In the USA, why is the Free File software only available for people earning less than $62k?
"It is very helpful to understand that Free File is not actually ""by"" the US Internal Revenue Service (IRS). The IRS does indeed offer access to the program through their website, but Free File is actually a public-private partnership program operated and maintained by the Free File Alliance. Who is the Free File Alliance? Well, according to their members list: 1040NOW Corp., Drake Enterprises, ezTaxReturn.com, FileYourTaxes, Free Tax Returns, H&R Block, Intuit, Jackson Hewitt, Liberty Tax, OnLine Taxes, TaxACT, TaxHawk, and TaxSlayer. Why the income restriction? Well, that's part of the deal the IRS struck - the program is ""dedicated to helping 70 percent of American taxpayers prepare and e-file their federal tax returns"". Technically the member companies are offering their own software to handle tax preparation, and the rule is that 70% of American's must 'qualify' for at least one product, so this adjusted gross income limit changes periodically so that 70% of the population can use it. Why restrict it at all? This was part of the give and take involved in negotiation with the businesses involved. If the program was ""everyone files for free"", then it is presumed that many reputable businesses that make the program valuable would choose not to continue to participate. In other words, they want to be able to not give away their services for free to customers who are - at least by income definition - more than capable of paying them. The IRS has said it does not want to be in the tax prep software business, so they are not offering their own free software to do the job that private companies would otherwise charge for. However, there are other restrictions to being in the program - like the fact that no business in the program can offer ""refund anticipation loans"", offer commercial services more than a certain amount of times (so they can't hound you to upgrade), and so on. Some businesses were making a killing off these, though they are pretty much solely developed to be predatory on people with the lowest incomes (and education levels, and IQ, and with cognitive disabilities, and basically anyone they could sucker into paying what were effectively absurd rates for short term loans along with inflated filing/preparation fees). Finally, Free File was partly developed as an initiative to increase the amount of digitally filed taxes and reduce the paper-based burdens of accepting and processing turns. In other words: to cut government costs, not to be a government welfare program. Even if it were, one can generally obtain commercial software for $30-$100, so the benefit to those above gross income levels is pretty minor; yearly costs to file taxes with such software for those payers would be less than 0.001% of their yearly expenses. Compared to the benefits obtainable by households living below the poverty line, fighting to cover an extra 5-30% of the population at the potential expense of having the whole program be a failure probably seemed like a more than worthwhile trade-off." Free File is not software by the IRS.  Free File is actually a partnership between the IRS and the Free File Alliance, a group of tax software companies.  The software companies have all agreed to provide a free version of their tax software for low-income taxpayers. According to the Free File Alliance FAQ, the Alliance was formed in 2002 as part of a Presidential initiative to improve electronic access to government.  You can read all the excruciating details of the formal agreement (PDF) between the IRS and the Alliance, but basically, the participating software companies get exposure for their products and the possibility of up-selling services, such as state tax return software. "Regardless of the source of the software (though certainly good to know), there are practical limits to the IRS 1040EZ form.  This simplified tax form is not appropriate for use once you reach a certain level of income because it only allows for the ""standard"" deduction - no itemization.   The first year I passed that level, I was panicked because I thought I suddenly owed thousands.  Switching to 1040A (aka the short form) and using even the basic itemized deductions showed that the IRS owed me a refund instead. I don't know where that level is for tax year 2015 but as you approach $62k, the simplified form is less-and-less appropriate.  It would make sense, given some of the great information in the other answers, that the free offering is only for 1040EZ.  That's certainly been true for other ""free"" software in the past."
