DIY Tax Review – It’s Free. Really

DIY Tax Review – Free Tax Preparation

It’s hard to believe that you can get anything of value these days without paying for it, and that’s particularly true of tax preparation.  DIY Tax seems to be the exception.  Most tax preparation companies offer a base price in a big font on their Website but when you read the fine print, you’ll see that there are a lot of addons that can dramatically raise the price.  One company we encountered had a low price, but then it turned out that the price applied only to the basic 1040 form, and every other form required, such as a 1099, a W2 or a Schedule C incurred an extra fee, as did actually filing the return.  That’s not the case with DIY Tax; they’ll let you file your returns for free.  Period.  Read on for our full DIY Tax review.

You’re paying too much in taxes.  You are!  Click here to see how to lower your taxes, legally.

DIY Tax Overview

diy tax review logoDIY Tax, which actually sits at FreeTax.com, is owned by a major tax preparation company, Liberty Tax Service.  While Liberty has nearly 5000 offices nationwide and makes its money by doing in-person tax preparation, DIY Tax is, as the name implies, a self-service product.  All you need is a computer with Internet access and you can file your Federal and your state taxes using your Web browser.  The site is secure, and uses 128 bit encryption to ensure that your data remains safe.  You can save your information from one year to the next and use it to populate future returns for easier filing in the future.

To use DIY Tax, you create an account, log in, and answer questions and fill out your return.  When you’re done, you’ll have the option of filing your state return, as well.  Then you can file them electronically and wait for your return.  The odd thing about DIY Tax is that there isn’t a price list anywhere on the site.  Most products have a listing of basic features, deluxe features and addons, such as printed returns, audit insurance and more.  There’s nothing like that at DIY Tax; it’s free.  The product includes a guarantee that your return will be accurate and the company promises to pay your penalties and interest if their software makes an error that costs you money.  Audit assistance is provided, though DIY Tax will not meet with the IRS on your behalf.  They will, however, advise you as to how to proceed should you receive an audit notice from the IRS.

bannerOn-site help seems to be limited to live chat and a knowledgebase, though we suspect that if you need help, you can visit a local Liberty Tax office for assistance.  That may require payment, but for most users, the live chat feature may be sufficient.  The site loads quickly, is easy to navigate and we haven’t read a single complaint about DIY Tax anywhere online.  The company insists that their product is completely free.  So, what’s the catch?

There may not be one, and if you can do your taxes without any assistance, you’re probably going to save a lot of money with DIY Tax.  If you need help, and lots of it, you’re probably better off visiting a Liberty Tax office, and we’re guessing that they’ll tell you that.  A lot of taxpayers, however, especially those accustomed to doing their taxes by themselves, will find that DIY Tax works well for them.  The software works for individuals with no deductions as well as those with small businesses and rental property.   If you like free, you should probably give DIY Tax a look.

freetax.com reviewKeep in mind, however, that no tax software, including DIY Tax, is perfect.  These tax preparation programs are basically calculators; you insert numbers and they crunch them according to preprogrammed formulas.   They’re set up to handle basic deductions, but they are not set up to think outside the box, and that’s where any software, including DIY Tax, can cost you money.  You see, there are thousands of ways to legitimately save on your taxes by taking allowable deductions against your income.  Some of these deductions are common, and some are obscure.  Even the common ones that DIY Tax knows about could cost you, as the IRS sometimes allows more than one way to calculate the value of a deduction.  Most tax preparation software only allows for one method, and if another way of calculating the value of a deduction could save you money, you’re out of luck.  Of course, if you knew about this, you could make that calculation yourself, determine if an alternate way of doing it would save money, and then enter that value into DIY Tax.

The same could be said for the many other ways that you can take deductions.  DIY Tax can handle them, provided that you know about them in the first place.  No tax software is clairvoyant; the programs can only work with the information that you provide.  If you don’t know about it, then the software can’t help you.  The U.S. tax code is so complicated that even tax professionals cannot keep up with all of the changes and allowable deductions.

So what do you do?  You can keep going on as you have, and just keep paying too much in taxes.  On the other hand, there is a resource that makes it easy to keep up with ways to save.  The information is presented in plain English.  You can use the deductions to save on your taxes this year, next year, and every year after that.  You’ll find out about lots of ways to save money on your taxes that never even occurred to you.  Then you can plug that information into DIY Tax, file your taxes for free, and sleep well, knowing that you paid the least amount of taxes legally possible and that you were able to file your income tax returns at no charge.

Want to know more about saving money on your income taxes?  Click here to see how to lower your tax bill.

3 thoughts on “DIY Tax Review – It’s Free. Really

  1. I ran into an issue with diy tax — it did not support adjusting the basis on my capital gains (etrade reported the wrong basis to the IRS). This was an annoying showstopper, as it supported the rest of my issues no problem.

  2. I had no problems with the state return. My W-2 wages appeared automatically. When you’re filling out the W-2 information on the federal form, there is a place at the bottom of the page to enter the state tax withheld.

  3. Their State return does not pick up W-2 wages from Federal, and there is no place where you can add them! (or anything else I presume).
    Chat line person was incompetent, and nobody answers email, so I will probably have to go to state’s website to file.
    I know it was free to file the federal, but I resent the subsequent waste of time.
    I suggest avoiding this service!

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