Note scroll down if you don't want to read my long story and see some different options for free / low cost tax return software.
Yesterday, I started my tax return with H&R Block where I had been using "Best of Both" for several years now.
My tax return has enough quirks in it that I could not get free filing, but I discovered that for $120 I could get "Best of Both" This includes the HR Block Premium product for federal filing, a state filing and a very experienced Enrolled Agent. The H&R Block tax preparer always made some adjustments that Premium didn't allow and was, perhaps more importantly, the person signing off on the preparation.
I much preferred this method because I was able to ensure accuracy while drawing on expertise and having "insurance" against mistakes. It didn't seem to cost much more than doing it alone.
Well this year they decided to make "Best of Both" a standalone product for an extra $80, bring the total cost up to $200. I found some codes which seemed to indicate I'd get 30% to 40% off online products, but they only applied to the $80 federal return so I was still looking at $168.
I remembered that Credit Karma had emailed me about free tax filing. I took a look and yes indeed it was free with no catches. Filled it in and found a few problems. Firstly, although they had a place to enter foreign tax paid, it wasn't being deducted. Secondly, when transferring to the California return, they added back tax free interest and didn't give an option to remove it. Thirdly, they also didn't allow HSA distributions to be entered as an adjustment to income on the California return.
Indeed, they didn't allow any adjustments at all on the California return. However, the foreign tax credit issue on the federal return could be bypassed, so I thought it might just be an idea to find somebody who enabled me to file the state return for a lower cost than the $40 H&R Block want.
So I began to look around for options elsewhere to file the California return. The state's own filing software excluded all but the simplest returns, so I looked at the free options on the IRS website.
What was interesting was that there are several websites that give free returns if your AGI is low enough and if you follow the links on the IRS website. Some of the websites also give free state returns. Even though my income didn't qualify for the returns, I clicked on a few of them and they were either very low cost for paid returns or were giving a discount if you came through the IRS website. Lo and behold, H&R Block reduced their Premium product for federal returns from $80 to $30. But the state return was still $40 so compared to the new very low cost providers I had just found, they were still not competitive.
So I started exploring the low cost options on the IRS website but then found another website, not linked from the IRS, which like Credit Karma said it was free with absolutely no catches. Better though was that it was a free service provided by Liberty Tax who are an established tax prepared so I sensed they would be able to do the state return right.
So without further delay, here is a quick list of how to get free or very low cost tax filing:
Free for any income
I ended up filing with freetax.com. I was able to do everything I needed correctly apart from the state HSA distribution issue for which I found a workaround. Indeed, I had to do a workaround for their federal software on the HSA as well. So I sent them a note about that.
Free federal filing for lower incomes. State might be free.
Low cost filing for those not qualifying for free filing based on income
I did a partial investigation of the free for lower income filers to figure out what it would cost me since my income wasn't low enough to qualify and this is what I found:
After these, it seems the lowest cost are these two: