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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.

Rule Your Retirement Home Fool
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