What “Free” Tax Prep Software Costs You

It has often been said that if something is free, you are the product. That is certainly true when it comes to “free” tax preparation software.

The good news is that tax prep companies cannot automatically use the information in your tax return for any purpose other than preparing your taxes. However, when using TurboTax or H&R Block online to file your taxes for free, you will be asked to share your return data.

H&R Block asks for permission to access your data to “optimize your H&R Block experience.” Intuit (the provider of TurboTax) asks for access to your data to “enrich your financial profile, communicate with you about Intuit’s services, and provide insights to you and others.” What does that mean in simple English? Both companies want to use your data to sell things to you. Additionally, H&R Block wants your permission to share your data with a company in the Philippines that provides customer service for them.

You have the right to say no to these requests and the companies will still complete your taxes for free. If you have already agreed to these requests and now would like to revoke permission to access your return data, you can do so. For TurboTax, you have to email Be sure to mention that you’d like to revoke your “consent for use of tax return information.” H&R Block told the Washington Post that customers could withdraw permission by contacting the company, but did not specify a method of contact.

In addition to privacy concerns, many taxpayers discovered that a service advertised as free actually was a lure to upsell taxpayers to paid services. Intuit, TurboTax’s parent company, has agreed to a $141 million settlement after the Federal Trade Commission alleged it had deceived millions of customers into paying for tax-prep services that should have been free. If you qualify, you will automatically receive a direct payment of approximately $30 for each year that you were deceived into paying for filing services.

So if you want a free tax prep solution which free one should you use? The New York Times provides a comparison of the major tax prep apps. They recommend TurboTax Free Edition for most filers, but a simple flow chart shows when another solution may be best for you.