New Law Will Make It Difficult to Pay Taxes for Free
Whether you are among the 70% of Americans who are eligible to file their tax returns electronically for free, or among the nearly 100% of Americans who want an easier tax filing process, here’s what you need to know about the new bill, which is fast. passes through Congress.
Last week, the House of Representatives introduced the HR1957 Act, also known as the First Taxpayer Act of 2019. This law, which could more accurately be called the First Tax Software Law of 2019, prevents the IRS from creating an online tax filing system, which means that we will only be able to file tax returns electronically through a third-party program. …
The IRS currently maintains a list of free file-based software offerings available to people with adjusted gross income of less than $ 66,000. Under the Taxpayers Act, these free file software offers will remain valid for taxpayers at a certain income level in exchange for the IRS never creating its own electronic file system.
However, as Splinter’s Libby Watson reminds us, many taxpayers start the tax software filing process with the assumption that they will file their taxes electronically for free – and end up paying for the software anyway thanks to reasonably sold spin-offs. (We’re not sure whether we need this audit defense, but buy it just in case.)
The Taxpayer Act will not remove free e-filing, but it will prevent the IRS from taking steps to simplify tax filing in the future, which means we will all be spending more time paying taxes. We’ll probably spend a little more money, too, whether we hire a tax preparer to help us sort out the IRS’s convoluted rules, or we pay software to let us do it ourselves.
If you use one of the free file software services, how often is your filing 100% free? Do you end up acquiring audit protection or any of the other tax preparation and security features offered by the software? Let us know – and let us know what you think of this new account.