Last year at the annual Fincon conference, I met with representatives of more than 75 companies. After meeting with the representative of this company, I put an appointment in my calendar to write about it. I can't remember ever making an appointment to write an article four months in the future.
The gist is: This company knocked my socks off. I think you'll like what they have to offer.
The company is FreeTaxUSA. It is appropriately named and the title of this post should sums up their value proposition well.
I know you are thinking: "Free tax filing? That doesn't make sense. It is probably only for a 1040EZ."
The big players (H&R Block, TurboTax) offer free tax filing for 1040EZ. That's great news for some in the lower income levels. However, once your taxes start to get more complicated you'll need to buy their products ranging from $35-60 for federal and then another $35 or more for state taxes. By the time you are done, you could spend $75 or $100.
With FreeTaxUSA, you can do fairly complicated taxes for free. Business owners can file their schedule C for free. With TurboTax you have to buy the Home and Business which is typically over a $100 for federal alone.
Do I have your attention? Good, here's the 30-second high-level pitch from FreeTaxUSA:
When I heard the pitch, my "too good to be true" spidey-sense went off.
My first thought, "This is a fly by night company with no experience." Nope, they've filed more than 14 million tax returns.
My second thought, "They are probably really bad at spotting deductions." I haven't tried it, but they do have a "Deduction & Credit Maximizer." From software development perspective this is usually not very complicated and deductions are typically similar year after year. I don't think you'll lose out on any tax refund cash going with them.
My third thought, "I really don't want anyone messing up my taxes. I want someone I can trust." (In my head, I used a different word than "messing".) When I look down at their list of services, I can see that their accuracy is guaranteed. Combine that with the 14 million tax returns filed and I feel like they've earned my trust.
So what's the catch with FreeTaxUSA?
First off, I don't know if I'd call it a catch. However, I think FreeTaxUSA is expecting that after you put all your information in to get the free federal return, you'll be fine with paying $12.95 for their state tax product.
It feels like the old razor and blades business model, where they give away a razor for free to get the more lucrative recurring blade income stream. However, in this case you get a free razor and the blades are cheaper than you'd pay anyway. Sometimes, when I see this kind of deal, I wonder if the company can stay in business. In this case, I wouldn't worry too much. There are millions and millions of people filing taxes and even if they get a small percentage of that business, it is tens of millions of dollars... enough to put together some very good software.
If you are going to shave this seems like the best way to do it, right?
Are you going to give FreeTaxUSA a try? Let me know in the comments.
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