Freetaxusa vs Turbotax

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Topic Author
BogleMelon
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Freetaxusa vs Turbotax

Post by BogleMelon »

I have been using Turbotax desktop (Deluxe) for a while now. I am considering now switching to Freetaxusa this year for the first time.
My reasons:
1- Looks cleaner and user intuitive
2- can e-file the state (Turbotax would require additional $20 to do so, as a result I go to the state site and enter the forms manually which is a bit time consuming)
3- A bit cheaper (though I expect this year to file 2 states as I am starting a new job remotely at a different state- which would bring the cost to the same).

I seek opinions on how the both compared, especially from people who used/switched over from one to another.
What was your experience comparing both software?
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
Topic Author
BogleMelon
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Re: Freetaxusa vs Turbotax

Post by BogleMelon »

Since TT is on sale today at Amazon (usually cheapest day in the year) I need to bump this. Anyone? I would hate to pat more later for TT, but also would really like to try Freetaxusa.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
TravelGeek
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Re: Freetaxusa vs Turbotax

Post by TravelGeek »

Did you look at threads from previous years discussing FreeTax USA?

Intuit (on the Amazon product page and elsewhere) advertise

“60-Day Product Returns: If you're not completely satisfied, go to the TurboTax Returns Website within 60 days of purchase and follow the process listed to submit a Give back request. You must return this product using your license code or order number and dated receipt.”

so presumably you could buy TT today, then compare the products (and post a comparison for us :beer ) and then decide whether you are completely satisfied with TT or not. Note that I don’t know if the TT product return extends to in-app purchases like additional states.
alexbogle
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Re: Freetaxusa vs Turbotax

Post by alexbogle »

I love freetaxusa. I use their UI and then also fill out the 1040 manually. Then I compare and double check everything. This is easy because freetaxusa produces a filled-in copy of the 1040.

I'm sure TurboTax probably lets you do this too, but I refuse to support their lobbying efforts to prevent the U.S. government from simplifying the filing process for people.
"Learn every day, but especially from the experiences of others. It’s cheaper!” -- Jack Bogle
Nosirrah
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Re: Freetaxusa vs Turbotax

Post by Nosirrah »

I’ve used Freetaxusa for the last few years. Very easy to use. I have a fairly simple return, maybe a more complicated return would change that?

I usually recommend it to friends and family who ask.
Triple digit golfer
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Re: Freetaxusa vs Turbotax

Post by Triple digit golfer »

I like FreeTaxUSA and have used it for the last several years. I don't have an overly complicated return, but it isn't a simple EZ return either. I have a house, a family, capital gains and dividends from a taxable account and it handles it all just fine. No rental properties or other complex investments.
mouth
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Re: Freetaxusa vs Turbotax

Post by mouth »

Add my voice for FreeTaxUSA. Been using it since 2018 and bounced between TT and TaxAct before that. I have no plans to go back. By taxes have included things like marriage, divorce, stock sales, backdoor Roths, investment rental property (to include carry over losses), multiple primary home purchase/sales, pension, and this year it'll include the sale of my rental property. I plan to use FTU still.
BernardShakey
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Re: Freetaxusa vs Turbotax

Post by BernardShakey »

I'm a fan of FreeTaxUSA and have used it for the last few years. My taxes are pretty simple though.
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inverter
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Re: Freetaxusa vs Turbotax

Post by inverter »

Free Tax USA is great. Highly recommend you ditch TT.
ehh
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Re: Freetaxusa vs Turbotax

Post by ehh »

I use FreeTaxUSA and am a satisfied customer. But my taxes are simple. The user interface is clean and intuitive - in my opinion better than the TurboTax interface. I have no experience with FreeTaxUSA and multiple state returns. It does work fine for my (one) state return.

You could purchase TT today. And, if you have a little time during tax filing season, experiment with FreeTaxUSA. FreeTaxUSA doesn't ask for payment until late in the process. It won't show you a copy of a state return until you agree to pay. But, if memory serves, you can see a draft of your federal return and go thru the inputs for a state return before it asks for your credit card information.
jtdavid
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Re: Freetaxusa vs Turbotax

Post by jtdavid »

Freetaxusa interface is excellent. I pay the extra $8 for additional support even though I don't need it, just because I feel like it is an excellent product. Mildly complicated return here with multiple K-1s, Schedule E, etc.
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Nate79
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Re: Freetaxusa vs Turbotax

Post by Nate79 »

Another vote for Freetaxusa. Used it for many years and it's great.
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Drew31
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Re: Freetaxusa vs Turbotax

Post by Drew31 »

I used Freetaxusa for several years and liked it. Switched away in order to get I Bonds via tax refund but would use again.

