeTaxUSA is able to handle the input and reconciliation of the child tax credit payments.
Can I use FreeTaxUSA if I invest in cryptocurrency?
This depends on how complex your crypto investing is. For those who are just buying or only made a couple of trades, then FreeTaxUSA will likely be able to handle it. Remember you’ll need to type in all data yourself, so active traders will want to look for an easier tax filing solution.
What are the payment options for FreeTaxUSA?
For those who only use it to file their federal returns, there is no cost. It’s totally free. But most users will need to file a state return, which costs $14.99. You can either pay with your credit or debit card or opt to have the cost deducted from your tax refund. There is an additional fee of $19.99 for this service.
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Is FreeTaxUSA legit?
For those who are new to filing taxes, FreeTaxUSA is a great software to start with because of its low cost, relative ease of use, and ability to cover most tax situations. It’s possible that a person could use this service for decades if their financial situation is simple to mildly complex.
The most notable drawback is that you can’t auto-import your W-2 or 1099 forms. For a person with a W-2 job and a couple of rental properties, it’s probably an easy decision to type the data yourself rather than spend much more to import data conveniently. Investors and entrepreneurs with business or side hustles may feel that paying extra is worth it.
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Writer
Charlotte Edwards is an educator-turned-freelance writer based in Beijing, China. She writes personal finance and parenting content for both digital and print publications around the world.
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