You've seen the advertisements by now: "Start your return for free" or "file for free". But honestly, are these tax software and service companies really free?
Not to mention the fact that the IRS has the FreeFile alliance, which is a group of companies that have committed to offering free filing for eligible individuals (you may have seen the countless news articles on this recently).
We took a look at every major tax filing software and service, and broke down who is offering free filing and who isn't. Many of these companies offer free Federal returns for certain filers, but then charge for the State return. Or even worse, charge more for a State return than other versions of their software!
Here's our list of the top free tax software so you can file your tax return for free!
If you want the short answer, check out H&R Block Free Online Tax Filing and Credit Karma Tax this year. They offer the most robust free file options.
How These Companies "Get You"
After trying out almost every piece of tax software this tax year, we've learned something - while many companies advertise that they offer free filing for your tax return, many don't. Furthermore, even those that do try to up-sell you at every turn.
If you're able to truly file your taxes for free - you should! And you should use the best software to do it.
You shouldn't have to spend 30-45 minutes going through your tax return, only to discover that you don't qualify for free, and you've been upgraded to the "Deluxe" version - which happens ALL THE TIME!
You also shouldn't have to upgrade "to get a bigger tax refund". We saw that several times - simply because the free versions of many companies don't itemize - and that could save you more money.
Many of these companies also get you with charging for a state return. If you live in one of the states that don't require a tax return - lucky you. But for those of us that do, it's just another fee to potentially pay.
Here's how all the major companies compared.
Which Companies Offer Free Federal and State eFile Tax Returns?
If you want the short answer on our recommendation for 2020 - we recommend H&R Block Free Online Tax Filing for free file. They have the most "robust" free file that allows for not only Federal and state returns, but also for some itemized deductions. Check out H&R Block Online here.
Right with H&R Block is Credit Karma Tax. Credit Karma Tax has some limitations (which is why we put is second), but it will work great for the vast majority of tax filers. Check out Credit Karma Tax here >>
Note For Last Minute Filers: almost all free file for state taxes goes away on April 1 for most companies on this list. Also, many of the prices and offers change the closer it gets to the tax deadline. File early next year to take advantage!
Note: The tax prep offers that appear on this site are from companies from which The College Investor receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). The College Investor does not include all tax prep companies or all tax prep offers available in the marketplace, although we are always striving to keep our content updated.
List Of Free Tax Software Companies
Company | Free Federal? | Free State? | Notes | Try It |
|---|---|---|---|---|
H&R Block | Free for simple returns. Read our H&R Block Review. | |||
TurboTax | Free for simple returns. Read our TurboTax Review. | |||
TaxAct | Free for W2 and no dependents. Read our TaxAct Review. | |||
Credit Karma Tax | 100% Free. Read our Credit Karma Tax Review here. | |||
FreeTaxUSA | State is $12.95 additional. Read our FreeTaxUSA Review. | |||
1040Now.net | "Free to Start", not to file. They charge a $19.95 e-File fee. Read the 1040Now review. | |||
1040.com | Free simple tax returns. Check out the 1040.com review. | |||
ezTaxReturn.com | Free Federal and State for EITC filers. Read our review. | |||
File Your Taxes | Free Federal for certain income levels. | |||
eSmart Tax | State is additional. Read our eSmart Tax Review. | |||
Online Taxes (OLT) | State is additional. Read our OLT Review here. | |||
Tax Hawk | State is $12.95 additional. This is the same company as FreeTaxUSA. Read the TaxHawk Review here. | |||
Tax Slayer | Free for simple tax returns. Read our Tax Slayer Review. |
All of the other companies on the list might advertise free, but it's limited. Here's what each company really offers.
TaxAct
TaxAct does offer free tax filing for simple tax returns. Must be W2 and have no dependents.
This includes both Federal and State returns.
The free version does not include phone support, and doesn't allow you to import your prior year's information automatically. You can read more about what TaxAct offers in our TaxAct Review.