Doesn't Freetaxusa still require payment for state e-file? I thought that was more of a state thing then the platforms themselves. Maybe I'm just confused. I never used it for state as I have just done them by hand with PDFs from the state.
cacophony
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Re: Freetaxusa vs Turbotax

Post by cacophony »

I purchased H&R Block offline software for 2021 and found the interface to be unbelievably terrible. It felt like a buggy windows 2000 app designed for 1024 × 768 resolution. I'm assuming the online version must be better.

I ended up looking for other solutions... I tried freetaxusa and found it to be pretty much perfect. It has a very clean and intuitive interface and I really liked how it would populate the actual pdf forms in real time so you could clearly see what was happening.

So another vote for Freetaxusa!
bog007
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Re: Freetaxusa vs Turbotax

Post by bog007 »

freetax usa ftw
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hameshatumkochaha
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Re: Freetaxusa vs Turbotax

Post by hameshatumkochaha »

H&R: both thumbs down.
TT: Liked it but FTUSA was better like other said. Handled fairly complex situations so far pretty well. Also I second what AlexBogle said above about TT's questionable tactics history...
MrJones
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Re: Freetaxusa vs Turbotax

Post by MrJones »

alexbogle wrote: Wed Dec 28, 2022 9:02 am I love freetaxusa. I use their UI and then also fill out the 1040 manually. Then I compare and double check everything. This is easy because freetaxusa produces a filled-in copy of the 1040.

I'm sure TurboTax probably lets you do this too, but I refuse to support their lobbying efforts to prevent the U.S. government from simplifying the filing process for people.
I'd love to never contribute to this lobby either.

However, when I tried freetaxusa a couple years ago, it wouldn't even auto-import 1099s from major brokerages (Vanguard, Schwab, Fidelity, IIRC). Entering long 1099s by hand is a deal breaker. Is this still the case with them?
ehh
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Re: Freetaxusa vs Turbotax

Post by ehh »

MrJones wrote: Thu Dec 29, 2022 1:36 am However, when I tried freetaxusa a couple years ago, it wouldn't even auto-import 1099s from major brokerages (Vanguard, Schwab, Fidelity, IIRC). Entering long 1099s by hand is a deal breaker. Is this still the case with them?
Yes. Inability to upload 1099s appears to still be the case. For the 2021 tax year I could not upload a Vanguard 1099. And this recent review https://www.businessinsider.com/persona ... usa-review indicates still the case for 2022.

If you have complex and/or numerous 1099s, using FreeTaxUSA will be tedious.
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BogleMelon
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Re: Freetaxusa vs Turbotax

Post by BogleMelon »

ehh wrote: Thu Dec 29, 2022 7:06 am
MrJones wrote: Thu Dec 29, 2022 1:36 am However, when I tried freetaxusa a couple years ago, it wouldn't even auto-import 1099s from major brokerages (Vanguard, Schwab, Fidelity, IIRC). Entering long 1099s by hand is a deal breaker. Is this still the case with them?
Yes. Inability to upload 1099s appears to still be the case. For the 2021 tax year I could not upload a Vanguard 1099. And this recent review https://www.businessinsider.com/persona ... usa-review indicates still the case for 2022.

If you have complex and/or numerous 1099s, using FreeTaxUSA will be tedious.
Mu understanding is that only the total line in 1099 is required to be entered. We don’t need to enter every single detailed line in it
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
harrad
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Re: Freetaxusa vs Turbotax

Post by harrad »

Would anyone know how does Freetaxusa manage to keep the software free? I realize they do have premium services and I think they charge a small fee for state filing. But would it be sufficient to cover the cost?

I am mainly worried about selling data to others. I did read their privacy statement and did not see anything alarming other than the use of social media widgets in their website.
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Blues
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Re: Freetaxusa vs Turbotax

Post by Blues »

Been using FreeTaxUSA for several years now after having been both a TurboTax and TaxACT user.