Whoever wrote this article is an idiot. $112,000 income in NY makes you barely middle class. 529 plans and 401k plans are two of very few actually sensible pieces of tax policy this burning dumpster fire of a country has. Come to Brooklyn and tell the high school janitor who makes $100k that he is too affluent to get college savings tax credits and be prepared to get punched in the face. "You're confusing so many things at once here...... First thing first: we cannot suggest you what to do business-wise since we have no idea about your business. How on Earth can anyone know if you should sell the software to someone or try to distribute to customers yourself? How would we know if you should hire employees or not? If you say you don't need employees - why would you consider hiring them? If you say you want to sell several copies and have your own customers - why would you ask if you should sell your code to someone else? Doesn't make sense. Now to some more specific issues: I heard sole proprietary companies doesn't earn more than 250k and   it's better to switch to corporation or LLC etc. because of benefits. I heard it was snowing today in Honolulu. So you heard things. It doesn't make them true, or relevant to you. There's no earning limit above which you should incorporate. You can be sole proprietor and make millions, and you can incorporate for a $10K/year revenue business. Sole proprietorship, incorporation (can be C-Corp or S-Corp), or LLC - these are four different types of legal entity to conduct business. Each has its own set of benefits and drawbacks, and you must understand which one suits you in your particular situation. For that you should talk to a lawyer who could help you understand what liability protection you might need, and to a tax adviser (EA/CPA licensed in your state) who can help you understand the tax-related costs and benefits of each choice. On the other hand I heard that if I create LLC company, in case of   failure, they can get EVERYTHING from me, what's this all about? No. This is not true. Who are ""they"", how do you define ""failure"", and why would they get anything from you at all? Even without knowing all that, your understanding is wrong, because the ""LL"" in LLC stands for LIMITED liability. The whole point of forming LLC or Corporation is to limit your own personal liability. But mere incorporation or forming LLC doesn't necessarily mean your liability is limited. Your State law defines what you must do for that limited liability protection, and that includes proper ways to run your business. Again - talk to your lawyer and your tax adviser about what it means to you. I'm totally unfamiliar with everything related to   taxes/companies/LLC/corporation etc Familiarize yourself. No-one is going to do it for you. Start reading, ask specific questions on specific issues, and get a proper legal and tax advice from licensed professionals." "So it seems like a lot of people here aren't exactly sure about why this works and its financial implications.   So what you are referring to is in Finance something called Funds Transfer Pricing or FTP (often referred to as just Transfer Pricing). Like anything else, FTP has its place. Most companies; however, don't use it properly. FTP, theoretically, has one primary purpose (although it's developed a second): to properly allocate opportunity costs across divisions.  Let's say Company A produces widgets. They sell these widgets for $200 at a TOTAL COST of $150 and book profits of $50. Now to produce the widget Division 1 makes a computer chip at a cost of $50 that it then ""sells"" to Division 2 for $60. Division 1 then books a profit of $10. Division 2 then makes some plastic stuff and assembles the device. This is labor intensive so Division 2's costs are $100. Company A sells the completed device for $150. Division 2 subsequently books profits of $40, and appears much more profitable than Division 1, on the surface.  The problem arises when Division 1 could sell the chip to the open market for $125. Now it costs them $50 to produce, and they could make a theoretical profit of $75. This is MORE than the company makes AS A WHOLE on the entire device. By having Division 2 pay effectively ""fair market price"" for that chip, you realize that Division 2 is really operating at a loss (the *opportunity cost* of not selling the chip to market is greater than producing the completed device). Company A would be better off getting rid of Division 2 and solely focusing on Division 1. In a good FTP system, Division 2 would pay the fair market price of $125. If done properly, management would  hopefully realize it should divest Division 2.  That's the ***fundamental premise*** behind FTP. In actuality things get much more complicated because of economics, the company itself, branding, IT, operations, management, PPE, labor laws, etc. Thats why most companies screw it up. All that other stuff falls under whats called cost allocation accounting. It gets VERY complex and entire masters courses are dedicated to it (different methods, etc.)   The other thing you can do with FTP is get crazy tax breaks due to various tax laws. The simplified explanation is that divisions pay taxes on profits to the government ***that division*** is located in (this works on the state level, too btw.). GE does a lot of this and it's a big part of why they pay almost no-taxes. Again, it gets more complicated when you involve audits as there's some grey area legally.   For simplicity, assume tax rates are 40% in the US and 10% in India. So let's say GE makes an airplane engine in the US but ""finishes"" manufacturing in India. These specific engines costs $5,000,000 for the US division to make, up to a certain point.  