TurboTax
TurboTax offers a truly free tax filing option this year for individuals filing a simple tax return. They have the best user interface and are one of the easiest to use. However, their free version is more limited than other companies.
This includes both Federal and State returns.
You can read more about what TurboTax offers in our TurboTax review.
H&R Block
H&R Block offers a free Federal and State return this year. They also expanded what counts for free filing, making them our top choice for individuals that qualify for free file.
W-2 wage earners (including homeowners, people claiming childcare expenses, student loan interest deduction or charitable deductions and recipients of the earned income tax credit) can all get free file this year.
You can read more about what H&R Block offers in our H&R Block Review.
Credit Karma Tax
We're really excited about the potential of Credit Karma Tax this year. They have significantly improved their product from last year, and they are still offering a 100% free solution!
We'll update more as soon as they open it up. Learn more about Credit Karma Tax here.
FreeTaxUSA
FreeTaxUSA advertised themselves as the best place to file your taxes for free. That's why I was surprised to see them charging $12.95 for State Returns, even under their "free" program.
But it's their advertising that is upsetting:
I counted, and they used the word "Free" 6 times, when in reality they charge $12.95 for the state return. I'm not quite sure how that is 100% free?
Note: FreeTaxUSA typically raises their state tax return price closer to the tax deadline.
Check out our FreeTaxUSA review here.
1040Now.net
Beyond 1040now.net having the second ugliest website of all tax preparation companies, their pricing is exceptionally confusing. Their site says Free online tax preparation. But none of their filing options are free.
They clearly charge $19.95 - there's no free! So why do they start by saying free online tax preparation?
1040.com
1040.com has a free filing option this year which is great to see. You have to scroll down a bit on their homepage, but they have it. It is limited, similar to TaxAct, where you're not allowed to have dependents.
Check out our 1040.com review here.
ezTaxReturn.com
ezTaxReturn has made their prices very transparent this year, and we appreciate that. They offer a limited free file option for both Federal and state. Might be a good choice for some, but not for everybody.
Check out our ezTaxReturn review here.
FileYourTaxes
We honestly couldn't figure out what you were going to pay on this site this year. They claim they are free for certain income levels, but the pricing for this isn't easily found and/or advertised.
We mark this site as confusing...
eSmart Tax
eSmart Tax is another company that offers free Federal returns, but charges $29.95 for state returns. Make sure you read all the way through, because their free is also pretty limited.
We're also disappointed by that incredibly high price point for state tax returns.
Check out our full eSmartTax review here.
OnLine Taxes (OLT)
OLT.com is another online tax software company that hypes up "Free Federal Return For Everyone" because they charge additional for the state return.
You're going to pay $9.95 more for a State Return with their free edition. Also, their tax software is the hardest to use of any we've reviewed. Check out our OLT.com review here.
Tax Hawk
Tax Hawk is the same company as FreeTaxUSA. It also advertises a free return, but charges for the state. For example, their current web header says "Free Tax Software...Federal & State Return Preparation". But, in reality, it's only free Federal.
If you sign up for their Free Federal Return, you'll pay $12.95 for the state return. Read our full TaxHawk review here.
Tax Slayer
I appreciate Tax Slayer as being the most honest company when it comes to what you're really getting for free. They clearly advertise that the Tax Slayer Simply Free return will allow you to file a simple tax return for Free.
For the 2019 - 2020 tax season, TaxSlayer continues on that truly free pricing. You can read our full TaxSlayer Review here.
FreeTax.com
FreeTax.com was removed from the above list this year because they are no longer active. They re-direct to Liberty Tax.
Frequently Asked Questions
Is there such a thing as free tax software?
Yes, there are lots of free options to file your taxes. The IRS has the Free File Alliance, and most tax software offers a free level.
Are there any restrictions?
Yes, all free software (including the IRS Free File Alliance) has restrictions - including income, forms required, state return options, and more.
