Turbo Tax Will No Longer Let You Do This, Effective Immediately
The popular tax preparation service is making a major change this year.
Tax season can be stressful as is, but a number of changes over the last year—from child tax credits to stimulus payments—might add an extra layer of stress and confusion to the 2022 season. Many taxpayers rely on accountants or online tax preparation providers to navigate the updates from year to year, but it's not only the Internal Revenue Service (IRS) making changes. Turbo Tax, a popular online tax service used by millions of people, has decided to bar users from doing one thing in particular this year. Read on to find out what you won't be able to do if you file your taxes with Turbo Tax in 2022.
Turbo Tax is no longer allowing users to use the IRS free filing program.
Turbo Tax will no longer participate in the IRS Free File Program, starting Jan. 24 when the new tax season begins. The software's parent company, Intuit, actually announced this change for the new year in July 2021, but many taxpayers were likely unaware because even early filers don't start thinking about taxes until January or February, USA Today explained.
"Intuit has elected not to renew its participation in the IRS Free File Program and will no longer be offering IRS Free File Program delivered by TurboTax," the company explains on its website. "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."
Turbo Tax has its own free service for certain users.
Intuit had been participating in the IRS program for more than 20 years before it announced its withdrawal. According to Fox Business, Intuit had prepared about three million returns processed through the IRS Free File in 2020.
Turbo Tax does have its own free service, but it's only available to certain people filing simple tax returns, ABC-affiliate News 10 in Albany, New York, reported. Customers who have itemized deductions, unemployment income reported on a 1099-G, business of 1099-NEC income, stock sales, income from rental properties, charitable donations, education donations, and credits, deductions, and income reported on schedules 1-3 cannot use Turbo Tax's separate free filing service, according to the news outlet.
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But millions of people can benefit from the IRS Free File program.
Around 70 percent of people filing taxes in the U.S., or about 100 million people, qualify for the IRS Free File Program, according the the agency. This program allows some taxpayers the option to use specific online tax preparation services at no charge. Any person or family who earned $73,000 or less in 2021 is able to use at least one of the softwares, but each IRS Free File provider "sets its own eligibility rules for products based on age, income, and state residency," according to the agency. For this year, the service opened on Jan. 14, 10 days before the start of the tax season.
"Free File is part of a wide selection of services available on IRS.gov to help people file taxes during this challenging period," IRS Commissioner Chuck Rettig said in a statement. "IRS Free File offers taxpayers an easy, free way to do their taxes from the safety of their own home. Free File also provides electronic filing with direct deposit, which is the best way to avoid delays and receive refunds quickly and securely."
Turbo Tax is not the only tax provider no longer using the IRS service.
Turbo Tax is not the only big tax preparation service to opt out of the free filing program, however. In Oct. 2020, H&R Block exited the IRS Free File Program, Bloomberg reported. According to the news outlet, H&R Block's president, Jeffrey J. Jones, said that it was "in the best interest of the company to move forward in a different direction" at the time. Without Turbo Tax and H&R Block, the IRS only has eight providers now: 1040Now, FreeTaxUSA, ezTaxReturn, TaxSlayer, File Your Taxes, OLT, TaxAct, and Free1040Tax Return.