FreeTaxUSA is a legitimate tax filing service, but it is not free for all returns

FreeTaxUSA is a real company that has been filing tax returns since 1998. It is registered with the IRS as an authorized e-file provider, which means the IRS recognizes it as a legitimate way to submit your return electronically. The company does not charge a filing fee for federal returns in most cases, but it does charge for state returns — usually between $14.99 and $21.95 per state — and for certain add-on services like amended returns or prior-year filings.

The service is owned by 2nd Story Software, a private company based in New Jersey. FreeTaxUSA does not have the brand recognition of TurboTax or H&R Block, but that does not mean it is unsafe or fraudulent. It simply means fewer people use it. The company stores your information on encrypted servers and uses the same security standards that larger tax software companies use.

What matters most is whether FreeTaxUSA will work for your specific tax situation. If you have a straightforward return — W-2 income, standard deduction, no business — FreeTaxUSA can handle it at no cost. If you need to file a state return or have a more complex situation, you will pay a fee, and you should compare that cost to other services before deciding.

Key Takeaways

  • FreeTaxUSA is an IRS-authorized e-file provider that has operated since 1998 and uses standard encryption to protect your data.
  • Federal returns are free to file, but state returns cost $14.99 to $21.95 each, and some add-on services carry additional fees.
  • The service works well for simple returns with W-2 income and standard deductions, but may not be the best choice if you have self-employment income, rental property, or complex itemized deductions.
  • You can import your prior-year return data and use the IRS Free File program if you meet income limits, which may save you money compared to paid tax software.

How FreeTaxUSA's pricing actually works

FreeTaxUSA advertises "free federal tax return filing," and that is technically true — you will not pay a fee to file your federal return. However, the company makes money from state return fees and optional services. If you live in a state with an income tax and you need to file a state return, you will pay $14.99 to $21.95 per state. If you only file federal, you pay nothing.

The company also charges for services beyond basic filing: amended returns (Form 1040-X) cost extra, as do prior-year returns and certain business forms. If you use the "Live Tax Pro" chat feature to ask questions, that is free, but if you want a tax professional to prepare your return for you, that service is not available through FreeTaxUSA — you would need to use a different provider.

One way to reduce cost is through the IRS Free File program. If your household income was below a certain threshold in the year you are filing for, you may be able to use FreeTaxUSA through the IRS Free File portal at no cost, including state returns. The income limit changes each year, so check IRS.gov to see if you may have access to before you start.

What FreeTaxUSA can and cannot handle

FreeTaxUSA works well for straightforward tax situations: single or married filers with W-2 income, standard deduction, and basic itemized deductions like mortgage interest or charitable donations. The software walks you through each section of the return and flags common mistakes before you file.

The service becomes less practical if you have self-employment income, rental property, capital gains from investments, or complex business deductions. While FreeTaxUSA does support Schedule C (self-employment) and Schedule E (rental income), the interface is less intuitive than TurboTax or TaxAct, and you may spend more time troubleshooting. If you have a business with employees, payroll, or inventory, FreeTaxUSA is not designed for that level of complexity.

FreeTaxUSA also does not offer audit support or representation. If the IRS contacts you about your return, the company will not represent you or help you respond to the IRS. Some paid tax software services include audit support as a premium feature; FreeTaxUSA does not offer it at any price.

Security and data privacy at FreeTaxUSA

FreeTaxUSA uses 128-bit SSL encryption to protect data in transit — the same standard that banks use. Your return information is stored on servers in the United States and is not sold to third parties for marketing purposes. The company does not share your tax data with credit card companies, lenders, or advertisers.

That said, FreeTaxUSA is a for-profit company, and like all tax software providers, it is required by law to retain copies of your return for a set period. You should read the company's privacy policy before you file to understand exactly what data is collected and how long it is kept. The policy is available on the FreeTaxUSA website under "Privacy Policy."

One practical concern: if you use FreeTaxUSA, you will need to keep your own copy of your return. The company does not automatically store your return in your account for future years the way some larger services do. You can download a PDF of your filed return, and you should save it to your computer or cloud storage.