No regrets whatsoever.
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ClevrChico
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Re: Freetaxusa vs Turbotax

Post by ClevrChico »

Blues wrote: Thu Dec 29, 2022 7:45 am Been using FreeTaxUSA for several years now after having been both a TurboTax and TaxACT user.

No regrets whatsoever.
Same. FreeTaxUSA has a very streamlined interface which keeps me coming back as a customer. The price is also great too!
sureshoe
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Re: Freetaxusa vs Turbotax

Post by sureshoe »

As a software guy, my recommendation is not to change software unless you have a good reason. People invariably find something they hate about the new software that the old one used to do.

Having written that, if the motivation is cost, then have fun. I'm not sure if "freetaxusa" is actually cheaper/free/etc, but will trust you looked and know. Otherwise, I'd stay with TT unless it is missing a feature or does something you don't like.
b42
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Re: Freetaxusa vs Turbotax

Post by b42 »

Another vote for FreeTaxUSA. I've been using it for years, and also use it to file a few family member's returns.
ehh
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Re: Freetaxusa vs Turbotax

Post by ehh »

harrad wrote: Thu Dec 29, 2022 7:45 am Would anyone know how does Freetaxusa manage to keep the software free? I realize they do have premium services and I think they charge a small fee for state filing. But would it be sufficient to cover the cost?

I am mainly worried about selling data to others. I did read their privacy statement and did not see anything alarming other than the use of social media widgets in their website.
The company name is TaxHawk Inc. A privately held company established in 2001 and located in Utah. Relatively small. In addition to charging for state returns they charge for upgraded support, unlimited amended returns, and printing a copy of your return and mailing it to you.

They outline their security practices here https://www.taxhawk.com/safe.jsp

Perhaps I lack imagination but why would they sell your data to others? If they did so and it came to light their business would be destroyed.
mangoheadgolf
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Re: Freetaxusa vs Turbotax

Post by mangoheadgolf »

I've been using TaxAct ever since the requirement to file electronically for 2016
I can't believe there wasn't a mass uprising in now forcing everyone to pay $150 a year just to file taxes, since you can't use the forms anymore.
This tells me that almost 0% of people file their own taxes and never noticed this.
But, now I am stuck with TaxAct since it rolls over all my old data, each year, so it takes me an hour to do the whole thing.
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Re: Freetaxusa vs Turbotax

Post by neilpilot »

mangoheadgolf wrote: Thu Dec 29, 2022 8:50 am I've been using TaxAct ever since the requirement to file electronically for 2016
I can't believe there wasn't a mass uprising in now forcing everyone to pay $150 a year just to file taxes, since you can't use the forms anymore.
This tells me that almost 0% of people file their own taxes and never noticed this.
But, now I am stuck with TaxAct since it rolls over all my old data, each year, so it takes me an hour to do the whole thing.
Maybe I'm misreading your post, but AFAIK you still have the option to mail a paper return to the IRS via the USPS.
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RickBoglehead
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Re: Freetaxusa vs Turbotax

Post by RickBoglehead »

TurboTax Deluxe CD/Download is $34.98 plus tax this year (yesterday). If "cost" is your number one reason to switch, I'd submit your perspective is a bit wacky. The amount of energy that people spend agonizing about spending $35, and posting on forums debating options, is simply amazing.

I've been using TurboTax Deluxe for decades.

I would NEVER use a website to do my taxes. Yes, I am uploading my federal return via Intuit's servers. That is not the same as storing your return on someone's website.

For those that complain about inputting state returns manually, two things:

1) Many states don't even offer this capability (i.e. Michigan for one)
2) I mail my state returns. Costs maybe $1.50. Most years I owe money. Mailing them also gives me float on the check I mail them too.
Avid user of forums on variety of interests-financial, home brewing, F-150, EV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
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RickBoglehead
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Re: Freetaxusa vs Turbotax

Post by RickBoglehead »

neilpilot wrote: Thu Dec 29, 2022 8:56 am
mangoheadgolf wrote: Thu Dec 29, 2022 8:50 am I've been using TaxAct ever since the requirement to file electronically for 2016
I can't believe there wasn't a mass uprising in now forcing everyone to pay $150 a year just to file taxes, since you can't use the forms anymore.
This tells me that almost 0% of people file their own taxes and never noticed this.
But, now I am stuck with TaxAct since it rolls over all my old data, each year, so it takes me an hour to do the whole thing.
Maybe I'm misreading your post, but AFAIK you still have the option to mail a paper return to the IRS via the USPS.
Yup.
Avid user of forums on variety of interests-financial, home brewing, F-150, EV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
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Re: Freetaxusa vs Turbotax

