Planning to file your tax return for free? TurboTax drops out of key IRS program
Taxpayers are eligible for program if they earned less than $72K in annual gross income in 2020
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Americans for Tax Reform President Grover Norquist on the debt ceiling, taxes, spending and infrastructure negotiations and the possible expansion of the IRS.
Tax-filing season is swiftly approaching, but Americans planning to file their returns for free will have fewer options to do so than in years past.
Intuit, the company behind popular tax-filing software TurboTax, announced in July that it will no longer participate in the IRS Free File program, which allows millions of taxpayers to file their returns for free.
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"With the Free File program surpassing its founding goals of e-file and free tax preparation, and due to the limitations of the Free File program and conflicting demands from those outside the program, we are not able to continue in the program and deliver all of the benefits that can help consumers make more money, save more, and invest for the future," the company said at the time.
The homepage of Intuit Inc.'s TurboTax website is displayed on a computer monitor in Washington on Feb. 13, 2012. (Andrew Harrer/Bloomberg via Getty Images / Getty Images)
About 70% of people filing taxes in the U.S. – or about 100 million Americans – qualify for the free program offered by the IRS, which is a public-private partnership between the IRS and the Free File Alliance, a group of tax preparation companies with online software. That now includes groups like TaxAct and FreeTaxUSA after TurboTax, as well as H&R Block, exited the program. (H&R Block left in 2020.)
Taxpayers are eligible for the program if they earned less than $72,000 in annual gross income in 2020.
Intuit had participated in the program for more than 20 years before quietly announcing its withdrawal in July, well before the start of tax season.
During the previous tax season, Intuit prepared 17 million free tax filings, including about 3 million that went through the IRS Free File, the company said. That means those individuals will need to rely on an alternative solution this year.
Intuit said that by ending its participation in the IRS program it would face fewer constraints in the future when assembling tax returns.
A man enters the Internal Revenue Service (IRS) building in Washington on May 7, 2010. (Andrew Harrer/Bloomberg / Getty Images)
"This decision will allow us to focus on further innovating in ways not allowable under the current Free File guidelines and to better serve the complete financial health of all Americans through all of our products and services, in tax preparation and beyond," the company said.
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Intuit, along with H&R Block, have both been accused of sketchy tactics when it comes to free filing, including in 2019 when the Los Angeles city attorney sued the companies and alleged they had "defrauded the lowest earning 70% of American taxpayers" by impeding public access to the IRS program.
The Free File service launched in 2003; the Free File Alliance, which consists of different tax-prep companies, formed and agreed to offer no-charge tax preparation for millions of Americans. In exchange, the IRS said it would not offer its own version.