Are Federal and State tax returns free?
Most of the free file options only offer Federal tax returns for free. However, a few options offer both Federal and state tax returns for free.
Which tax software is free?
Credit Karma Tax and H&R Block Free are the most robust free file options. Beyond that, TurboTax, TaxSlayer, Tax Act, FreeTaxUSA, and more all offer free file.
Final Reminder About Free Tax Filing
A last reminder about free tax filing. If you don't live in a state with income tax, you only have to file a Federal tax return - so you have a lot more free options! In that case, find a service you like that's easy to use and you can stick with it for years to come.
If you want to estimate your taxes without "Starting For Free", consider using a tax estimator - those are almost always free.
Preston @TheDrunkMillionaire says
Great post Robert! It’s nice to have a side-by-side comparison of the various tax software options. I may rethink my usual H&R block choice..
Corinne Helen Mitchell says
Not so true. The new “post card” size 1040 now moves many things that use to b included on that form to “schedules”. There are 6 of them, go to, web site, what to know about the new 1040 schedules.
We, as many, participate in a retirement savings program (401k). This now requires schedule 3. You get through ur entire form and at the end your told you have to upgrade because of the schedule. ALL of the ones you mention do this. TurboTax even tells you that you can’t upgrade to the premium version but that you need their deluxe version. I tried all of the free and got the same thing. Wasted a lot of hours. No money to pay for the product!! If so, wouldn’t waste my time with the free versions. And then you have to pay more to do your state taxes. Please be careful what you write before you do so. What your stating in your article is not the whole truth and wasted a great many days trying everything you listed. Please revisit and make corrections. This includes AMT, education credits, etc..
If you find something that does work let me and everyone know. Otherwise, tell your readers that it’s only free if you hand write your own taxes.
Robert Farrington says
Everything we marked as free above in the list has a free tier, but not free for every scenario. We break that down on the reviews individually – as some are very limited in what they offer for free.
Our recommended choice of Credit Karma Tax is truly free for every filing situation (we even say that in one of the first paragraphs), but it’s limited in other aspects (like you can only do one state). Others, like FreeTax.com are truly free, but more complex to use.
Christopher Marchand says
Yep, Just went through several “free” filers, Tax act, Turbotax etc and they all require additional schedules which are now “premium”. Now you know why Intuit and the rest of their ilk spend millions lobbying congress to PREVENT free filing.
Robert Farrington says
We don’t know your full situation and income, so it’s impossible to know what you are filing. But you may find this helpful: Best Tax Software.
Ed says
The information posted is not 100% accurate. ezTaxReturn offers free filing through the IRS site and through the Free File Alliance site.
Robert Farrington says
We put it as a No because it’s misleading. You can free file with ezTaxReturn in select cases (under $62k in gross income and live in one of 15 states) AND you go through the IRS free file link. IF you go directly to their website, they don’t offer that for filers. And they still always charge for state.
Mike says
You have to give FreeTax.com your cell phone number. Why is that? This seems too intrusive.
Robert Farrington says
Don’t know but would be curious as well – likely marketing.
Craig says
Just want to let you know that OnLine Taxes does offer free state returns if you click on their link from the state tax return website, at least for Virginia. Otherwise they charge. They were also very good at responding when I inquired about why I was being charged (I clicked on their link from the IRS website), and they took the charge off.
I’m curious though. How do the free ones earn money for providing this service? Does the IRS pay them something?
Robert Farrington says
The program, called Free File, was set up three years ago in a deal the IRS struck with companies that make tax preparation software. In return for not competing with them by developing its own tax preparation package, the IRS required tax software makers to provide a free version of their services to 70% of all taxpayers. That 70% cutoff is what changes every year for the 1040EZ and similar returns.
Louise Ornelas says
Quick question? Do the tax software companies sell the software to big companies like H&R Block/Turbo Tax? Or are the companies you are referring to actually H&R Block/Turbo Tax?
