More Free Tax Filing Options This Year

Contributed by mm | January 18, 2005 8:34 AM PST

This time last year, I discussed IRS's Free File Alliance, a consortium of 15 companies that offers free online tax filing. If you read my notes last year, you will notice that no single company offers the free service to everybody. This year, the landscape has changed.

If you are considering buying your tax preparation software, take a look at the list of companies that offer free tax filing this year first. Especially, the following three providers give away the service to everyone without restrictions:

TurboTax� for the WebSM
TaxACT.com
eSmartTax

Last year I used TaxAct.com to file online and it works great for me. This year, due to a special situation, I need to file on paper, but I will still use TaxAct -- it is a standalone Windows program that allows paper print-out, and I love the flexibility it offers.

Why do these companies want to offer this (valuable) service for free? Because this will give them the chance to crosssell you other products, like state tax filing and other value-added tax consulting.

These free offers are not available if you visit the main website of these companies directly. Be sure to tell your friends if you want to save them a buck or two.

This Post Has Received 3 Comments. Share Your Opinions Too.

Anon Commented on January 18, 2005

What's the difference between filing online and purchasing the CD from Staples/OD/OM and filing that method?

Jonathan Commented on January 19, 2005

The 1 thing that I don't understand about e-filing is that why I have to pay to make the life of other (IRS) easy (i.e. reduce paper work) regardless of how little that payment is (I think it is about $10). In fact, I strong believe that I should share some of the cost saving of IRS by reducing their paper work.

I will only e-file if the benefit of doing so is greater than the cost of $10. If I owe IRS tax, there is no economic reason to e-file. If I have tax refund, the economic benefit of e-filing is that you get your refund earlier and earn additional interest for the difference in refund delay between e-filing and paper filing. That difference may be about 2 to 3 weeks. Given the current best interest rate that you could earn from the market, say 2%, you have to have a refund of $10 / 3 weeks x 52 weeks / 2% = $8666 in order to just match the $10 cost. But if you are not wise enough to allow uncle Sam to owe you that much along the year, you deserve to be squeezed another $10 anyway.

But of course, there is this convenient factor of e-filing (but printing the paper outs, putting them in an envelop, sticking 2 37 cent stamps and dumping it in a mailbox are not too inconvenient to me. But of course, I normally file very early in case the mail is lost, but my tax is simple enough for me to do so). Also, if you have high interest loan to pay off, the benefit analysis is different.

Karthik Commented on March 2, 2005

I agree. In fact there should be an incentive from IRS to encourage e-file.

I had to paper file this year and I did it today. Total cost $3.00 ($0.60 stamp and $0.90 for cerficate of mailing). The post-office tried to sell me certified mailing stating IRS doesn't accept certificate of mailing as proof. I didn't buy into it.

BTW taxslayer.com allows you to take a full printout of the completed form (with a BIG do-not-file printed over) and irs.gov gives you fillable pdf forms. It is just a matter of data re-entry to save the filing cost.