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Author: BaumgrenzeJohn One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121597  
Subject: Cost of Processing a Return - Paper vs E-file? Date: 2/24/2012 8:56 PM
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I did a search and could not find a discussion of this topic. I'm amazed. I'll compose this post while taxes are still on my mind.

I've used TTax since the first filing after we bought an AppleII+, so that's a long time. In recent years they have included in the cost of their product the electronic filing of our federal return but not the filing of our California income tax return.

It is not clear just how much effort is required to enter a printed return from a tax program. Clearly a hand completed set of forms is a whole other problem. Clearly the California FTB starts with a table of entries designed to be scanned into a computer, but this must be a manual task. Thereafter, the paper and electronic copies need to be tracked together in a filing system. It only stands to reason that the FTB saves money if I e-file. I can't see why I should pay an additional $20 to e-file. That is way more than the paper, ink, and postage, even certified with return receipt.

Is it time for me to tell my state legislators that it should not cost me a bundle to e-file? Can anyone help me document the case with numbers?

Thanks,

baumgrenze
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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115214 of 121597
Subject: Re: Cost of Processing a Return - Paper vs E-fil Date: 2/24/2012 9:05 PM
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Is it time for me to tell my state legislators that it should not cost me a bundle to e-file?

You can probably e-file your California return for free. Right here: https://ftb.ca.gov/online/CalFile/index.asp?WT.mc_id=HP_Onli...

The fee you are paying to TurboTax goes only to TurboTax. You are paying them for their time and effort to create their program which prepares California tax returns and then e-files those returns.

Why TT chooses to give away their Federal program and charge for the state program is beyond me. But it's their business decision to make.

In short, contacting your state legislator will not help with this issue. (It doesn't help on many others as well, but that's a topic for PA).

--Petri non dormitat

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115216 of 121597
Subject: Re: Cost of Processing a Return - Paper vs E-fil Date: 2/24/2012 10:56 PM
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I've used TTax since the first filing after we bought an AppleII+, so that's a long time. In recent years they have included in the cost of their product the electronic filing of our federal return but not the filing of our California income tax return.

As Peter has already pointed out, this charge is just profit for TT. (Not singling out TT here; AFAIK all the software vendors charge for the state even if they include a "free" Federal e-file in the price of the product.) I've not stayed up to date on the mechanical side of things, but there used to be "piggyback" states for e-filing. That means that the return originator (TT in this case) just sends one set of data to the IRS, which then forwards it to the state for its use. In a piggyback situation there is zero cost or effort to the originator in filing the state return.

But the much bigger question is why are you having to buy software in the first place? Peter pointed out that you can e-file CA for free through their website. The same is true for many states. While you cannot file directly through the IRS site, their "Freefile" program allows most filers to e-file the Federal return completely for free. It's cumbersome in some cases, there are aspects of it I don't like, but it's there for those who want to use it.

Phil
Rule Your Retirement Home Fool

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Author: BaumgrenzeJohn One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 115236 of 121597
Subject: Re: Cost of Processing a Return - Paper vs E-fil Date: 2/25/2012 8:14 PM
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I found this Intuit web page. Ever the skeptic I wonder if this process does not somehow benefit Intuit even though it promotes 'free filing.'

http://blog.turbotax.intuit.com/2010/01/25/why-intuit-believ...

There is also the Free File Alliance website. The Free File Alliance, a coalition of industry-leading tax software companies, has partnered with the IRS to help millions of Americans prepare and e-file their federal tax returns.

IRS Free File is the quick, efficient way for 70 percent of taxpayers to prepare and e-file their federal tax returns completely online.

http://freefilealliance.org/about-us

On October 30, 2002, a public-private partnership agreement was officially signed between the IRS and the Free File Alliance, LLC, a group of tax software companies. The IRS entered into a three-year agreement with a group of private computer-software companies to provide free electronic filing for at least 60 percent of all taxpayers who file an individual tax return.

So it is 60% or 70% or "?" and why am I skeptical? It provides for a maximum AGI but does not talk about joint returns.

http://freefilealliance.org/faqs

Any insights and/or reassurances will be appreciated, by me and probably others as well.

baumgrenze

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