Post by neilpilot »

RickBoglehead wrote: Thu Dec 29, 2022 9:04 am
neilpilot wrote: Thu Dec 29, 2022 8:56 am
mangoheadgolf wrote: Thu Dec 29, 2022 8:50 am I've been using TaxAct ever since the requirement to file electronically for 2016
I can't believe there wasn't a mass uprising in now forcing everyone to pay $150 a year just to file taxes, since you can't use the forms anymore.
This tells me that almost 0% of people file their own taxes and never noticed this.
But, now I am stuck with TaxAct since it rolls over all my old data, each year, so it takes me an hour to do the whole thing.
Maybe I'm misreading your post, but AFAIK you still have the option to mail a paper return to the IRS via the USPS.
Yup.
Yup I'm misreading Mango's post? Or, yup you can still mail a tax return?
mangoheadgolf
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Re: Freetaxusa vs Turbotax

Post by mangoheadgolf »

neilpilot wrote: Thu Dec 29, 2022 8:56 am
mangoheadgolf wrote: Thu Dec 29, 2022 8:50 am I've been using TaxAct ever since the requirement to file electronically for 2016
I can't believe there wasn't a mass uprising in now forcing everyone to pay $150 a year just to file taxes, since you can't use the forms anymore.
This tells me that almost 0% of people file their own taxes and never noticed this.
But, now I am stuck with TaxAct since it rolls over all my old data, each year, so it takes me an hour to do the whole thing.
Maybe I'm misreading your post, but AFAIK you still have the option to mail a paper return to the IRS via the USPS.
I believe that is false.
I believe everyone is required to E-file for years now.
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Re: Freetaxusa vs Turbotax

Post by xenial »

mangoheadgolf wrote: Thu Dec 29, 2022 12:30 pm
neilpilot wrote: Thu Dec 29, 2022 8:56 am
mangoheadgolf wrote: Thu Dec 29, 2022 8:50 am I've been using TaxAct ever since the requirement to file electronically for 2016
I can't believe there wasn't a mass uprising in now forcing everyone to pay $150 a year just to file taxes, since you can't use the forms anymore.
This tells me that almost 0% of people file their own taxes and never noticed this.
But, now I am stuck with TaxAct since it rolls over all my old data, each year, so it takes me an hour to do the whole thing.
Maybe I'm misreading your post, but AFAIK you still have the option to mail a paper return to the IRS via the USPS.
I believe that is false.
I believe everyone is required to E-file for years now.
Nonsense. Paper filing is allowed. See How to File.
neilpilot
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Re: Freetaxusa vs Turbotax

Post by neilpilot »

mangoheadgolf wrote: Thu Dec 29, 2022 12:30 pm
neilpilot wrote: Thu Dec 29, 2022 8:56 am
mangoheadgolf wrote: Thu Dec 29, 2022 8:50 am I've been using TaxAct ever since the requirement to file electronically for 2016
I can't believe there wasn't a mass uprising in now forcing everyone to pay $150 a year just to file taxes, since you can't use the forms anymore.
This tells me that almost 0% of people file their own taxes and never noticed this.
But, now I am stuck with TaxAct since it rolls over all my old data, each year, so it takes me an hour to do the whole thing.
Maybe I'm misreading your post, but AFAIK you still have the option to mail a paper return to the IRS via the USPS.
I believe that is false.
I believe everyone is required to E-file for years now.
I continued to be amazed that people think this is so....
https://www.irs.gov/filing/where-to-fil ... -form-1040
MrJones
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Re: Freetaxusa vs Turbotax

Post by MrJones »

ehh wrote: Thu Dec 29, 2022 7:06 am
MrJones wrote: Thu Dec 29, 2022 1:36 am However, when I tried freetaxusa a couple years ago, it wouldn't even auto-import 1099s from major brokerages (Vanguard, Schwab, Fidelity, IIRC). Entering long 1099s by hand is a deal breaker. Is this still the case with them?
Yes. Inability to upload 1099s appears to still be the case. For the 2021 tax year I could not upload a Vanguard 1099. And this recent review https://www.businessinsider.com/persona ... usa-review indicates still the case for 2022.

