TurboTax touts their Free Edition’s free-ness. Free to use, free to file. Free for Federal, that is (1040EZ only). Then, they try to up-sell you on filing State for $27.95. What they probably don’t want you to notice is that the Free Edition has nothing to do with the Free File program offered by the IRS, which TurboTax does participate in. But I noticed. Especially one year in while in college when I had to file in three different states, all of which allowed Free E-Filing.
Do You Meet One These Criteria?
- AGI of 31k or less, or
- Active Military with AGI of 57k or less, or
- you qualify for the Earned Income Credit
Congratulations, you should probably use Freedom edition if you are planning on using TurboTax.
The IRS Free File program has its limits, as does TurboTax Freedom edition. For the former, you’re only eligible if you had an AGI of $57k or less in 2009. For TurboTax, it’s even more stringent: $31k AGI (for single filers). Additionally, if you own a house, own a business, have a lot of investments/capital gains/losses or donate a lot to charity and you don’t pay attn. to tax laws on your own or don’t care to, neither of TurboTax’s free editions are right for you. There are other companies that offer robust solutions through the Free File program that don’t have the same income limits (Freedom) or restrictions to 1040EZ (Free).
Why should I care?
I don’t know about you, but I don’t want to pay $30 to file my state taxes. Freedom edition allows you to do it for free in states that allow for free e-filing.
Additionally, while 1040EZ will suffice for some people, many others have more difficult tax needs and thus need access to the 1040, which is provided by the Freedom edition, but not Free edition.
But, I don’t see that option on TurboTax’s Web Site!
Yes, they’re rather sneaky like that. In order to access the Freedom edition, you have to go through the IRS Free File Portal. The IRS provides a nice tool to help you choose a preparer, but you can also choose to go to TurboTax directly. The link to TurboTax will allow you to use the Freedom Edition, where things really are free.
I can’t speak with any amount of authority, but I believe the same process is true for some of the other tax companies as well. So, if you do have an AGI under $57k, it’d be smart to head over to the IRS Free-File page and access the online tax applications from there. They provide a list of participating companies, the limitations of each, and a link to the correct free edition.