Why Is TaxAct Charging Me When It Says Filing Is Free?

Many tax filing services, including TaxAct, advertise free filing options, but users often encounter unexpected charges. Understanding these potential costs can help determine whether the fees are legitimate and how to avoid them.

Edition Upgrades or Premium Services

TaxAct offers a free filing option, but certain tax situations require an upgrade to a paid version. If you report investment income, claim business deductions, or file self-employment taxes, you may be switched to a higher-tier edition. This often happens when entering specific tax details, leading to unexpected charges at checkout.

Optional add-ons, such as live tax expert assistance, audit defense, and data import from previous returns, are not included in the free version. These services may be pre-selected during the filing process, and if not manually opted out, they can result in additional charges.

Extra Fees for Certain Forms and Schedules

Even if you qualify for free filing, TaxAct may charge fees for specific forms and schedules. Some tax situations require additional documentation that falls outside the free version’s scope.

For example, selling stocks, bonds, or cryptocurrency requires Schedule D to report capital gains or losses. Rental property owners must file Schedule E to report income and expenses. These schedules involve complex calculations and additional IRS reporting, leading to extra charges.

Certain deductions and credits may also trigger fees. Claiming the Lifetime Learning Credit or American Opportunity Credit requires Form 8863, which may not be included in the free version. Similarly, claiming the Foreign Tax Credit with Form 1116 or reporting household employment taxes using Schedule H can result in additional costs.

State Return Charges

While federal filing may be free, TaxAct typically charges for state returns, with fees ranging from $39.99 to $59.99 as of 2024, depending on the edition used.

If you lived in one state but worked in another or moved during the year, you may need to file multiple state returns. TaxAct charges separately for each, which can add up quickly. Even in states without income tax, such as Texas or Florida, other tax obligations may still require filing.

Refund Transfer or Bank Product Fees

Paying for tax preparation fees using your refund instead of a debit or credit card results in additional charges. TaxAct’s Refund Transfer service deducts filing fees directly from your refund before disbursing the remaining balance, with a processing fee of around $39.99 as of 2024.

This fee applies even if you qualified for free federal filing. Additional charges may apply for alternative refund delivery methods, such as a prepaid debit card or splitting the deposit across multiple accounts.

Previously Applied Discounts No Longer Active

Unexpected charges can occur if a discount you initially qualified for is no longer applied. TaxAct offers promotional pricing, such as discounts for early filers or new users. If you started your return during a promotion but completed it after the offer expired, the price may have increased.

Some discounts require accessing TaxAct through a specific referral link or partner website. If you began your return through a discounted offer but later logged in from a different device or browser, the system may not recognize the promotion. Certain discounts also require a specific payment method, such as using a debit card instead of opting for a refund transfer. Reviewing promotional terms can help determine if a discount was removed and whether it can be restored before filing.

Technical or Billing Errors

Occasionally, unexpected charges result from system glitches or billing issues. While TaxAct’s pricing structure is generally transparent, software bugs or misapplied service charges can lead to incorrect fees at checkout. Reviewing the breakdown of fees in the final payment summary can help identify discrepancies.

Billing errors can also occur if payment information is entered incorrectly or if there are authorization issues with a credit or debit card. In some cases, duplicate charges may appear if a transaction is processed multiple times due to a failed payment attempt. If you suspect an error, contacting TaxAct’s customer support can help resolve the issue. Keeping records of promotional offers, pricing details, and payment confirmations can also be useful when disputing unexpected fees.