06-28 bill mug-01

William Patrick

I like free stuff.

To pay my taxes this year, I decided to use one of the free filing services offered online. It cost me 40 bucks.

TurboTax online used the word “free” five times on its home page.

Turns out, if you use the “start your return” option, odds are you are going to pay. If you don't file a straight 1040, with no additional forms, you must pay for an upgrade.

Apparently, not many people caught on. The actual free-filing software – called the “Freedom Edition,” not “Free Edition” – is hidden within the site.

If you don't know exactly what you're looking for, you're probably not going to find it.

A Google search for “TurboTax free filing” brings up several results – all linking to its home page, not the Freedom Edition, where the free stuff is.

I'm not the only one who fell for this okey-doke. Possibly millions of filers paid $40 to $200 to file their taxes, thinking they were going to file free.

This shady practice has sparked a federal class-action suit against TurboTax parent company, Intuit, Inc., of San Diego, for deceptive practices.

Under an agreement with the Internal Revenue Service, TurboTax is available free to anyone earning less than $66,000 a year. In return, the IRS has agreed not to compete with online tax-preparers by offering its own free software or pre-filing taxes for the 70 percent of Americans who don't itemize.

Ads for TurboTax, however, don't disclose that, to access the “Free File” program, filers must first find the “Freedom” edition of the product. This edition, inaccessible by using the “start for free” option, is found by clicking on the “see if you qualify” button.

Starting for free doesn't guarantee that, if you continue to file, charges won't apply.

When I tried to enter my child-care expenses, I was told I had to upgrade to TurboTax Deluxe. (Because I filed early, I was eligible for 25 percent off the regular price of $60.)

What's more, I didn't have to pay this out-of-pocket.

“We'll just take the $40 out of your refund,” the site assured me. What wasn't clear, though, was that this was a $40 “convenience fee,” in addition to the $40 charged for the product.

Filing “for free” was going to cost me $80. I hit the back button and paid it. None of these charges would have applied, however, if I had clicked the magic “see if you qualify” button that opened the secret door to the land of free filing.

Intuit reported that more than 30 million people filed with TurboTax last year. Of those, many millions reported less than $66,000 in earnings and were allowed, by law, to file free. Unfortunately, they were bamboozled, as was I, into paying for the service.

Small wonder, Intuit spent $66 million last year lobbying against a free-file system run by the IRS.

I enjoy the convenience of TurboTax. The automatic input of my W-2 information saves me from math and eye-strain.

But I don't like getting suckered. Neither should you.

For more information on the class-action lawsuit against TurboTax, visit:


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