Don't Mess With Taxes

The current program, which allows taxpayers with adjusted gross income in 2007 of $54,000 or less to prepare their returns and e-file them at no cost via the IRS Free File portal, is in effect through Oct. 15. That's the final filing deadline for folks who got an extension to file earlier this year.

For 2009 filing season, during which we'll all send in our 2008 returns, the income threshold will be $56,000 per year. Again, the IRS and the Alliance say this will accommodate roughly 70 percent of taxpayers.

No free tax filing lunch: While elimination of the separate fees for federal e-filing via TurboTax and TaxCut is a good thing, but that doesn't mean that the process is free.

There might not be separate fees, but there still a cost:

If you don't qualify for Free File and you want to use a desktop software program on your own computer, PC or Mac, you'll have to buy it off the shelf or pay, in many instances, to download it from the Web.

The reality is that the software companies will hike their products' prices. Of course, that happens anyway in every retail business as the across-the-board costs increase. That increase will help them recoup the revenue lost from the separate fee.

That's likely to irk a lot of filers, but that's the way the world of commerce operates. Personally, I prefer that approach, rather than the nickel-and-dime format used by, for example, the airlines. Raise the fare price and take all my bagged; raise the software price and let me do everything I want for that price.

That's the thinking of Intuit. I spoke with Julie Miller, director of Intuit's consumer products division, this morning, who said the company doesn't believe it makes sense to impose a la carte pricing. Over the years, she noted, while the software's price has increased, Intuit has added features, such as It's Deductible and audit support.

"The price on the deluxe product is up about $15," Miller said, "but that reflects the value of TurboTax. Last year, the cost of federal e-file was almost $18 so taxpayers [who e-file] will still save some dollars."

State returns will still cost: And it will still cost all you folks who must pay state income taxes to send those returns electronically.

Of course, things do change, so stay tuned. Remember those bow shots I mentioned a few paragraphs ago? State ammunition is likely to be eventually loaded.

Miller said that Intuit is constantly evaluating all its offerings and "it's totally possible" that state e-filing fees might be included in the 2009 TurboTax package, which will used in 2010 to get those returns to the appropriate tax collectors.