If you have complex and/or numerous 1099s, using FreeTaxUSA will be tedious.
That's a shame. But thanks, that's helpful to know.
MrJones
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Re: Freetaxusa vs Turbotax

Post by MrJones »

BogleMelon wrote: Thu Dec 29, 2022 7:39 am
ehh wrote: Thu Dec 29, 2022 7:06 am
MrJones wrote: Thu Dec 29, 2022 1:36 am However, when I tried freetaxusa a couple years ago, it wouldn't even auto-import 1099s from major brokerages (Vanguard, Schwab, Fidelity, IIRC). Entering long 1099s by hand is a deal breaker. Is this still the case with them?
Yes. Inability to upload 1099s appears to still be the case. For the 2021 tax year I could not upload a Vanguard 1099. And this recent review https://www.businessinsider.com/persona ... usa-review indicates still the case for 2022.

If you have complex and/or numerous 1099s, using FreeTaxUSA will be tedious.
Mu understanding is that only the total line in 1099 is required to be entered. We don’t need to enter every single detailed line in it
It's more complex than that. One line per disposition date per ticker. So dozens of lines if you TLH, for example. And that's for each broker.

Dividends are even worse.
Tdubs
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Re: Freetaxusa vs Turbotax

Post by Tdubs »

Drew31 wrote: Wed Dec 28, 2022 12:42 pm I used Freetaxusa for several years and liked it. Switched away in order to get I Bonds via tax refund but would use again.

Doesn't Freetaxusa still require payment for state e-file? I thought that was more of a state thing then the platforms themselves. Maybe I'm just confused. I never used it for state as I have just done them by hand with PDFs from the state.
Because of its inability to handle paper I Bond purchases, I switched to OLT.
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SmileyFace
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Re: Freetaxusa vs Turbotax

Post by SmileyFace »

I've got things like RSUs, ESPP, Backdoor Roth, etc.
I am not sure if FreetaxUSA can handle all these as easily as TT-desktop and to me, like someone else said, TT is the best value in software I ever spent (and last year you were still allowed to do up to 5 Returns with one purchased license - I do 4 returns every year so even more of a bargain for me - I also spring for Premier - only an extra $10 or $15 during sale time).
There are always posts about people making errors on 8606s, etc. - some of those people used Freetaxusa.
Perhaps it's okay if you have a simple return. And perhaps okay if you don't mind filling data out online (I am only comfortable with desktop software)
Last edited by SmileyFace on Thu Dec 29, 2022 3:05 pm, edited 1 time in total.
MrJones
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Re: Freetaxusa vs Turbotax

Post by MrJones »

harrad wrote: Thu Dec 29, 2022 7:45 am Would anyone know how does Freetaxusa manage to keep the software free? I realize they do have premium services and I think they charge a small fee for state filing. But would it be sufficient to cover the cost?

I am mainly worried about selling data to others. I did read their privacy statement and did not see anything alarming other than the use of social media widgets in their website.
40+ states have income tax. So their market is almost as big as anyone else. Plus, they don't have wholesalers and retailers to take revenue away. So I believe they can make just as much money as the bigwigs.

Nevertheless, data privacy is a good question to ask.
Tdubs
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Re: Freetaxusa vs Turbotax

Post by Tdubs »

MrJones wrote: Thu Dec 29, 2022 3:04 pm
harrad wrote: Thu Dec 29, 2022 7:45 am Would anyone know how does Freetaxusa manage to keep the software free? I realize they do have premium services and I think they charge a small fee for state filing. But would it be sufficient to cover the cost?

I am mainly worried about selling data to others. I did read their privacy statement and did not see anything alarming other than the use of social media widgets in their website.
40+ states have income tax. So their market is almost as big as anyone else. Plus, they don't have wholesalers and retailers to take revenue away. So I believe they can make just as much money as the bigwigs.