Robert Farrington says
What do you mean? H&R Block and TurboTax are a few of the dozens of companies that develop filing software
Jim Stone says
Free always scares me. I am 70 and have always have filed my own taxes. Fill in the blanks not too difficult. It would be nice if the IRS would let us E-file without the flim flam or going through a company that has a motive that certainly isn’t pure. In the meantime I will mail mine in. I files 27 March and refund was mailed the 21st of April. It took about an hour and a half of my time.
Robert Farrington says
Remember, the reason that IRS and these companies offer free filing is because the IRS made an agreement not to develop their own software in exchange for these companies providing it for free for certain filers.
Carl says
Robert, do any of these free tax services include filing schedules for employee healthcare and HSA contributions and distributions?
Robert Farrington says
I believe H&R Block More Zero supports HSA contributions (not sure about distributions). Here’s the list of forms that are supported with free: https://www.hrblock.com/taxes/doing_my_taxes/products/popup/diy_6.html
I would contact customer service at any company you prefer to double-check.
M Wu says
I tried using H&R Block’s free file but they said I’d have to pay to file a 1099-MISC and Schedule C. This directly contradicts what’s listed here as supported under free: https://www.hrblock.com/taxes/doing_my_taxes/products/popup/diy_6.html
Has anyone checked if the other websites handle 1099-MISC and Schedule C for free? TaxSlayer does not.
Thanks
Robert Farrington says
There is no limitations on the forms you can file with the Free version. It must be an option you selected. Anything else on your return that stands out?
On our list of the Best Tax Software in 2018, there are other options (including a free option).
Rachel Kirk says
Same here. I can’t file mine for free because of a 1099-MISC for radio contest prizes. Only 680.00 and now I have to pay 29.99 to file???
Robert Farrington says
You can use Credit Karma Tax if you qualify.
Julie says
Thanks for the article. I am low-income and used H&R Block for free federal and pay for CA for 2014 and 2015. In 2016 I did my state taxes for free. But NOW, for 2017, they are charging $29.99 to use my prior year data to populate my forms – Pretty sure this was free before. What gives?
Robert Farrington says
All the free versions we’ve seen don’t allow import of prior year. You can enter it manually, but if you want to have them do it, you’re going to have to pay.
Dolores says
Just uses TaxAct and really it is not totaly free …clicked on import last years info but they don’t tell you there is a $15.00 charge for this and then it didn’t do it anyway but still charged me also they charge a bank transfer fee for direct deposit!
Robert Farrington says
Every free software charges as an “upsell” the ability to import your prior year info.
johnbleroy says
Tax Act is not offering free filing of the 1040A this year. Their advertising is full of FREE federal, FREE state, etc., but when you go through the process and you end up on a 1040A form, there is no way to complete filing without having to pay $14.95.
sam says
fantastic to-the-point article and very useful
My question is
i dont like putting my tax info online
so i prefer downloading tax software(like HRBlock or Turbo), do taxes and then eFiling
each state eFiling costing me $20
Pls recommend tax software as part of purchase price includes/allows
-Fed filing + 2 state filing (or something close)
-Free eFile for Fed efiling and 2 state efiling
Thanks
Sam
Robert Farrington says
We actually don’t even recommend you do that anymore. It’s actually safer and more secure for your data to use an online service. As such, we don’t review desktop software anymore.
Orlando Benitez says
I have a one employee sub chapter s corp, are there any free or lo cost on line company that would help with a corporation tax filing?
Robert Farrington says
TaxAct is the lowest I’ve seen but I haven’t researched filing corporate taxes.
Amber Barnes says
TurboTax is no longer free! This year while filing our 2018 taxes, it required a $39.99 upgrade just to file. We were not informed until the very very last step and had gone through all of the entire return. They are also tacking on an additional $29.99 charge if you have student loan interest to report.
Robert Farrington says
TurboTax definitely has a free version, but since you have student loan interest, you don’t qualify for it. We break it down fully in our TurboTax Review – which is also the reason we don’t recommend TurboTax as the best free tax software.