How FreeTaxUSA compares to other free and low-cost options

If you may have access to for the IRS Free File program, you have several choices beyond FreeTaxUSA. The IRS partners with companies like TurboTax, H&R Block, TaxAct, and others to offer free federal filing to people below the income threshold. Each partner has a different interface and different features, so comparing them side by side can help you decide which works best for your situation.

If you do not may have access to for Free File, FreeTaxUSA's $0 federal fee is competitive with other low-cost options. TaxAct charges $14.99 for federal filing (though it also offers a free version for simple returns), and H&R Block's basic online version starts at $0 but adds fees for state returns and certain forms. FreeTaxUSA's state fees are in the same range as competitors.

The real difference is in the user experience and the complexity of your return. If you have a simple return and want to save money, FreeTaxUSA works. If you have a more complex situation or want better customer support, you may be better served by TurboTax or TaxAct, even if you pay a higher fee.

Red flags and common complaints about FreeTaxUSA

FreeTaxUSA has a mixed reputation online. Some users report that the software is straightforward and saves them money. Others complain that the interface is outdated, that customer support is slow, and that the software does not handle edge cases well. These complaints are not signs of fraud — they are signs that the service is basic and may not work for everyone.

One common complaint is that FreeTaxUSA does not clearly explain its pricing upfront. The website says "free federal filing," but does not immediately tell you that state returns cost extra. This is misleading marketing, but it is not illegal, and it is not unique to FreeTaxUSA — many tax software companies use similar language.

Another complaint is that customer support is limited. FreeTaxUSA offers live chat during tax season, but response times can be slow, and the company does not offer phone support. If you need immediate help, you may be frustrated. However, the company does provide a knowledge base and FAQ section that covers most common questions.

What to do before you file with FreeTaxUSA

Before you start, gather your documents: W-2s from your employer, 1099s for any other income, receipts for deductions, and last year's return if you have one. FreeTaxUSA will ask for this information, and having it ready will speed up the process.

Check whether you may have access to for the IRS Free File program. Go to IRS.gov and look for the Free File section. If your income is below the threshold, you can file for free through FreeTaxUSA or another Free File partner, including state returns. This can save you money if you live in a state with income tax.

Read the privacy policy and understand what happens to your data after you file. Download and save a copy of your return to your computer. Do not rely on FreeTaxUSA to store it for you. Finally, if you have any doubts about your return — if your situation is complex or you have never filed before — consider paying for a consultation with a tax professional or using a service with better support options.

Frequently Asked Questions

Is FreeTaxUSA safe to use with my Social Security number and bank account?

FreeTaxUSA uses the same encryption standard as banks and other tax software companies. Your data is not sold to third parties. However, any online service that handles tax information carries some risk. Use a strong password, do not file on a public Wi-Fi network, and keep your login credentials private. If you are uncomfortable entering sensitive information online, consider filing by mail or using a tax professional.

Will FreeTaxUSA get me a bigger refund than TurboTax?

No. The tax software you use does not change the amount of tax you owe or the refund you receive. The IRS calculates that based on your income and deductions. Different software may catch deductions you missed or flag errors, but FreeTaxUSA and TurboTax will produce the same result if you enter the same information correctly.

Can I file an amended return with FreeTaxUSA if I made a mistake?

Yes, but FreeTaxUSA charges a fee to file an amended return (Form 1040-X), usually around $25 to $35. You can also file an amended return by mail for free, though it takes longer. If you made a small error, filing by mail may be worth the wait to avoid the fee.

What if I have a self-employment business — can FreeTaxUSA handle that?

FreeTaxUSA supports Schedule C (self-employment income) and Schedule SE (self-employment tax), so technically yes. However, the software is less user-friendly for business returns than TurboTax or TaxAct. If your business is simple — one person, no employees, straightforward expenses — FreeTaxUSA can work. If your business is more complex, you may want to use different software or hire a tax professional.

Do I have to use FreeTaxUSA every year, or can I switch to another service?

You can switch to any tax software service at any time. FreeTaxUSA does not lock you in. However, you will need to re-enter your information in the new software — most services do not import data from competitors. Keep a copy of your prior-year return so you can reference it when you file with a new service.