Nevertheless, data privacy is a good question to ask.
And once you have finished your federal taxes, they know you just want to be done and will cave to the small fee for state taxes.
CuriousTacos
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Re: Freetaxusa vs Turbotax

Post by CuriousTacos »

MrJones wrote: Thu Dec 29, 2022 2:05 pm
BogleMelon wrote: Thu Dec 29, 2022 7:39 am
ehh wrote: Thu Dec 29, 2022 7:06 am
MrJones wrote: Thu Dec 29, 2022 1:36 am However, when I tried freetaxusa a couple years ago, it wouldn't even auto-import 1099s from major brokerages (Vanguard, Schwab, Fidelity, IIRC). Entering long 1099s by hand is a deal breaker. Is this still the case with them?
Yes. Inability to upload 1099s appears to still be the case. For the 2021 tax year I could not upload a Vanguard 1099. And this recent review https://www.businessinsider.com/persona ... usa-review indicates still the case for 2022.

If you have complex and/or numerous 1099s, using FreeTaxUSA will be tedious.
Mu understanding is that only the total line in 1099 is required to be entered. We don’t need to enter every single detailed line in it
It's more complex than that. One line per disposition date per ticker. So dozens of lines if you TLH, for example. And that's for each broker.

Dividends are even worse.
From the IRS:
If you don't need to make any adjustments to the basis or type of gain (or loss) reported to you on Form 1099-B (or substitute statement) or to your gain (or loss) for any transactions for which basis has been reported to the IRS (normally reported on Form 8949 with box A checked), you don't have to include those transactions on Form 8949. Instead, you can report summary information for those transactions directly on Schedule D. For more information, see Exception 1, later.
And the text for Exception 1 further says:
Exception 1.

Form 8949 isn't required for certain transactions. You may be able to aggregate those transactions and report them directly on either line 1a (for short-term transactions) or line 8a (for long-term transactions) of Schedule D. This option applies only to transactions (other than sales of collectibles) for which:

You received a Form 1099-B (or substitute statement) that shows basis was reported to the IRS and doesn't show any adjustments in box 1f or 1g;

The Ordinary box in box 2 isn’t checked;

You don't need to make any adjustments to the basis or type of gain (or loss) reported on Form 1099-B (or substitute statement), or to your gain (or loss); and

You aren’t electing to defer income due to an investment in a QOF and aren’t terminating deferral from an investment in a QOF.

If you choose to report these transactions directly on Schedule D, you don't need to include them on Form 8949 and don't need to attach a statement. For more information, see the Schedule D instructions.
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Re: Freetaxusa vs Turbotax

Post by isira »

MrJones wrote: Thu Dec 29, 2022 2:05 pm
BogleMelon wrote: Thu Dec 29, 2022 7:39 am
ehh wrote: Thu Dec 29, 2022 7:06 am
MrJones wrote: Thu Dec 29, 2022 1:36 am However, when I tried freetaxusa a couple years ago, it wouldn't even auto-import 1099s from major brokerages (Vanguard, Schwab, Fidelity, IIRC). Entering long 1099s by hand is a deal breaker. Is this still the case with them?
Yes. Inability to upload 1099s appears to still be the case. For the 2021 tax year I could not upload a Vanguard 1099. And this recent review https://www.businessinsider.com/persona ... usa-review indicates still the case for 2022.

If you have complex and/or numerous 1099s, using FreeTaxUSA will be tedious.
Mu understanding is that only the total line in 1099 is required to be entered. We don’t need to enter every single detailed line in it
It's more complex than that. One line per disposition date per ticker. So dozens of lines if you TLH, for example. And that's for each broker.

Dividends are even worse.
If the cost basis has already been reported to the IRS, there is zero reason to do all that and you only need to input the summary gains/loss.
gutterman
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Re: Freetaxusa vs Turbotax

Post by gutterman »

I have been using Freetaxusa for at least 6 years. Works well for me and I actually find it easier to use than Turbotax.
MrJones
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Re: Freetaxusa vs Turbotax

Post by MrJones »

CuriousTacos wrote: Thu Dec 29, 2022 3:16 pm
MrJones wrote: Thu Dec 29, 2022 2:05 pm
BogleMelon wrote: Thu Dec 29, 2022 7:39 am
ehh wrote: Thu Dec 29, 2022 7:06 am
MrJones wrote: Thu Dec 29, 2022 1:36 am However, when I tried freetaxusa a couple years ago, it wouldn't even auto-import 1099s from major brokerages (Vanguard, Schwab, Fidelity, IIRC). Entering long 1099s by hand is a deal breaker. Is this still the case with them?
Yes. Inability to upload 1099s appears to still be the case. For the 2021 tax year I could not upload a Vanguard 1099. And this recent review https://www.businessinsider.com/persona ... usa-review indicates still the case for 2022.