If you have student loan interest, you can file for free at H&R Block Free Online Tax Filing or Credit Karma Tax.
Joel Landesman says
Hi Robert,
TurboTax is completely misleading. I had an offer, through my bank, to use TurboTax free, $0 federal, $0 state, $0 filing. I get all the way to the end, and the only option is to pay $39.99. Then to file state, it only costs another $39.99 and to send everything in…..you guessed it, another $39.99. Total was $119+ and the only thing I was using was a W2. Nothing else. No student loans, no house, nothing extra. Needless to say, I exited out and will not be using TurboTax ever again.
Wish I had read this article before all of my attempts yesterday. Took me 5 1/2 hours to figure out which site to go to.
I actually used 1040.com and thought it was quite reasonable. Cost was $10.66 each for myself and my wife. $21.32 to file all taxes…I have spent so much more in the past. I will definitely be checking out the free sites that you wrote about, next year.
Jay S says
I Agree with Amber. I got all the way to the end of the return, (1040-with standard deductions) and there is a “Refund Processing Service fee of $39.99” tucked away in the disclosures section.
Denise says
H&R block isn’t free if you have an HSA… They should be upfront about this… and maybe the article should reflect that point as well.
Robert Farrington says
Thanks for checking. We’re following up with H&R Block because contributions through your paycheck and reflected on your W2 should be free (we believe). Only non-W2 contributions would require an upgrade.
Clifton says
Any update on this?
Robert Farrington says
None yet. If you’re eager to file, go with Credit Karma or FreeTax.com if you want truly free no matter what.
SJL says
I free filed with H&R Block last year, and I thought it was great (compared to Turbo Tax). This year, it appears that you have to pay if you want to itemize deductions? I don’t see Schedule A Itemized deductions included on the list of forms supported by the Free version: https://www.hrblock.com/pdf/HRB-Online-Fed-Forms/TS18_HRB_Online_Fed_Forms_FreeEdition.pdf
It is on the list of forms supported by the “Deluxe” version – https://www.hrblock.com/pdf/HRB-Online-Fed-Forms/deluxe.pdf
Can you confirm?
Robert Farrington says
Correct – if you itemize it’s not free. The reason is most people won’t itemize this year with the much higher standard deduction. In fact, according to the Tax Foundation, almost 90% of all filers are expected to take the new standard deduction.
SJL says
How is H&R Block (or other companies that don’t support itemized deductions in their free version) going to help individuals determine which option is best for them? I’ve done the math already to determine that in my particular case, it still makes sense to itemize, but I’ll be a lot of free filers won’t do that.
Robert Farrington says
You won’t know until you’re in process of filing your return – that’s how they “upgrade” you. You start filling it out, assume it’s free, then half way through they say “if you want to claim this, you need to upgrade”.
What do you have that makes you thin you are itemizing? Also, if you’re itemizing, I’d go with either Credit Karma Tax, which is free for every form (but has limits such as only one state return, etc) or H&R Block. H&R Block has the most robust free file of the paid platforms, and they are one of the best pricing structures if you do have to pay.
SJL says
I’m entitled to more than $15,000 in deductions if I itemize – significantly more than the $12,000 standard deduction. I just filed using Credit Karma, which wasn’t as good as the H&R Block interface that I used last year, but it was free and easier than using the Free Fillable Forms option that I have used in the past. I refuse to pay a third party company to e-file my taxes. I have privacy concerns about using Credit Karma (if it’s free, I’m the product, not the customer), but I’m giving it a try this year. Personally, I’m disappointed/disgusted that our government doesn’t offer the type of service that Credit Karma does specifically because it has made a deal with for-profit companies. Just more evidence that democracy is dead.
