Why Does TurboTax Advertise as Free but Charge Me $110 to File?

Many users wonder why TurboTax advertises as free but ends up charging them a significant amount when filing their taxes. This article aims to clarify the reasons behind these charges and help you understand how to avoid unexpected fees.

Eligibility for Free Filing

The most common reason for unexpected charges is that not everyone qualifies for the free version of TurboTax. Typically, the free tier is limited to simple returns, such as those with straightforward income and no additional deductions or credits.

If your tax situation is more complex, TurboTax may prompt you to select a paid version to access additional features like tax advice, live support, or specific forms. Always review your eligibility for the free version carefully before starting the filing process.

Additional Features and Fees

Moreover, some of the situations that might lead to fees include having self-employment income, investment income, rental property income, or other intricate financial situations. These factors can complicate your tax return and may not be supported by the free version of TurboTax.

Additionally, state tax returns often incur additional fees, even if the federal return is free. It is essential to understand which features you might need and ensure that you meet the eligibility criteria for free filing.

State Returns and Additional Fees

State tax return filing fees can vary significantly depending on the state. If you require a state tax return, you may incur additional charges that are not covered by the free version of TurboTax. It is crucial to review the state filing requirements before starting the process.

Promotions and Limitations

Finally, TurboTax occasionally runs promotions that may not apply to all users or may have specific conditions. Ensure that you understand the terms and conditions of any free offers before taking advantage of them. Contact TurboTax customer support if you have specific questions about charges or fees.

Historical Context and Customer Feedback

Intuit, the company that owns TurboTax, was one of the founding sponsors of the IRS “Free File” program. However, they were criticized for making the free file program difficult to find behind their "pay for" versions. They were fined and required to issue refunds for their misdeeds. In 2021, Intuit removed themselves from the IRS Free File program and now advertise “Start for Free” on their website.

According to TurboTax, a simple return, done by yourself, early in the season, can be free. If you need assistance or require a review of your return, you might be charged. Similarly, state tax returns are not a part of the IRS program and often have additional fees.

What to Consider Before Filing

To avoid unexpected charges, consider the following:

Review your eligibility for the free version: Ensure that your tax situation aligns with the criteria for the free version. Understand the limitations: Familiarize yourself with the features that are and are not covered by the free version. Check for hidden fees: Be aware of any additional fees for state returns or more complex tax situations. Contact customer support: If you have specific questions or concerns, reach out to TurboTax customer support for clarification. Read terms and conditions carefully: Always review the details of any offers or promotions before proceeding.

Conclusion

Understanding the reasons behind unexpected charges and taking proactive steps to review your tax situation and eligibility can help you avoid surprises when filing with TurboTax. By being informed and informed, you can ensure a smoother and more predictable tax filing process.