If you have complex and/or numerous 1099s, using FreeTaxUSA will be tedious.
Mu understanding is that only the total line in 1099 is required to be entered. We don’t need to enter every single detailed line in it
It's more complex than that. One line per disposition date per ticker. So dozens of lines if you TLH, for example. And that's for each broker.

Dividends are even worse.
From the IRS:
If you don't need to make any adjustments to the basis or type of gain (or loss) reported to you on Form 1099-B (or substitute statement) or to your gain (or loss) for any transactions for which basis has been reported to the IRS (normally reported on Form 8949 with box A checked), you don't have to include those transactions on Form 8949. Instead, you can report summary information for those transactions directly on Schedule D. For more information, see Exception 1, later.
Good catch. I still had several pages of 8949, and went and looked up why. They fall into:
(B) Short-term transactions reported on Form(s) 1099-B showing basis wasn't reported to the IRS

These all turned out to be from employer issued stock (not TLH'ing as I'd originally written above). It's been the same across two employers at least. So here are all the places freetaxusa (unfortunately) doesn't work very well:

1. if you receive stock based income, and basis is not reported
2. if you have multiple brokerage accounts and/or brokerages, you still have the task of aggregating gains and losses across brokerages
3. If you have dividends, there are several numbers to enter without typos, even aggregated, for each brokerage account

My tired eyes, fingers, and brain are highly unlikely to get every single number right in the process above. I'd love to not contribute to the H&R (or TT) lobby, and would love to not play the coupon/deal game, and wanted to use freetaxusa, but freetaxusa just isn't there yet for folks like me.
outbackcountry
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Re: Freetaxusa vs Turbotax

Post by outbackcountry »

I normally use at least three/four tax software (all online) and file with one. Typically, I use HR Block, TaxAct, TurboTax and FreeTaxUSA and file with FreeTaxUSA (for the last three years). Prior to that mostly TaxAct (while still using the other two); have filed with Block couple of times and ones with Turbo. According to me, if the input data is correct, all software should output the same tax result. The main benefit of the premium softwares (TurboTax, HR Block) are reduction in data entry. Turbo has many integrations with most of the financial institutions/brokerages and W2 companies. It can import all data seamlessly without the need for data entry (very helpful if you have many 1099s). Added to that, they are probably good in support. HRBlock comes next in terms of integration support. I would assume Block has good CS as well. Thats the main reason they charge a premium.

If you are organized and game for some serious data entry, you can pick whichever costs less (FreeTaxUSA). TaxAct used to be cheap but they charge as good as Turbo nowadays (but still have those insane Q&As and minimal integrations). I have been using FreeTaxUSA for the last three years. They don't have many import or upload capability (I don't think they have any) which means you should be prepared to do the data entry (particularly, if you have capital gains transactions you should be prepared to key those entries or do a summary entry). There is a risk that you might miss some. If you have collated all data in an excel spreadsheet it will become easier. This is something you should consider.

I liked the old Block user interface, you can import, skip and manually intervene, etc., but they have become little cumbersome in the last few years. FreeTaxUSA is barebones but allows user control which helps in doing forms like 8606 (backdoor Roth). For some reasons (mostly user error) both Turbo and Block were messing up my 8606 last year and couldn't get it right.
homebuyer6426
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Re: Freetaxusa vs Turbotax

Post by homebuyer6426 »

harrad wrote: Thu Dec 29, 2022 7:45 am Would anyone know how does Freetaxusa manage to keep the software free? I realize they do have premium services and I think they charge a small fee for state filing. But would it be sufficient to cover the cost?

