filed your state income tax yet? There’s a good chance
your state allows you to file it online for free.
than 20 states offer "State FreeFile" programs
that are similar to the federal IRS FreeFile Program.
Both use outside vendors to prepare free returns for
taxpayers with incomes below a certain threshold.
there’s a catch: Eligible taxpayers must follow the
link from the state website, not any other link. If you
don’t follow the precise instructions, you could find
yourself with a charge of as much as $19.99 when you are
ready to click the "send" button, said Verenda
Smith, deputy director of the Federation of Tax
have to navigate some pretty rough waters to make sure
you get your free tax filings," Smith said. The FTA
has a 50-state map showing which states have these
programs and provides links to the websites.
remaining states that levy an income tax offer their own
free Web-based forms that generally allow any taxpayer
to file directly with the state, regardless of income.
But these forms are just online versions of the paper
tax forms, and aren’t connected to outside tax
preparation companies or their software.
their federal counterparts, state officials prefer that
taxpayers file electronically. The IRS has estimated
that e-filed returns cost less to process — about
$3.50 less per return. More than 80 percent of federal
returns were filed electronically in 2012.
is the only state that has a free online tool that
generates the return itself; you don’t even have to
enter the numbers. The program ReadyReturn pulls the
information from wage reports and past tax returns and
then completes a return online. The state touts
ReadyReturn as an easy program that allows taxpayers to
finish state tax returns in minutes, rather than hours.
not many Californians are using it. Of the 2 million
taxpayers who were eligible to use ReadyReturn, just
89,000 used the program last year, according to the
state Franchise Tax Board. Some 244,000 Californians
used CalFile, the state’s other online tax program,
which requires that taxpayers enter their own
information, the board said. In a nutshell, ReadyReturn
is for filers with under about $250,000 in income and
CalFile is for wealthier taxpayers.
is not without controversy. It started out as a pilot in
2005, but faced opposition from the industry,
particularly Intuit, producer of TurboTax. In a recent
investigation, ProPublica reported that Intuit has
opposed efforts at the federal and state levels to make
free filing easier. The company spent more than $3
million on overall lobbying and political campaigns in
California, including fighting ReadyReturn.
said it supports the FreeFile Program, the partnership
between the IRS and several online tax programs,
including Intuit’s TurboTax. "Why spend money the
government doesn’t have when every American can get
free online tax preparation and e-filing right now at no
cost to consumers or the government?" the company
said in a statement in response to the ProPublica story.
of the Federation of Tax Administrators said she doesn’t
know why more people aren’t using the various free tax
return services that states offer.
case in point is Massachusetts. Just 3 percent of
taxpayers in Massachusetts used the state’s free
program in 2012, The Boston Globe reported, suggesting
many taxpayers are either unaware of the free software
or think that commercial versions are easier to use.
York is the only state that has a law barring tax
preparation companies like H&R Block and TurboTax
from charging extra to file state income tax returns
electronically. But even here, taxpayers get tripped up
and find they end up paying if they don’t go through
the New York website. This happened to New York Daily
News columnist Bill Hammond when he used TurboTax for
his daughter’s return. He was told: "TurboTax
Online has always charged a tax preparation fee — not
an e-filing fee — to prepare and file federal and
state returns. E-filing is included for free."
York state is none too pleased. "It’s clearly a
consumer issue that we are looking into," Geoffrey
Gloak, a spokesman for the New York Department of
Taxation and Finance, said.
WITHOUT INCOME TAXES
Hampshire and Tennessee tax only dividend and interest