The US division can then sell the engine at a break even to India. So India ""pays"" $5,000,000 for the engine. The US division then books no profit. India finishes the manufacturing with additional costs of $1,000,000. The India division then sells the engine to the open market for $9,000,000 . Therefore, the India division books a profit of $3,000,000 and pays taxes of $300,000. Now GE as a whole makes a profit of $3,000,000 less taxes of $300,000 = net profit of $2,700,00.  Further, let's say the fair market value of the engine, as is, when the US sells to India is $7,000,000. That would mean US ***should*** book profits of $2,000,000 and India ***should*** book profits of $1,000,000. Total taxes by GE are now $800,000 (US) + $100,000 (India) = $900,000. However, what's important is that NET PROFIT is now $2,100,000. ***GE just saved $600,000 in taxes by doing this***. The beauty of this is, divisions are supposed to charge fair market value for products FTP'd internationally; however, it's REALLY hard for the IRS to say what the value of an unfinished product really is (heck, you could be offering bulk discounts, etc.)...  The fact is, often, US divisions have skilled labor that is difficult to replicate elsewhere. They just show US divisions operating at losses to make the company as a whole better. The problem, again, arises when top management don't fully appreciate or understand the reasoning behind this stuff. They end up making cuts to US labor because it's ""unprofitable"" without thinking about the entire story.   I know this is very long winded but hope it helps!  ***tldr; companies FTP to recognizes profitability and opportunity costs of divisions as well as use it for overseas tax breaks.***  Side note: Politically speaking, people who know how this works are pissed off about it in the U.S. (don't worry though, most politicians on both sides don't have a clue). We have high corporate tax rates relative to other countries and IRS loopholes allow this kind of thing (lobbying $$). It's also why, economically, you can't just raise ***corporate*** tax rates to increase domestic tax reciepts as more companies will just implement this process (it's complicated to do properly). Also, please don't say 50 years ago tax rates were higher and raising taxes increased receipts. The fact is most companies couldn't even FATHOM doing this 50 years ago, no less even 20.  edit: some clarification in wording" "This article acts like it's the fault of the person for not making enough money to pay for rent, food, insurance, and gas - ""Surely if I just tried hard enough I could make $280,000 a year and put 30% of it into investments.""  No financial software is going to change the labor market." In a nutshell, there are significant entrance hurdles, legally and especially financially. The fixed cost and effort to get it set up is high (although later, the proportional cost and efforts are negligible). Therefore, this is only of interest for taxable amounts of seven digits or more - which most people don’t reach. It might not be leniency for first time payers, but they do have programs, some federal some local, that help the poor and elderly complete their tax forms. There are also programs that allow the poor to file electronically for free. For most people the first time they file their taxes they are using the EZ form. Which is rather easy to do, even without the use of either web based or PC based software. The software tools all ask enough questions on the EZ forms to allow the user to know with confidence when their life choices have made it advantageous to use the more complex forms. The web versions of the software allow the taxpayer to start for free, thus reducing their initial investment for the software to zero. Because the first time filer is frequently a teenager the parents are generally responsible for proving that initial guidance.  The biggest risk for a young taxpayer might be that the first year that itemizing deductions might be advantageous. They might never consider it, so they over pay. Or they discover in April that if they had only kept a receipt from a charity six months ago they could deduct the donation, so they are tempted to  claim the donation without proof. Regarding leniency and assistance there is an interesting tax credit. The Earned Income Tax Credit. it gives a Tax credit to the working poor. They alert people that they need to Check Your Eligibility for the Earned Income Tax Credit They know that significant numbers of taxpayers fail to claim it. EITC can be a boost for workers who earned $50,270 or less in 2012.   Yet the IRS estimates that one out of five eligible taxpayers fails to   claim their EITC each year. The IRS wants everyone who is eligible for   the credit to get the credit that they’ve earned. The rules for getting the credit are simple, all the information needed to claim it is already on the basic tax forms, but you have to know that you need a separate form to get the credit. But instead of making the credit automatic they say: If you use IRS e-file to prepare and file your tax return, the   software will guide you and not let you forget this important step.   E-file does the work and figures your EITC for you! and then :  With IRS Free File, you can claim EITC by using brand name tax   preparation software to prepare and e-file your tax return for free.   