TurboTax, the nation's number one tax prep software, is facing a class action lawsuit claiming many lower-income people paid for tax filing when their returns should have been free.
One woman believes she was one of them.
Jessica Carlson is a single mom, raising a daughter and watching every dollar.
She decided to file her taxes through TurboTax this year, after hearing it was "free" if you earn less than $34,000 annually. Her income was significantly less than that, she says.
Only problem: Instead of the free filing she expected, Carlson was billed $90 for TurboTax, paying out almost a third of her tax refund.
"My total refund was $335," Carlson said, "and TurboTax took $90 of it."
She says she Googled for TurboTax free tax prep, clicked the link to TurboTax.com, then put in her information and W-2 forms for her part time job.
But within minutes, she claims, she ended up in its more expensive version, despite her low income.
"It automatically put me in Deluxe," Carlson said, "and I said I did not make that kind of money." But having gone that far, she proceeded anyway, gave her credit card, and was promptly billed for $90.
Investigation claims it's easy to end up paying
A recent investigation by the non profit group Pro Publica found other people who ended up paying, just like Carlson.
What she and so many other TurboTax users don't realize, the report says, is that unless you go to TurboTax through the IRS website, there is a good chance you've just gone to the paid version of TurboTax.
Pro Publica claims you must use the TurboTax Link on the IRS Free File site to be sure you will not be charged.
Carlson says after realizing what she was charged, she called TurboTax, but was told she could not get her money back.
"They said, 'No, we're sorry, but you should have gone to the IRS website.'"
We contacted TurboTax, where a spokesman told us its pricing is made clear before anyone pays, and said "more people have filed their taxes for absolutely free with TurboTax than all other tax prep software companies combined." (See full statement below)
But he did tell us they would contact Carlson directly about the bill she received, and discuss it with her.
"It's not fair," she said.
Class action filed
But TurboTax may soon have to explain its policies in court.
A California law firm, Gibbs Law Group, has just filed a nationwide class action suit claiming TurboTax intentionally made its free program hard to find, generating millions of dollars from people who could least afford it. (Read the full lawsuit HERE).
So it seems we have not heard the last of this.
As always don't waste your money.
FULL STATEMENT FROM INTUIT/TURBOTAX
"Any suggestion that Intuit does not support the IRS Free File Program is flat wrong. More people have filed their taxes for absolutely free with TurboTax than all other tax prep software companies combined. We are committed to offering Americans the ability to file their taxes for free, and we’re committed to the IRS Free File program. We look forward to working with the IRS and private industry to improve the Free File program and help it continue to grow." Rick Heineman, Intuit
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