The reviews below were conducted in January 2006 using software for preparing a year 2005 tax return. For up-to-date reviews about free tax software for the current year, see Reviews of Free Tax Preparation Programs.
In cooperation with the IRS, nineteen software companies offer their tax preparation software free of charge as part of the IRS Free File Alliance. But there are three main drawbacks. Read reviews of all the Free Tax Software, or read more about the IRS Free File program, its drawbacks, and my top picks.
Drawbacks to Free File
First drawback: each software company sets its own eligibility criteria. So, for example, TaxACT makes its software available for fee if you earn less than $50,000 and you reside in certain states.
Second drawback: software companies often charge an extra fee if you want to prepare a state tax return. Charges for state tax prep runs from about $10 to $25.
Third drawback: you have to begin your Free File tax return at the IRS Web site. If you go directly to the software company Web site, you will not qualify for the free software. Bottom line: IRS Free File is perfect for taxpayers in tax-free states. Free File is also a good deal for people in the rest of the country, because you can use top-notch software at a discounted price.
I've spent a lot of time testing all the tax prep software in the IRS Free File Alliance. I have some good news, and some bad news. The good news: six of the 19 Free File software achieved a rating of "Recommended" or "Highly Recommended." Now the bad news: the rest of the 13 Free File software programs have either mediocre quality or are downright scary.
My top three picks for best IRS Free File software should come as no surprise. These are produced by the top tax software companies and feature accurate, easy to use software.
- TurboTax Free File from Intuit
- TaxCut Free File from H&R Block
- TaxACT Free File from 2nd Story Software
Bottom of the Barrel
Some of the software in the IRS Free File Alliance is scary, annoying, and highly suspicious. Or perhaps I am over-reacting? Here's two tax software programs I think are the worst.
Average1040 requires customers to use the direct deposit feature for receiving tax refunds. The IRS encourages taxpayers to take advantage of direct deposit, but direct deposit is not required by the IRS. Average1040 prevents users from navigating back or forward in the software program until providing bank account information. This makes me highly suspicious, and so I do not recommend this software.
Another offensive Free File program is TaxSimple. This program requires taxpayers to download and install an ActiveX file. Normally, ActiveX files are used to provide a more interactive Web experience. However, this particular download crashed my computer three times and was very difficult for me to un-install. Under no circumstances should anyone use these two Free File software programs.
For a full list of participating IRS Free File software programs, along with my objective reviews, see Free Tax Software. Or you can get started directly at the IRS Free File Web site at: