Filing tax returns can be a complicated, frustrating and nerve-wracking task for many. The fear of what a simple arithmetic error can do to the entire tax return has filers repeating calculations, second-guessing themselves and staying up nights. The market for third-party tax preparation reflects the insecurity many taxpayers have with the whole process.
Yet these CPA services can be pricey, leaving those of modest income out in the cold. Enter electronic filing websites like FreeTaxUSA to provide step-by-step navigation at little to no charge. Yet do these seemingly optimal services deliver on their promises or are downsides left unspoken?
Read More: Filing Your Income Tax Return
Is FreeTaxUSA a Legitimate Company?
While every online service has its dissatisfied clientele, this is no indication that they are not set up in accordance with state law or fail to pay their own taxes. Now with over 150 employees, FreeTaxUSA was established in 2001 as a collaboration between certified public accountants (CPAs) and software developers. The company is a charter member of the IRS Free File Alliance.
Sporting an A rating with the Better Business Bureau, this company employs established encryption technology to transmit taxpayer filings to the Internal Revenue Service (IRS). No information available suggests that FreeTaxUSA is not legitimately operating.
Read More: How Can I Find Out If a Company Is Legitimate?
Does This Company Misrepresent Itself?
By any legal definition, the answer is most likely no, not in the strictest sense anyway. Upon learning that only the standard federal income tax filing is without charge, some people are put off to learn there is a fee associated with filing at the state level. In addition, a deluxe level service is also available to customers who seek more individualized attention. For the most part, the entire process is run online and some users become vexed by the lack of access to a live representative.
How Does e-Filing Work?
Before anything, a filer needs to go to the company's website and set up an account. Once all of the necessary tax forms are in hand, filers can begin to fill in the relevant fields in the online forms. No calculations are necessary since the software, the best tax software according to FreeTaxUSA fans, performs all the pertinent computations. What is due or what is coming is continuously recalculated as additional information is entered.
Never file as long as the return is based on estimates. Only when all numbers are finalized do users activate the file function.
What Do Users Think?
FreeTaxUSA reviewers speak favorably of the three free federal plans available: the Simple Plan, the Premium Plan and the Advanced Plan. Each is selected based on whether or not the filer has used FreeTaxUSA before, what sort of deductions will be claimed and what sorts of investments or businesses are involved. The Deluxe edition also provides live chat and audit assistance, for a fee of course. Filing state returns costs about $15, an annoyance to some, although many customers are willing to pay.
Are There New Tax Forms?
Since the IRS does not circulate 2021 tax forms until January 2022, it may be that websites like FreeTaxUSA will not be ready to process returns for the calendar year 2021 yet, particularly since most annual income is incomplete before that date. Online filing websites must make sure that software tabulates according to IRS standard operating procedure.
The specifics can change year by year as legislation and executive orders affect the tax code change calculation procedures. FreeTaxUSA filers have not voiced significant complaints with regard to audits.
Adam Luehrs is a writer during the day and a voracious reader at night. He focuses mostly on finance writing and has a passion for real estate, credit card deals, and investing.