If your budget is tight, FreeTaxUSA should be one of your top contenders when you’re choosing a tax preparation service for tax year 2020. You can use it to file your federal taxes for free, and it supports all major IRS forms and schedules, with the exception of a handful of less common ones. It’s fast, easy to use, and provides more help than we would expect from a free product that covers so much ground.
The user experience it provides isn’t the most elegant among the services we tested, and the product lacks some features that competitors like last year’s Editors’ Choice winner, TurboTax Deluxe, offers, such as expert tax help and data import. While the site has, of course, been modified to incorporate changes to the tax code, it looks and works like it did for the 2019 tax year—which gives its rivals a leg up. But it’s a strong option for the budget-conscious taxpayer who wants easily accessible explanations of topics and comprehensive coverage. It’s an especially good bargain if you have to file as self-employed. Many taxpayers have taken on side gigs in this uncertain economy, and some of the tax preparation serivices charge hefty fees if you have to file a Schedule C.
How Much Does FreeTaxUSA Cost?
As the name implies, FreeTaxUSA is totally free, unless you’re filing a state return ($12.95) or want the advanced support options in the Deluxe version ($6.99). The latter includes priority access to support agents, live chat, audit assistance (step-by-step instructions), and unlimited amended returns. Credit Karma Tax is also free, and it doesn’t charge extra for filing a state return, but it provides less in the way of support. By comparison, the traditional leaders in the field charge quite a bit more.
Regardless of price, all the services we reviewed for tax year 2020 work similarly—for the most part. They provide an alternative to manually entering numbers and other data in the tiny little boxes on the IRS Form 1040 and its supporting forms and schedules. Instead, they do the same thing tax professionals do when you sit in their offices. The site presents you with questions about your tax-related finances. Then it takes your answers, does all necessary calculations, and generates the finished product—your tax return, ready to approve and file.
All rely on step-by-step wizards that walk you through all the tax topics that apply to you—at least for some of their operations. The questions and statements on each screen are mostly written in plain language, and you only have to supply answers by checking boxes, making selections from lists, or entering data. Supplemental help is always available via email and sometimes via online chat or phone calls. When you come to the end of the process, these services make a careful pass through your return to look for errors and omissions, transfer the applicable data to any state return you must submit, and help you print or electronically file your approved return.
The User Experience
FreeTaxUSA begins with a good introductory screen that explains navigation tools and support options. There’s a quick, optional, one-screen tour that’s worth taking, though the site is well designed and intuitive even if you skip this.
FreeTaxUSA incorporates some of the best user interface conventions we’ve seen on tax preparation services over the years. However, some services, such as H&R Block Deluxe, have gotten rid of these features in favor of cleaner, less busy screens. This is not a criticism of FreeTaxUSA. In fact, it’s a compliment. Sometimes it’s worthwhile to offer users multiple paths to the same information and to display every available tool on every screen. This can cause confusion if you’re constantly crisscrossing the site, but a clear, understandable layout makes it easy to keep track of your progress.
A horizontal toolbar across the top divides the site into logical groupings that follow the path of the 1040: Personal, Income, Deductions/Credits, Misc(ellaneous), Summary, State, and Filing. Submenus under each display a comprehensive list of that section’s topics, with check marks next to those you’ve completed. Clicking on one takes you to the corresponding screen.
There are a few useful icons at the top of the page, which many services have removed. You can bookmark a page to remind yourself that you need to attend to something there before you complete your return. You can also open a comprehensive list of tax topics covered by the site and jump to one by clicking on it (if you’ve visited that area already). The third icon, which is unique to FreeTaxUSA, links to an audit-trail feature, which shows a history of all your actions on the site. Again, you can click on any of its entries to open the corresponding page.
The middle part of each screen is reserved for your interactive tax preparation content, and buttons at the bottom move you back one page or advance you to the next. The right vertical pane contains multiple help links; more on that later.
Starting the Journey
The first substantive thing you do on any tax service is to provide your personal details, such as name, address, Social Security number (unless you’re importing a PDF of your 2019 return from a competing product, which FreeTaxUSA and competitors like TaxSlayer allow), filing status, and dependents. If you filed for the previous year using FreeTaxUSA, your data will move over to this year’s version. Another early step that is offered by TaxAct and others is a Life Events feature, which tells you how situations like moving, getting married, and changing jobs might affect your tax return. FreeTaxUSA Deluxe lacks this.
