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TurboTax is a Scam. Why I Switched to FreeTaxUSA Instead.

You probably know TurboTax as the most commonly used tax software to file taxes. But just because they are most advertised does not mean they are the best.

Jerry Zhang
Jerry Zhang
·

3 min read

Ready to file your taxes for the year of 2020? If you’re a tax professional or really good at taxes, April 15th (the day taxes are due) probably doesn’t stress you out at all. However, if you’re like me—not an expert on taxes—you might be thinking about using TurboTax (which is a scam).

Because it’s easy. Because they are the most advertised tax software solution out there.

Well, just because they are most advertised doesn’t mean they are the best. And it definitely doesn’t mean they offer the best deal. How else can they pay for their Superbowl advertisement?

Keep in mind that every individual living in the USA will need to file both federal taxes and state taxes.

turbotax sucks

Why TurboTax is a Scam

If you make under $100,000 on a W2, then TurboTax can be free for you when you file your federal taxes. Good luck finding the actual free version.

But, even if you’re able to get free federal filing, you still need to pay for filing state taxes.

And, there are 5 different tiers:

  1. TurboTax Free: $0 federal, $29.99 state
  2. TurboTax Deluxe: $59.99 federal, $39.99 state
  3. TurboTax Premier: $79.99 federal, $39.99 state
  4. TurboTax Self-Employed: $119.99 federal, $39.99 state
  5. TurboTaxLive: $179.99 federal, $39.99 state

I’m not going to go into the details of each plan, but there’s no way that you can’t tell me this isn’t confusing upon first glance.

Even if you are eligible for the “actual free” version, it’s not truly free since you still need to pay $29.99 to file your state taxes. TurboTax is a scam.

freetaxusa logo

Why FreeTaxUSA?

FreeTaxUSA keeps things very simple. There are only 2 options: free and deluxe.

For most, free should get the job done. But if you really want some help, deluxe will provide live chat priority support and audit assist for just $6.99.

How then, does FreeTaxUSA make money? They charge $12.95 to file state taxes.

I haven’t encountered any issue with FreeTaxUSA yet. I bought an electric vehicle, and FreeTaxUSA was able to help me get my full federal tax credit back without any issue. Plus, I also own real estate, but that wasn’t a problem for me when I filed with FreeTaxUSA.

I love FreeTaxUSA’s transparency and simple fee structure. Their goal is to do straightforward business, not use dark patterns to trick innocent citizens out of their money.

Why is Filing Taxes in America So Complicated?

Nobody really knows the answer to this question, but I have a few guesses.

Prefer paying less taxes over simplicity.

Greedy Americans would rather keep their money with complicated tax exceptions and exemptions instead of making the process simple for everyone. What they may not realize is that by making the process more complicated, we introduce more overhead to make sure this rule is applied correctly on everybody’s tax return.

Prefer profitability over simplicity.

Tax software companies benefit by making the process so complex to the point it becomes impossible for the common person to file on their own. And then turn around and offer their “help” to tackle on these “evil complicated taxes”. In 2019, tax software companies went as far as sending lobbyists to pressure Congress to pass a bill that permanently prevent the IRS from creating tax filing software, thereby eliminating the IRS as a future competitor. TurboTax is a scam.

Conclusion

I will admit, I have used TurboTax before. As a student, they offered me free filing, so I just did it. And it was easy.

But after I started working, I was no longer eligible for the free version. I found FreeTaxUSA to meet all my needs, while saving at least $80.

I haven’t figure out how to get state tax filing for free yet, except by filing on my own. I’m not a tax professional, and I’m not advocating that you file your own taxes. But unless you have more than just W2 or 1099 income, it shouldn’t be too complicated.

Regardless, I do believe FreeTaxUSA is doing a good thing by providing free federal tax filing for everybody.

Personal Finance

Jerry Zhang

Programmer, YouTuber, and amateur musician. I like to write too!