FTC sues Intuit for falsely claiming TurboTax is 'free'

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There actually are 'free' tax services, but they come with some caveats of their own

As American taxpayers rush to meet the April 18 tax return deadline, many are looking for tax preparation software and services — especially one that’s free. After fielding complaints about TurboTax, the FTC has announced an administrative action against Intuit (TurboTax’s owner) for misleading people about free tax filing with the service. 

The agency has asked a federal court to stop the company from advertising that its service takes "$0 to file" or that consumers can "file FREE" because consumers are finding that they need to upgrade to a paid TurboTax product to complete and file their taxes after entering in their personal and financial information. 

TurboTax ads have run during major events, including the Super Bowl and the NCAA Basketball Tournament. In one ad that caught the FTC's attention, a disclaimer appeared on the screen while an announcer said “That’s right, TurboTax Free is free. Free, free free free.”

“To start, the term FREE is conditional, wherever you see the term free, there are attached conditions,” warned ConsumerAffairs reviewer Nicholas, from Torrance, Calif., in his review of TurboTax. “If you expect any excellent customer service, you are going to need to pay for it.”

“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 FTC's Bureau of Consumer Protection. “We are asking a court to immediately halt this bait-and-switch, and to protect taxpayers at the peak of filing season.”

Are there any real “free” tax services? Yes.

The FTC says that taxpayers do have options that are actually free. Below are some of the options that consumers can choose from:

The IRS Free File Program. If your adjusted gross income was $73,000 or less for the 2021 tax year, then you qualify for free guided tax preparation software for your federal taxes. All you have to do is use the IRS’ online tool to find which free software is available to you based on your income and situation. Depending on your income and which IRS partner site you use, you might also be able to prepare and file your state taxes for free.

When ConsumerAffairs reviewed the IRS’ site, there were eight services listed that qualified as free options, including TaxSlayer and TaxAct. However, there are some requirements related to age, income, and location that consumers will have to meet in order to qualify.

MilTax if you’re a service member or veteran. If your income is over $73,000, another free option is the Department of Defense’s free filing program. However, there are some eligibility requirements that you’ll have to clear.

IRS Free File Fillable Forms. The FTC says taxpayers can use this method to file their federal taxes for free if their 2021 adjusted gross income was more than $73,000. Don't expect any free advice or help with filing, though. These forms are simply an online version of the IRS paper forms, so guidance is not available. These forms don’t help with state tax returns, but state tax agencies may be able to offer some help, so it doesn’t hurt to ask. 

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