Barb Curtis says
ive been using taxact “free ” for years and though ive ALWAYS been charged SOMETHING for one reason or another, usually the import or what-not, but because it was fairly easy the first( and only free) time that i went with them, i continued. i went through the motions with them again this year, and this time the reason i was to be charged $39.95, was because my husband contributes to a 401(k) program at work. i am a homemaker, and the girl is grown, so its just the 2 of us, no state taxes here in Tennessee.??? i will be certainly be looking for a truely “free” way to file this year. the kicker was when i called for a question about how calculate my agi from last year, since i cant e-file without it and can not access my previous returns, the young man told me that “oohh i don’t really know” that pretty much decided for me. thanks so much for the info, really appreciate your time and investigations. :} mrs, b curtis
Robert says
What this article does not say and it should is what returns will be filed Free.. I started on both Tax Act and on FREE FREE FREE Turbotax only to find out that neither one will file a 1040 which is the most standard tax form of all. They will only let you free file a 1040A or 1040EZ
Robert Farrington says
It’s all based on what your filing situation is. If you need truly free, check out Credit Karma or FreeTax.com. Both have limitations as well though.
Doug H says
Very nice reviews – thanks for sharing your findings. I’ve been with TaxAct since 2011 but you may have “sold” me on FreeTaxUSA.
Thanks again!
JR says
I’ve never filed Electronically . I always go to an accountant but she just retired. I want to try efiing but don’t know which one to use. I want to itemize. I own a home, I’m divorced with no dependents from Philadelphia.
Robert Farrington says
Here’s our guide to the best tax software by situation: https://thecollegeinvestor.com/21156/the-best-tax-software/
You likely won’t need to itemize based on the higher standard deduction this year, but the software will figure it out for you based on what you input.
If you can read, type, and find the information requests (like Box 1 on your W2), you can easily do your own taxes online.
Diane McManus says
I am glad I stumbled onto this website. It is extremely educating on the free tax sites. I am currently looking for a new free site as I have used Credit Karma in the past and absolutely LOVED working with their site. However, this year I tried to go back to use them, and I must have used a different computer last year, they asked to verify my account with my phone number. I have changed my cell number since then and can not use CK because after a lot of hassle, I finally got to put in my current phone number and it can not be used, as someone else set up an account who had my current phone number before. I am VERY upset with this as I feel there are other ways to do this. CK has truly disappointed me. This is just an FYI for those who will be using them this year.
cwn says
was looking for a replacement for TaxAct, and based upon this site’s favorable review planned to start return with Credit Karma to see how i liked the program; stopped before even got registered as this site required that i give permission for Credit Karma to contact credit bureau agencies to view my credit history which has nothing to do with filing taxes, and i viewed as an invasion of my privacy by Credit Karma; did not complete the registration and moved onto to another favorably reviewed free filing site, FreeTax.com; glad i did as that site was very user friendly and was much better than the data entry format by TaxAct that i had used for a number of years
Jose says
Why is everyone crying about don’t these companies deserve to make money isn’t that why they’re in business anyway I’ve been doing my taxes for the last 10 years with free USA tax and I’ve only paid 12.99 for my state taxes and I’ve done long form short-form and I’ve done long and short form in the same tax season and only paid 12.99 and they store all my information all I have to do is change the numbers
Neil says
Tried Block online and it gave me the option to owe Federal of $143 using the free version or pay to itemize and get a refund of $25. How about that for upfront pricing. Wasted my time.
Bob says
This really is not too helpful. I tried both Tax Act & Turbo Tax. They both said that I did not qualify because I have dividend income. They both wanted me to upgrade to the $57+ version.
I also tried clicking on the TurboTax link from the free tax preparation software from the IRS website. That one also told me that I don’t qualify for it because it does not have the latest schedule B (1040) form. Last year, I used it with no problem.
The only option I think I have now is to download the forms from the IRS website and fill them in and print them out.
Robert Farrington says
That dividend income makes you need the “investor” level of any software. Did you try Credit Karma Tax? It’s truly free and one of our recommended choices for simple returns.
