Insult to injury

Posted at 9:59 AM on February 10, 2008 by Bob Collins (5 Comments)

This weekend was the annual tax preparation weekend in my house. It starts on Friday night when I pick up my favorite tax preparation software, continues on Saturday when I wonder why I have to pay a few thousand dollars in additional taxes (my youngest child advanced past my ability to claim him as a dependent last year) only to get some of it back in a rebate that's supposed to stimulate my economy, and concludes on Sunday when, for the life of me, I can't figure out why I have to pay a $17.95 fee for paying my taxes online (I won't. I'll mail it.).

In most cases, you can file for free if your adjusted income is $54,000 or less. It's a bit odd since most of those taxpayers are getting money back. The people who are out of luck are the ones who are trying to give the government more cash.

Filing electronic returns, according to the IRS, is faster and it's more accurate. So why doesn't the government provide free electronic filing to everyone? Because someone makes a buck at it, according to the e-file site.

NOTE: IRS cannot compete with private enterprise and does not offer free e-file software or direct filing. A number of companies, tested and approved by the IRS, do offer free use of their software and free filing, while others will charge nominal fees. Terms and conditions vary among companies and you are advised to review the information on each company's web site and choose the product that is right for you.

The product that's right for me is the one that lets me pay my taxes without paying a fee for the joy of doing so. Fat chance.

In the case of one of the most popular "private enterprise" products, Turbo Tax, the online version allows free e-filing. The personal version does not. But there's a bit of a scam there, too. The online "deluxe" version with the ability to do your state taxes, too, runs about $60. The same version that you buy in the store, is about $45.

If you have a simple return (like EZ), you can download a free version of Turbo Tax, but the state version costs extra. Still, Minnesota allows free filing if -- and only if -- you qualify for free filing with the feds.

On the whole, however, Minnesota, like the feds, is not interested in giving most taxpayers are break on electronic filing of taxes, which is perhaps just as well given the state's various run-ins with the concept of data privacy.

There are a few quiet deals out there. For one, customers of State Farm Insurance can use the online version of Turbo Tax for free (and file directly).

For the military, Tax Slayer allows free filing (only for the military), although you have to pay for the product.

The best bet? Shop around. Tax Act, another online preparer, has a cheapie version that allows free filing for all, but the state version is another $13.95 and the low-end version does not allow you to import data from a previous return.

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Comments (5)

It is pretty sad that Uncle Sam cannot even figure out how to help us pay our taxes, when they seem to be after every dollar we earn. I know what you mean about losing the deductions. When our fifth left home last year we lost our last. Thank goodness that the President is stepping up and giving us all a break this year.

(Collins notes: why go through the expense of mailing out checks? Why not just add a box to the tax forms to take it off the top? Mine is going right back to the treasury anyway.)

Posted by Larry Reed | February 10, 2008 10:41 PM

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"IRS cannot compete with private enterprise".

Ah, the power of lobbying.

Posted by GregS | February 11, 2008 8:50 AM

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I used the State Farm version, but it still hit me for $20 for the premier version. I needed the upgrade because I committed the sin of buying stock through my company's employee purchase plan.

Trying to figure out how to pay my "fair share" on those transactions negated any financial gain.

I came up with a few tax preparation tips on my blog, but here are the top two:

Tip #1: Don't make any money.

Tip #2: If you cannot follow Tip #1, use Tip #2: Don't make any complicated money.

Posted by daveg | February 11, 2008 9:56 AM

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I used H&R Block's online software, because I started using it when I qualified for free filing. I got a $47 refund. It cost me $45 to file.

That was depressing.

Posted by MR | February 11, 2008 9:59 AM

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You know, Dave, as I was doing taxes on Saturday, all I can hear in my head was the words from your blog..

Posted by Bob Collins | February 11, 2008 10:28 AM

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