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How to file your 2021 tax return for free: TurboTax no longer provides these services

TurboTax shocked taxpayers by announcing that the company had withdrawn from the IRS Free File program. Writes about it Detroit Free Press.

Photo: Shutterstock

The news was officially published in July 2021. Most taxpayers don't think about their taxes until January or February, and some are now surprised to learn of the significant changes expected in Free File.

TurboTax notes: "The company has decided not to renew its participation in the IRS Free File Program."

TurboTax is the second major company to exit the program. H&R Block withdrew from Free File in October 2020.

The IRS is expected to announce the start of the tax season in the near future. If there are no delays, the tax season could start as early as the end of January.

This year's 2021 tax returns must be filed by April 18, according to the IRS's online guidelines for tax season. Those who live in the states of Maine or Massachusetts file their declarations before April 19, as these states celebrate Patriots Day on the 18th.

Most people buy tax software to prepare their tax returns themselves, or they hire tax specialists. Millions of low-income families and seniors also turn to volunteers to prepare their tax returns for free.

What is Free File

However, an easy way to cut costs - which many people, oddly enough, don't turn to - is to use the free IRS file system if you qualify. Why pay for online software if you don't need it?

Free File Program provides eligible taxpayers with free access to tax programs. Those who qualify can use online software that helps resolve key tax issues, performs math calculations, and allows free electronic filing of returns. Electronic filing helps the IRS process returns and refunds faster than paper.

On the subject: 2021 tax filing deadline postponed: new date

TurboTax was just one of Free File's partners. Those who chose TurboTax last year can opt for their online tax preparation service in the Free File program from another company. Last year, nine tax software products were available through Free File in English and two in Spanish.

Who is eligible to participate in Free File

If your 2021 Adjusted Gross Income was $ 73 or less, you can use free tax software to prepare and file your tax return electronically in accordance with the IRS's online guidance for the 000 tax season. If you have earned more, you can use free forms or other free services.

Visit the IRS website to find options that suit you.

Approximately 70% of taxpayers, based on income, are eligible for some of the software services offered. But only a handful of those who qualify actually use Free File.

More than 2020 million taxpayers used one of Free File's free online partner products in 4,2, according to the IRS. This does not include the millions of non-filing people who have used the system to obtain quarantine payments.

In FY2020, the IRS processed over 150 million individual electronically filed returns.

It has been about 20 years since the IRS first entered into a special agreement encouraging tax software companies to provide free tax return software to a certain percentage of US taxpayers. But in return, the deal included an agreement by the IRS that it would not compete with these companies by providing taxpayers with their own software. Despite this, participation in the program is still very low.

Criticism

Big names like Intuit's TurboTax and H&R Block faced a lot of criticism back in 2019 after a ProPublica investigation detailed how companies are limiting program reach, making it difficult to find free options online and instead looking for a way to direct eligible taxpayers to products for which you have to pay money.

The ProPublica report included an indication that Intuit added code to the Free File TurboTax landing page that hid it from search engines like Google, making it difficult to find.

In January 2020, the IRS announced some changes to strengthen consumer protection.

One such change: Tax filing firms have agreed that they will not exclude Free File landing pages from regular Internet searches.

The IRS has asked taxpayers to look for the standard wording: "IRS Free File Program provided by (name of software vendor)."

The IRS Free File prevents taxpayers from offering banking products for which there is often a fee, such as high-value loans.

If you have used IRS Free File in the past year, you will receive an email from the same company with a greeting and links to the IRS Free File.

The email should include a link to the IRS Free File website and an explanation of how to handle it. If you click this link and qualify, you will not be charged for preparation and electronic filing of your federal tax return.

What they say in TurboTax

Some consumers report that TurboTax sent out emails in December warning that the company was no longer participating in Free File.

The company said it has been on Free File for nearly 20 years and has helped millions of Americans prepare and electronically file their tax returns for free.

You may be interested in: top New York news, stories of our immigrants and helpful tips about life in the Big Apple - read it all on ForumDaily New York.

Intuit (the company that owns TurboTax) blamed the lack of participation in the upcoming tax season with "restrictions on the Free File program and conflicting requirements."

The company will now focus on accelerating efforts to address other consumer financial concerns "without the constraints of the Free File program."

Such efforts, the company claims, include:

  • elimination of obstacles in the preparation of tax returns by importing data;
  • the use of artificial intelligence models for active interaction with customers;
  • with the consent of the client, direct transfer of funds to free high-yield accounts;
  • providing advances to help those in need make ends meet.

Intuit products include personal finance apps, Mint, and Credit Karma.

What could be next

US Senator Elizabeth Worre took a screenshot of Free File on Twitter in July and said that "the IRS can and should create its own free tax preparation system."

Back in early 2020, before the outbreak of the pandemic, the IRS said it was no longer promising not to enter the market for software for tax returns and electronic files.

However, the pandemic hit the IRS hard. The quarantine, which was introduced to stop the spread of COVID-19 in the spring of 2020, has led to delays in tax return processing and refunds. The IRS also took on additional work to implement payments and then the Child Tax Credit.

In the future, software may appear directly from the IRS.

Read also on ForumDaily:

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