Jared says
I just did my taxes through H&R and they required me to buy their “Deluxe” package for having HSA contributions on my W2.
I find this practice to be very dishonest. I would suggest not using H&R and finding another company that doesn’t charge for contributing to an HSA.
Rain says
For 2019 tax year TurboTax and TaxAct do not offer free e file to anyone with an HSA. My employer provided an HSA a few years ago since they only offered HDHP’s to its employees and since then have contributed to it yearly. It is not complicated. My household income is well below the $69,000 required to qualify for the free to e file on irs.gov.
I feel it is disgusting and dishonest to charge when my family doesn’t even meet the minimum living wage for the state I reside in.
A Panter says
You’re leaving out TaxSlayer… who is a major player when it comes to a positive user experience and sleek website. Oh, and they also offer free filing for various returns.
Robert Farrington says
How did we leave them out? TaxSlayer is on the chart (second from the bottom).
CP says
I haven’t been able to log into freetax.com this year. It redirects to Liberty Tax and doesn’t accept my credentials. Have you been able to confirm they’re still in business?
Robert Farrington says
Correct. FreeTax is now part of Liberty Tax and they also aren’t free. Check out review here: FreeTax DIY Tax Review.
Ted Maz says
My comments/questions (posted in January 2020) regarding certain limitations and incomplete forms’ list for tax year 2019 of the Credit Karma Tax have not only been left without response. They were summarily deleted. What is the reason for this?
Ted Maz says
I apologise for my misstatement. My comments regarding Credit Karma have been posted on the sister-website https://thecollegeinvestor.com/18920/credit-karma-tax-software-review/#comment-405474.
I have not yet received a response there, but I hope I will.
Ted Maz says
Even though I wrote about CreditKarma Tax problems before, I feel I must add the following information here:
I have written before about problems with form 8606 (Non-taxable IRA contributions) when using CreditKarma Tax in prior years. Finally, for tax year 2019 CreditKarma Tax does include form 8606, but…..A fatal glitch in the program makes it again not usable. In fact it results in huge over-calculation of taxes due. Here is the problem:
1) On line 15c of form 8606 is the taxable amount of the IRA distribution. This value is correctly calculated by CreditKarma Tax.
2) The text below line 15c reads: “Note: You may be subject to an additional 10% tax on the amount on line 15c if you were under age 59½ at the time of the distribution”.
And this is precisely what CreditKarma does, regardless of the fact that the personal information clearly shows that I am much older than 59 1/2. In fact, CrediKarma Tax asks again specifically whether you were below the age of 59 1/2 in 2019 when processing form 8606, but apparently the box “No” does not activate. The final result is that you are charged with an additional 10% of your IRA distribution in form of “penalty taxes”. Just imagine: a $100,000 IRA distribution, after first taxed in a regular manner, now adds whooping $10,000 in ADDITIONAL taxes. CreditKarma, please correct this horrible mistake IMMEDIATELY!
Ted Maz says
Update as of 15 February 2020: I contacted Credit Karma Tax to inform them about the program glitch. The response was text-book illustration of complete ignorance: I was directed to the section “Frequently asked question”… without any attempt to address the problem. And the whole irony is that Credit Karma Tax treats us (correctly) as seniors when entering the Standard deduction, but imposes the additional 10% tax applicable to people taking IRA distributions before the age of 59 1/2?! Neither H&R Block nor TaxAct made such striking mistakes. Credit Karma Tax remains an unreliable product with poor if any oversight. The fact that it is free only shows that you get what you paid for. Luckily H&R Block dispels this: their free version works just fine.
RICK G says
I have used TurboTax for the last 5 yrs, my daughter’s was always free (small
fee for state taxes), I will NEVER use them again, they’re offer of free is simply
not true, because of a small technicality, they want to charge her another $60!
I refuse do to my taxes with them anymore, the US government needs to step in and
make legitimate services for low income people!!!!!!!!!!!!