Consumers Will Soon Receive a Share of a $141 Million TurboTax Settlement
What happened
Intuit, which owns TurboTax, has entered into a settlement agreement to pay $141 million to lower-income Americans who were charged for tax preparation software that should have been free. About 4.4 million consumers were unfairly charged for tax prep software in 2016, 2017, and 2018, reports CNBC.
So what
Taxpayers whose income falls below a certain threshold are eligible to file their taxes for free. For those filing 2022 taxes, that threshold was $73,000. In 2016, it was $64,000. Because some customers were unfairly charged for TurboTax software they were entitled to for free, the company is now sending out payments to those impacted.
“Intuit is pleased to have reached a resolution with the state attorneys general that will ensure the company can return our focus to providing vital services to American taxpayers today and in the future,” said Kerry McLean, Intuit’s executive vice president and general counsel.
While the typical payout from the aforementioned settlement will be $30, some recipients may get up to $85 if they used TurboTax for 2016, 2017, and 2018. Payments are set to begin in May, but some may not hit customers' bank accounts until early June.
Now what
It's estimated that 70% of taxpayers are eligible to file their taxes for free. Yet only 2% of those eligible took advantage of a free filing option during the 2022 tax season, according to the National Taxpayer Advocate’s annual report to Congress.
If you're eligible for a free filing and your tax situation is fairly straightforward, then it generally pays to take advantage of it, provided you're using a trusted software, like TurboTax. That said, even if you're eligible to file taxes for free, it can sometimes work to your benefit to hire a tax preparer.
While tax software can help guide you toward the credits and deductions you may be eligible for, there's no guarantee you'll end up claiming all of the benefits you're entitled to if you don't use an actual tax preparer who knows the rules inside and out. Plus, if you're self-employed, then it's important to work with a tax preparer rather than file taxes on your own -- even if you can do so for free.
When you're self-employed, there's a whole different set of tax rules to follow, and you may be eligible for deductions that salaried workers aren't. The average cost of a tax preparer for an itemized Form 1040 is $323, according to Intuit. In many cases, the modest fee paid to a tax preparer is more than made up for via the savings involved.
Alert: our top-rated cash back card now has 0% intro APR until 2025
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.
Related Articles
View All Articles