How to Opt Out of TurboTax
As you prepare to file your tax return, you may be wondering which software is best for you. There are many options, including newbies like Credit Karma, but for many file companies, TurboTax is the most popular. However, the king of tax software has several problems.
The dirty little tax filing secret is that the IRS already has your information. It receives the same forms you receive every tax season: your W-2, 1099, investment information, etc. If you are using the standard deduction , the IRS has the information it needs to fill out your tax filings that you currently have. fill in the time.
But thanks to lobbying by companies like Intuit, which owns TurboTax, the IRS doesn’t fill out your tax forms ahead of time, even if it can. Here’s Dylan Matthews from Vox (emphasis added):
TurboTax is an evil parasitic product that exists solely because taxes are confusing and difficult to register. Worse, Intuit is one of the loudest voices on Capitol Hill against tax-relief measures. Several years ago, the Obama administration proposed an automatic tax filing system in which the IRS uses income information to fill out your tax return for you. It would have saved millions of Americans a lot of time and energy every year, but the idea has gone nowhere. Main reason? Lobbying by Intuit and H&R Block .
Automatic filing is not new to politicians – it has been offered by both Democrats and Republicans in the past. And it won’t work for everyone , especially those who list. But pre-filled forms and auto-complete will work for “tens of millions” of Americans, according to ProPublica . All it takes is “five minutes,” and best of all, it will be free.
But we don’t have that system, in part because Intuit spends a huge amount of money – $ 13 million between 2011 and 2015 alone – lobbying Congress to “strengthen voluntary compliance” – a euphemism against automatic filing, “Matthews writes. ProPublica published this in-depth report on Intuit in 2013 detailing how the company spent more lobbying in the five years leading up to the article than Amazon and Apple in the same period.
And that’s because Intuit makes a lot of money selling tax software every year. It is reported that in 2016, TurboTax was used by 31 million people – more than any other service.
It annoys everyone, but, Matthews writes, making sure people fill out their own forms and work through the convoluted US tax system especially hurts low-income taxpayers who are eligible for certain tax breaks , including the Earned Income Tax Credit.
“Twenty percent of people eligible for an EITC do not receive it, and most returns are in error, usually due to credit complexity and commercial tax preparers’ mistakes,” he writes. Obviously, those who can afford to hire the best tax inspectors are much better off.
TurboTax alternatives
Sites like Wirecutter still recommend Turbotax software – it is considered one of the easiest to use. But as College Investor points out, it’s also the most expensive option, and it’s not free in many cases, as this Reddit thread says. If you don’t want to give TurboTax and Intuit more money, you have other options.
The easiest option is to fill out your tax return by hand . You download the forms for free from the IRS website and mail them in. But there are a number of factors that make it unattractive – difficult, confusing, less secure, and more error prone than registering online.
So, if you want to use tax software to make sure you’re catching everything (and that a scammer is stealing your tax return), try the IRS Free Files Portal first to see if you’re eligible for free filing software. Note that you need to go through the IRS website, not the tax software site, to get truly free access, even if the software site says otherwise. If you make less than $ 66,000, you are eligible for free federal registration.
Then, beware of softwares including TurboTax and many others that claim to offer free signups on their own. You will be resold every step of the way, including if you want a “larger refund,” or if you want the software to list for you, or if you have an additional form such as a health savings account form . In many cases, this is used to charge fees for the “luxury” version of the software.
Credit Karma Tax , which is now available during the third tax season, is free regardless of your income for both federal and state reporting purposes. FreeTaxUSA offers free federal and state registration for $ 12.95. Online tool H & R Block is convenient for the user, and will quickly become apparent if you can apply to get free or not (again, like TurboTax, if you have additional forms, such as the HSA, or you are a freelancer, you might want to look somewhere And, as the ProPublica investigation notes, H&R Block is also lobbying against automatic filing.) Here are resources that you can file for free by state.
The catch is, taxes may take a little longer this year. Convenience is a hell of a drug. But if you want to fight back against a system that requires you to pay to submit information that the government already has, look for a free TurboTax alternative.