TurboTax doesn’t like “free” tax – For most Americans, the dread of tax season begins long before the calendar turns to April. When the first tax form comes in, Americans face a dreaded question of whether they want to put in all of the information themselves or pay a professional to do it for them.
Neither is a great option, as both of them require a time commitment and the compilation of all necessary forms and information to make sure that the return is as accurate as possible.
But what if there was a third option: having the return already prepared for you by the IRS and simply having to give it a once-over to confirm its accuracy?
Sound too good to be true? It is, for one reason: the tax preparation companies like TurboTax don’t want you to have that free option available to you.
Turbotax spends millions to lobby against free tax filing
Despite the fact that several European nations including Spain, Denmark, and Sweden already offer their citizens a return prepared by their government, TurboTax’s parent company Intuit and other tax preparation firms have been staunch opponents of bringing that same freedom to the United States. The reason is pretty simple: Intuit doesn’t want to lose the business of TurboTax customers who choose their software program to file their return.
Currently, TurboTax ranges from “free” for the most basic use to $135 for its top-of-the-line software. Most Americans don’t need the most expensive package, which is for small business owners, but neither do they qualify for the most basic level of tax preparation either, resulting in some kind of cost for them to figure out their taxes.
Having tax prep be “not free” is very lucrative for TurboTax
Whatever refund those Americans get isn’t the refund they receive, because before they can claim it, Intuit helps itself to a portion of the money as its fees for the service. That portion comes out to be just under $1.5 billion per year, an amount that Intuit doesn’t want to give up without a fight, as evidenced by the $13 million that the company has spent to lobby against bills that would give Americans the option of having the IRS compile their returns for them.
It’s no surprise that Intuit has fought so aggressively against such a program. Part of TurboTax’s appeal is that it’s supposedly the easiest and least expensive way to file taxes, as compared to meeting with an accountant and paying for their services. If an easier way exists, TurboTax’s appeal drops quite a bit, and in practice, the idea of having the IRS file returns for Americans has proven fairly popular.
The added irony is that the “free” version of TurboTax’s software can still cost you over $100 by the time you complete the filing process. Their premium versions can cost a lot more, even after the discount from a coupon or service code.
The state of California offered free filing of taxes
In California, the Ready Return program didn’t attract much attention, but the overwhelming majority of those few Californians who allowed the state to handle their return reported being happy with the process and said they would use it again.
That’s a problem for Intuit, which is why it’s openly admitted that it doesn’t want the government to be in the business of preparing returns for its potential customers. In the past few years, Intuit has gone as far as to claim that having the government file tax returns would be a massive expansion of big government, despite the fact that former president and noted small-government advocate Ronald Reagan was in favor of allowing the IRS to provide Americans with their returns.
Free federal tax returns would be optional
There’s another fact in there that Intuit doesn’t want its potential customers to know: nobody would be affected by such a change if they didn’t want to be. If someone didn’t trust the government’s math or liked the process of doing their own taxes, they’d still have the option to do their taxes themselves by opting out of return-free filing. Much like the program in California, which is now known as Calfile, an IRS filing would be completely optional for anyone who wants to take part.
But for those Americans in the other 49 states, TurboTax will remain one of only a few options for Americans for the foreseeable future. With so few options, all but the most tax-savvy of Americans will have no choice but to spend part of their hard-earned money on one of the most basic acts of citizenship there is… and in many cases, they’ll be giving that money to someone who wants to make sure that reality never changes!
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