There are two ways tax services solicit large blocks of information from you. Some, like Jackson Hewitt, break them into smaller pieces, so you may only need to complete one field per screen for a few steps. Others display so many questions on a page that you have to scroll quite a bit to get to everything. All the services do a combination of both at some points, and FreeTaxUSA is no exception.
FreeTaxUSA keeps a close watch on your return as you’re preparing it and warns you about potential problems.
FreeTaxUSA, like competitors, wants you to finish required fields on each screen before advancing to the next. So, when I left a dependent’s Social Security number and birthdate off the Dependent Information page and tried to move on, it kept me on that page. A Fix This link appeared at the top. When I clicked on it, it took me directly to the field that needed correcting. This is a nice touch, and one not offered by everyone. After specifying my filing status and describing dependents, it showed me a summary of what I entered in case anything needed editing and moved me along to the Income section.
The first and most common tax form is the W-2 form you receive from your employer. This is the first tax topic that FreeTaxUSA tackles. It’s very simple. The site displays a form containing all the fields on the W-2. Some information carries over from the Taxpayer Information pages; you only have to fill in the rest. Unfortunately, you can’t import information from your W-2, 1099, and so on from employers and financial institutions, as you can using TurboTax. This will cost you some time and increase your chances of errors.
As it does every year, FreeTaxUSA has incorporated tax issues from the current year into its online solution.
When you finish, clicking the Save and Continue button advances you to the Income home page; Previous Page or Cancel moves you back. This anchor Income page displays a list of all the tax topics related to your income from 2020, divided into Common (such as interest, dividends, and Social Security benefits), Business and Rental (such as Form 1099-MISC, Schedule C business, and rental income) and Uncommon (including gambling, estate or trust, and royalties). If you imported data from last year, you’ll see those totals in the 2019 column and will be able to modify them for 2020.
You click the Start button to the right of any topic that applies to you, which opens the Q&A for that section. In some cases, like interest income, you just see a form that contains the same fields your 1099-INT contains. As you did with your W-2, you enter the correct numbers in the corresponding boxes and answer a couple of questions by clicking on the Yes or No buttons. After you complete this section, FreeTaxUSA takes you back to the income home page.
FreeTaxUSA is one of only two websites where you can file a federal return containing a Schedule C for free.
More complex topics require a multistep mini-wizard. The Business Income section, for example, takes you through many pages, as you might imagine. The Schedule C is probably the most complex. You’re asked questions upfront about, for example, your business name and code, accounting method (cash or accrual), and your need (or not) to file any Form 1099s. If you received a 1099-MISC or 1099-NEC, you can complete that form. The bulk of your work on the Schedule C involves entering your expenses (like advertising, office expenses, and travel) on a screen that contains a field for each total.
The next screen contains links for other self-employment issues like home office and vehicle expenses. The site then asks some questions to see if you qualify for the Qualified Business Income (QBI) deduction and allows you to edit any of your work on this section as needed. Then it returns you to the income home page.
Once you visit a topic on this screen, the Start button turns into an Edit button. You can always go back and make changes or add new copies of forms. Final amounts appear in a column, as does the phrase Not Visited if you haven’t explored its content yet. After you enter all of your income, FreeTaxUSA displays a summary page. If you missed a topic or anything looks wrong, you can click on the item to return to its page and make changes.
Services like TaxAct and TaxSlayer work similarly, using a combination of step-by-step wizards and reproductions of forms containing blank fields that you complete.
Deductions and Credits
When you’re satisfied with your income content and click Continue, you advance to the Deductions/Credits section, which works similarly to the last section. There’s a home page for Itemized Deductions that contains links to topics like mortgage interest, taxes paid, and medical expenses. Once you’ve gone through all of those, FreeTaxUSA displays a summary and compares your itemized deductions to the standard deduction so you know which one to choose. Then you move on to credits, where a step-by-step wizard asks you questions about other deductions and credits, including IRAs, the Self-Employed SEP deduction, student loan interest, and home energy improvements. After all of it is summarized, FreeTaxUSA also shows you a page of miscellaneous forms and topics that haven’t been covered, like federal estimated tax payments.