I am mainly worried about selling data to others. I did read their privacy statement and did not see anything alarming other than the use of social media widgets in their website.
The question is not why FreeTaxUSA is so cheap, but why TurboTax is so expensive. It does not cost that much to produce reliable tax software. Especially when you realize how big the market is (many millions of people). They are taking a bigger cut. FreeTaxUSA is running a leaner ship. I plan to use them this year as well.
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homebuyer6426
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Re: Freetaxusa vs Turbotax

Post by homebuyer6426 »

outbackcountry wrote: Sun Jan 01, 2023 5:03 pm I normally use at least three/four tax software (all online) and file with one.
You are what they call a power user. I can't imagine doing my taxes 4 times by choice. :sharebeer
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ZIP2C
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Re: Freetaxusa vs Turbotax

Post by ZIP2C »

BogleMelon wrote: Fri Nov 25, 2022 10:10 am I have been using Turbotax desktop (Deluxe) for a while now. I am considering now switching to Freetaxusa this year for the first time.
My reasons:
1- Looks cleaner and user intuitive
2- can e-file the state (Turbotax would require additional $20 to do so, as a result I go to the state site and enter the forms manually which is a bit time consuming)
3- A bit cheaper (though I expect this year to file 2 states as I am starting a new job remotely at a different state- which would bring the cost to the same).

I seek opinions on how the both compared, especially from people who used/switched over from one to another.
What was your experience comparing both software?
We used Freetaxusa last year for the first time and were very happy with the ease of filing. This year it's even easier because it uses last years info to help build your return for this year, saving a lot of time entering redundant information.

Sorry that TurboTax ended their free filing for lower income people a few years back, but with a very simple return we couldn't justify the cost.

We also compare return with OLT, but they are a bit vague in some areas. Example, they didn't ask about an ACA 1095-A form. A search turned it up and was able to add it to the return.

Both FreetaxUSA, and OLT offer free Federal and free State filing in my state if we qualify, which we do.
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telemark
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Re: Freetaxusa vs Turbotax

Post by telemark »

homebuyer6426 wrote: Thu Jan 26, 2023 1:36 pm
harrad wrote: Thu Dec 29, 2022 7:45 am Would anyone know how does Freetaxusa manage to keep the software free? I realize they do have premium services and I think they charge a small fee for state filing. But would it be sufficient to cover the cost?

I am mainly worried about selling data to others. I did read their privacy statement and did not see anything alarming other than the use of social media widgets in their website.
The question is not why FreeTaxUSA is so cheap, but why TurboTax is so expensive. It does not cost that much to produce reliable tax software. Especially when you realize how big the market is (many millions of people). They are taking a bigger cut. FreeTaxUSA is running a leaner ship. I plan to use them this year as well.
TurboTax has to maintain three different versions of their software, one for Windows, one for macOS, and one online. The backends are presumably at least nearly the same, but that still leaves a lot of user interface. FreeTaxUSA only has the online version to worry about. They have to test with different browsers, sure, but TurboTax has that problem too.
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BogleMelon
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Re: Freetaxusa vs Turbotax

Post by BogleMelon »

telemark wrote: Thu Jan 26, 2023 2:29 pm
homebuyer6426 wrote: Thu Jan 26, 2023 1:36 pm
harrad wrote: Thu Dec 29, 2022 7:45 am Would anyone know how does Freetaxusa manage to keep the software free? I realize they do have premium services and I think they charge a small fee for state filing. But would it be sufficient to cover the cost?

I am mainly worried about selling data to others. I did read their privacy statement and did not see anything alarming other than the use of social media widgets in their website.
The question is not why FreeTaxUSA is so cheap, but why TurboTax is so expensive. It does not cost that much to produce reliable tax software. Especially when you realize how big the market is (many millions of people). They are taking a bigger cut. FreeTaxUSA is running a leaner ship. I plan to use them this year as well.
TurboTax has to maintain three different versions of their software, one for Windows, one for macOS, and one online. The backends are presumably at least nearly the same, but that still leaves a lot of user interface. FreeTaxUSA only has the online version to worry about. They have to test with different browsers, sure, but TurboTax has that problem too.
Different versions, but every version has its customers and sells. Their IT (as high overhead costs) should still be split among numerous customers arising from numerous of versions. They (TT) wanted that model, so that must be more profitable for them than maintaining just the online platform and one version.
In other words, that could justify a high overall running costs, but doesn't justify IMO the high cost per product since they maintain a lot of products to divide the cost among.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
CletusCaddy
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Re: Freetaxusa vs Turbotax

Post by CletusCaddy »

Freetaxusa offers PDF upload of W2s for the first time this year. Gives me hope that 1099s are not far behind
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