Just how 'free' are 'free' tax filing services?


The IRS has a for-real 'free' option that might be worth considering

First, the Federal Trade Commission (FTC) called TurboTax on the carpet for the company’s “free filing” offer. Then, H&R Block was pulled into the same mud puddle.

Now, law firm Morgan & Morgan has filed a class-action lawsuit against H&R Block, claiming that it misled the public about the cost of its tax preparation services.

The lawsuit argues that H&R Block has “deceptively” marketed its online tax preparation products by representing to consumers that they can file for free, when in actuality many consumers have to pay a fee.

How it plays out

One of the plaintiffs – Stacey Cox of Spokane, Washington – said that in her particular situation, it all started with Block's advertisements that pitched a free version of their Online Product. After logging on to the Block website to complete her 2023 return, she said she received no warning that she was not eligible to file her return for free. 

“Only after having entered her personal and financial information was Cox notified that she would be charged approximately $77 as a condition of submitting her return. Cox never received an explanation as to why her return was not a “simple” return that would qualify for a free submission,” the lawsuit states.

“Although this fee was contrary to defendants’ promises of ‘free’ tax return preparation, having expended the time and effort required to fill out her personal and financial information on the Defendants’ online system, Cox agreed to pay the fee in order to submit her tax return,” the complaint states.

“H&R Block has allegedly been preying on their users during tax season, one of the most stressful times of the year, and one that is extremely difficult to navigate for many,” Morgan & Morgan attorneys John Morgan and John Yanchunis, said.

“Our plaintiffs were allegedly lured into using their services under the guise of the services being free, only to experience an alleged bait-and-switch after they’ve been going through the long and daunting process of completing their taxes. We have deceptive marketing laws for a reason, and our goal is to hold H&R Block accountable for their alleged misleading advertising, and to ensure that future consumers will not be duped.”

Customers have mixed reviews about H&R Block's tax preparation services at ConsumerAffairs. While some appreciate the ease of use and accuracy of the software – especially for simple tax returns – others mention that the free version may not cover all necessary forms and may require upgrades at an additional cost. 

Is 'free' ever legit?

With any consumer product, marketing language has no bounds. “Free” is rarely ever really free. The window to get your taxes in by Apr 15, 2024 is closing quickly, but the IRS does have a “free” version that tax experts think is worth considering.

Here’s an explainer on how it works on how to navigate the process as easily as possible:

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