It's available exclusively at IRS.gov/freefile. Free help preparing   your return to claim your EITC is also available at one of thousands   of Volunteer Income Tax Assistance sites around the country. To find   the volunteer site nearest to you, use the VITA locator tool on   IRS.gov. But if you don't use free file you might never know about the form. Apparently it escapes 20% of the people who could claim it. I'm talking about household income. $300k is a huge amount of money for a single person to make, but $150k is certainly doable for most doctors/lawyers/engineers. If your spouse is also a high earner that will help put over the 1% threshold. Looks like you can get a PO box online for $62 per year: https://www.usps.com/manage/get-a-po-box.htm "The problem with these services is that they resell a random assortment of programs at a pretty high price.  Buying the programs a la carte adds up quick, especially when a SD stream of varying quality costs as much or more than the DVD set when it is released (don't get me started on the HD up-charges).  That's per show, per season.  It makes it really expensive to catch up on a season, when you are essentially ""buying the seasons"" to stream them, when all you want to do it ""rent them"" instead.  The way this is not like steam, and the point I think OP is trying to make, is that stuff is all over the place.  People don't want to have to jump between Hulu, CBS.com, iTunes, Netflix, Amazon, etc.  Plus, some places have some things for free, some charge a monthly fee, some charge per-view (rent), some charge once per show/season/movie (buy), etc.  Some offerings that are free are actually sold for a fee through other services.  Right now, it's sort of a mess.  I'm not even sure what the right model is (buy, rent, season pass, ad-supported, etc) and I'm sure there will be competing models for the foreseeable future." "Usually... if you can't figure the business model for a cheap or ""free"" product it's because you ARE the product and just don't know it.  In this case, moviepass has found a buyer who will pay more for the data on your movie watching habits than they have to fork out for movie tickets.   This is why the price dropped from $60 to $10. It's a data play now.   Don't worry... You're giving Google and Facebook way more for access to their ""free"" technologies, I assure you." Office 365 has all of the sharing/editing/browser access that you would want as a consumer - plus it is FAR more useful in an enterprise setting because of better permissions settings.  What people don't seem to realize is that Microsoft doesn't make their nut on consumer software.  They ultimately are failing at porting REALLY GOOD enterprise packages to the consumer - which is a totally different issue. Because salaries aren't high enough.  If the salaries were higher more people would pursue that field.  I'm not going to begrudge anyone making billions, but Microsoft is raking in cash, and it's obvious that they'd rather horde it than spend it on talent.  Well, ask a professional sports team about that equation.  Just because salaries are in the 100s of thousands doesn't mean that they're too high.  Especially when you look at these companies financial filings. There isn't one. I haven't been very happy with anything I've tried, commercial or open source. I've used Quicken for a while and been fairly happy with the user experience, but I hate the idea of their sunset policy (forced upgrades) and using proprietary format for the data files. Note that I wouldn't mind using proprietary and/or commercial software if it used a format that allowed me to easily migrate to another application. And no, QIF/OFX/CSV doesn't count. What I've found works well for me is to use Mint.com for pulling transactions from my accounts and categorizing them. I then export the transaction history as a CSV file and convert it to QIF/OFX using csv2ofx, and then import the resulting file into GNUCash. The hardest part is using categories (Mint.com) and accounts (GnuCash) properly. Not perfect by any means, but certainly better than manually exporting transactions from each account. You can choose to pay your mortgage instead of another bill, or vice versa.  Your net will change from month to month while your gross is relatively static. I can make a bunch of promises to my load officer about my expenses, but it is very difficult to verify.  Moreover, it is pretty hard to give your net income and plan for emergencies. So for the sake of reliability, verifiability, and general ease a lender will look at your gross. YOU should definitely look at your net when deciding if you can afford a loan. I think you have a good start understanding the ESA. $2k limit per child per year. The other choice is a 529 account which has a much higher limit. You can deposit up to 5 years worth of gifting per child, or $65k per child from you and another $65k from your wife. Sounds great, right? The downside is the 529 typically has fewer investment options, and doesn't allow for individual stocks. The S&P fund in my 529 costs me nearly 1% per year, in the ESA, .1%. the ESA has to be used by age 30, the 529 can be held indefinitely.