Before you move on to any state return you must file, FreeTaxUSA asks if you want to run through the Refund Maximizer. This mini-wizard looks for deductions you may have missed (like dependents that you might not have recognized as such) and presents your options. H&R Block does something similar. It also provides a list of income types that are not taxed, to be sure you haven’t overstated your income. Then it does a final check for tax documents you may not have entered, like the Form 1099-SA (HSA information). Finally, it provides a summary of the entries in your tax return and asks if you want to move on to state (not available yet when I tested).
FreeTaxUSA offers multiple types of help. Some of these support features have been discontinued by competitors, but others are standard fare. For example, the site’s interview pages sometimes contain expanded explanations of the current topic. If there’s a question mark by a topic, clicking on it opens a window containing clarification and additional instructions.
FreeTaxUSA does a terrific job of providing context-sensitive help for both basic and complex topics.
Links in the vertical pane on the right side of the screen open a variety of guidance tools. Enter a word or phrase in the Search box, and the Tax Help window opens, sometimes containing dozens of brief, clear articles about the topic. If you paid the extra $6.99 for the Deluxe version, you can contact Priority support and live chat. Click on Top Issues or Help with the Page to open pages containing numerous context-sensitive frequently asked questions (and answers)—even on screens as basic as the one that contains details like your name and address. “Where Do I Enter?’ displays a list of links to site-wide forms and topics. This can be especially helpful if you get to the end of your return and still have paper forms or unaddressed issues. Finally, the Deduction Dictionary is a list of deductions and credits with their explanations.
Granted, there’s some duplication among all these resources. But for a site whose federal preparation and filing is free, and which is only charging $12.95 for a state return, this is more than I would have expected and more than the totally free Credit Karma Tax and the pricey Jackson Hewitt offer. H&R Block still provides better depth and breadth of onsite help, though.
As an authorized IRS e-file provider, FreeTaxUSA says it meets or exceeds the security requirements outlined by the IRS. It also allows you to set up two-factor authentication. If you sign in on an unrecognized device, you’ll have to answer the security questions you set up when you created your account. If you’ve forgotten them, you can use email or phone verification. The site offers a Remember Me option, but you should only check that box if there’s no chance anyone else can gain access to your computer.
Terrific Mobile Access
I like the way FreeTaxUSA uses responsive design to make its tax preparation application accessible on a smartphone. You can get to it through your Android or iOS phone’s browser instead of using a separate mobile tax app that you have to install. Both versions work similarly.
The iPhone FreeTaxUSA app replicates the desktop-based version effectively.
FreeTaxUSA’s mobile navigation differs in minor ways from what you see on a desktop, but it’s just as effective. You use the same buttons at the bottom of the screen to move forward or back by one page as you advance through the Q&A. Because some screens require so much scrolling to get to the bottom, though, there’s a Previous Page button at the top of the screen—a nice touch that the mobile version shares with its desktop counterpart. Click the triple-line icon in the upper left, and a comprehensive navigation outline slides out that displays shortcuts to every tax topic in the application. Other links take you to support and housekeeping pages.
The mobile site’s help tools are as thorough as what it offers on the desktop version. You can visit a screen that displays links to common tax issues and another that offers help for the current screen. Click on Where Do I Enter? to search for forms or topics. Within the Q&A itself, small question marks accompany most topics. Clicking on one displays context-sensitive help articles.
Much of your work on the Android FreeTaxUSA app requires direct data entry.
If you’re used to using your smartphone for other productivity tasks, you’ll probably find that the mobile-friendly version of FreeTaxUSA is as easy to use and as helpful as the desktop version.
FreeTaxUSA is a solid choice for mobile tax filers, but PCMag’s favorite way to file taxes from a phone or tablet is Intuit’s TurboTax Tax Return App, thanks to its excellent interface and accessible, innovative help options. Unless you use the free edition of TurboTax, though, you of course have to pay for the web-based version to use the app.
For Complex Returns
If your tax situation is fairly complex but you can’t afford one of the more expensive tax prep options, FreeTaxUSA might serve you well, considering its usability, thorough coverage of tax topics, and guidance options. It may also be a good choice for taxpayers who have modest self-employment income to report, given the cost of competitors that support the Schedule C.
While you’re working with your money, you ought to also read our coverage of the best personal finance software. If you run a small business you might also take a look at our overview of the best accounting software.