You know the ads: “Free free, free free free free.”
For years, TurboTax maker Intuit has run ad campaigns focusing on the word, “free,” but can all TurboTax users really file their taxes for free? The answer is actually no (more on that later), and in a lawsuit filed March 27 of this year, the Federal Trade Commission (FTC) suggested that Intuit’s advertising campaigns have been misleading consumers.
“TurboTax is bombarding consumers with ads for ‘free’ tax filing services, and then hitting them with charges when it’s time to file,” said Samuel Levine, Director of the Bureau of Consumer Protection, in a statement. “We are asking a court to immediately halt this bait-and-switch, and to protect taxpayers at the peak of filing season.”
This year’s tax filing deadline is April 18. Intuit says it will fight the lawsuit.
TurboTax can be a wonderful filing software for many taxpayers, particularly those with very simple tax returns. But not all users will find themselves without charges come Tax Day. Read on to see who qualifies for free tax filing with TurboTax.
Is TurboTax actually free?
TurboTax users can file their taxes for free only if they have a “simple” tax return, as defined by Intuit, according to the FTC complaint.
That definition changes from year to year; for tax-year 2021, Intuit refers to a simple return as one that can be filed on a Form 1040 with limited attached schedules, like one that includes student-loan interest paid, the FTC said.
Users without a simple return must upgrade to a paid version of the tax service, the FTC alleged. This includes any independent contractors in the gig economy who get a 1099 tax form.
“In truth, TurboTax is only free for some users, based on the tax forms they need,” according to the FTC lawsuit. “For many others, Intuit tells them, after they have invested time and effort gathering and inputting into TurboTax their sensitive personal and financial information to prepare their tax returns, that they cannot continue for free.”
About two-thirds of American taxpayers are ineligible to file their taxes using TurboTax’s free service, according to the FTC.
For their part, Intuit is arguing that their ads have done more good than harm.
“Far from steering taxpayers away from free tax preparation offerings, our free advertising campaigns have led to more Americans filing their taxes for free than ever before and have been central to raising awareness of free tax prep,” wrote Kerry McLean, executive vice president and general counsel of Intuit. “While it is disappointing that the FTC chose to file this lawsuit, we look forward to presenting the facts in court and are confident in the merits of our position.”
Beware of Tax Season Scams
While TurboTax’s actions are disappointing, we can’t say we’re surprised. As we’ve covered in previous blog posts, the tax industry is rife with scammers, predatory firms, and other bad actors. In fact, this is why my partner and I founded Boxelder Consulting back in 2015 — to bring integrity back to the industry and provide real tax help to good people.
Especially during peak tax season, it’s important to be wary of too-good-to-be-true tax filing offers – and to keep an eye out for the red flags of tax debt relief scams.
If you want honesty in your fees, a professional relationship with your CPA, and the peace of mind to know that you’re in good hands, take a look at our client testimonials and give us a call at 303-317-6111.