Duplicity on the Part of Intuit/TurboTax

By Editor |

Saturday, April 12, 2014

In 2013 I filed taxes for the first time in many years.  I hadn't been filing because I had started my own business and was pretty poor.  I couldn't even afford to pay the so-called payroll taxes.  ("Payroll taxes" is a fairly new term; they weren't called that when I was young.)

Self-employed people have to pay the entire 15% payroll tax amount since they don't have an employer; and when you are making $12,000 a year, you can't afford to part with about $1,500.  In my opinion, payroll taxes should be graduated like income taxes are.  Indeed, I ended up paying the federal government about $1,850 in payroll taxes for 2012, a huge amount of money for someone at my low income level.

Since I had a home-based business, I knew that my 2012 taxes would be complicated.  I tried to get free help from an AARP tax preparer, but she said my taxes were too complicated.  So I went to a local CPA and was told that their charge would be about $800 (gulp).  I knew about programs like TurboTax, made by Intuit, but I didn't want to pay money to purchase a program (especially since you have to buy a new version of the program every year).  However, much to my delight, I discovered that the federal government had made a deal with Intuit and other software companies to provide their software free to low-income tax filers.  So I used TurboTax to do my 2012 taxes, and it cost me nothing.

On April 9, 2014, I logged onto my TurboTax account to do my 2013 taxes and discovered that it was no longer free.  To do a simple EZ tax return was free, but to do a business return would cost me $99.  Furthermore, they wanted an additional $29 to do my state tax return.  I didn't even have that much money in the bank.  I was flabberghasted, and I wondered what had changed since the previous year.  The opening page of the TurboTax site seemed to suggest that all my taxes would be done for free; but when I got to the business portion, they required $99 to continue.

So I went back to the federal site and learned that the federal government was still offering tax preparation software for free, including TurboTax.  I then went back to the TurboTax site and searched their help files.  What I discovered was this:  When you sign up with TurboTax to have your software done for free in one year, they then convert your account to a regular "free" account for the next year -- but that "free" account is only good for the 1040EZ form, not for more complicated forms.  In order to get my taxes done again for free, I had to create a new account in another part of their site.  Here is how it works:

My old account was here:

     turbotax.intuit.com  ("TurboTax Free Edition" -- not really free)

To get free filing in 2014, I had to go here and establish a new account:

     turbotax.intuit.com/taxfreedom/ ("TurboTax Freedom Edition" -- entirely free)

For Intuit to have turned my "Freedom" account into a not-so-free "Free" acount for my following year's taxes was dishonest at best.  I wonder how many TurboTax users didn't figure out what I figured out, and ended up paying TurboTax a lot of money.  Undoubtedly, the reason why Intuit does this is that the federal government is probably paying TurboTax only a small amount -- probably something like $5 or $10 -- for every filer who gets to use their software for free.

Before I had figured out what was going on, there was ONE moment on the TurboTax site when they gave me the option to convert my 2012 account back to a "Freedom" account, which would have been entirely free -- but they didn't explain what the different was between a "Free" account and a "Freedom" account, so I declined.  (Most people, I think, when given the option to have a "Free" account or a "Freedom" account would take the former since they know what the word "free" means, but don't know what the word "freedom" means in this context, with no explanation being given.)  Once I declined, the TurboTax site wouldn't give me that option again.

So here we have some obvious duplicity on the part of Intuit:  (1) They change the customer's completely free acount to a pay account from one year to the next; (2) they don't tell the customer that a completely free account is still available; (3) they do, however, give the customer the option to keep the completely free account, but they don't explain the terminology they are using, so most customers won't make the right decision; (4) and once the customer has made the wrong decision, that option is never presented again.

In 2015, I won't be fooled.

(Note:  When I created the new account for my 2013 taxes, I used a different email address.  I don't think that was necessary, but it might make a difference, and I suggest you do that too.)