First free filing shoe indeed drops
Taking the sting out of stock losses at tax-filing time

More e-filing fees evaporate

It's official. More of us will be e-filing for free next year.

Yes, that's the same opening sentence as my last post about Intuit's TurboTax. But this time, it's referring to H&R Block's TaxCut software.

Taxcut_log_3 Denise Sposato, director of communications and communities at H&R Block, dropped the ol'' blog a note to confirm my "guess" about TaxCut offering federal e-filing at no additional cost in its software for upcoming Tax Season is absolutely true.

"We actually were first to lead and announce our plans yesterday to offer e-filing at no additional cost," wrote Sposato.

For the 2009 filing season, Sposato continued, H&R Block customers will not pay an additional charge for electronically submitting a return, regardless of whether they go to one of the tax prep company's retail offices, use one of TaxCut's online offerings or, in this latest move, purchase the desktop tax software.

Sposato noted that the company also last year eliminated all e-file fees in its TaxWorks professional tax preparation software.

I'm sure the tax software giants, as will as those looking to join their ranks, will continue to shoot customer-friendly tax prep perks across each other's bows for a while.

Free File Alliance still as is: All these changes so far have not altered the operation of the Free File program, the public-private partnership that allows certain taxpayers to file for free via a special IRS Web page.

TaxCut and TurboTax versions will still be on that site, which will continue in basically the format next filing season, with around 20 tax software firms participating.

Tax Analysts reports that immediately preceding the tax software company announcements yesterday, Tim Hugo, president of the private sector consortium Free File Alliance, said that the IRS and his group have not yet made any formal changes to their memorandum of understanding. That document governs the free filing program and expires next year.

The current program, which allows taxpayers with adjusted gross income in 2007 of $54,000 or less to prepare their returns and e-file them at no cost via the IRS Free File portal, is in effect through Oct. 15. That's the final filing deadline for folks who got an extension to file earlier this year.

For 2009 filing season, during which we'll all send in our 2008 returns, the income threshold will be $56,000 per year. Again, the IRS and the Alliance say this will accommodate roughly 70 percent of taxpayers.

No free tax filing lunch: While elimination of the separate fees for federal e-filing via TurboTax and TaxCut is a good thing, but that doesn't mean that the process is free.

There might not be separate fees, but there still a cost:

If you don't qualify for Free File and you want to use a desktop software program on your own computer, PC or Mac, you'll have to buy it off the shelf or pay, in many instances, to download it from the Web.

The reality is that the software companies will hike their products' prices. Of course, that happens anyway in every retail business as the across-the-board costs increase. That increase will help them recoup the revenue lost from the separate fee.

That's likely to irk a lot of filers, but that's the way the world of commerce operates. Personally, I prefer that approach, rather than the nickel-and-dime format used by, for example, the airlines. Raise the fare price and take all my bagged; raise the software price and let me do everything I want for that price.

Turbotaxlogo275_3 That's the thinking of Intuit. I spoke with Julie Miller, director of Intuit's consumer products division, this morning, who said the company doesn't believe it makes sense to impose a la carte pricing. Over the years, she noted, while the software's price has increased, Intuit has added features, such as It's Deductible and audit support.

"The price on the deluxe product is up about $15," Miller said, "but that reflects the value of TurboTax. Last year, the cost of federal e-file was almost $18 so taxpayers [who e-file] will still save some dollars."

State returns will still cost: And it will still cost all you folks who must pay state income taxes to send those returns electronically.

Of course, things do change, so stay tuned. Remember those bow shots I mentioned a few paragraphs ago? State ammunition is likely to be eventually loaded.

Miller said that Intuit is constantly evaluating all its offerings and "it's totally possible" that state e-filing fees might be included in the 2009 TurboTax package, which will used in 2010 to get those returns to the appropriate tax collectors.


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Although I charge a fee for e-filing returns the trade off is found regularly by my returning clients. When a return is e-filed it for the most part is there, no human hands at the IRS are going to miss key any data causing issues with a taxpayers return. The odds of a general audit are reduced as well. My fee is a flat $10.00, covers cost at best for the added input and paper on my side of it.

For the Tax payer doing their own,pay the extra for the added amenity.

Travis Wolff

I guess it's all about how you approach your taxes, isn't it? We've never charged our clients for e-filing, mostly because it makes everyone's life easier so we see it as a value-add. But it also costs more to work with a firm than it does to just use tax-prep software. That's part of the trade-off, I suppose. Service vs. cost.

Susan Lewis
Travis Wolff Independent Advisors & Accountants

Murray Carvel

.42 vs $15 or $20 extra for e-file? I'd rather mail my return in (I usually have to pay anyway) for .42 then pay $15 or $20 extra to make it eaiser for the IRS. Most of the consumer tax software are fairly similar in operation. The cheapest one wins, extra points for not embeding the cost of e-file in the program!!

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