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TurboTax agrees to pay millions for deceiving customers.
© Mykhailo Polenok |

Did you pay for a ‘free’ TurboTax filing? You may be entitled to part of this $141M settlement

Tax season is over, but it’ll be back again. And again. It’s never too early to start preparing. While you don’t need to hunker down just yet, it can’t hurt to start making a list of deductions for next year’s filing.

Do you work from home? You can deduct expenses for the part of your home that you use solely for business. Think insurance, utilities, repairs, maintenance and depreciation. Tap or click here for more information on home office deductions.

Tax preparation software companies help you file taxes, maximize deductions and increase refunds. TurboTax is one popular option, but rather than helping with refunds from the government, its parent company will be paying customers out of its own pockets. Keep reading to see if you’re owed.

Here’s the backstory

Intuit, the owners of TurboTax, has agreed to pay $141 million to more than 4 million of its customers, according to a press release from New York Attorney General Letitia James.

All 50 states and the District of Colombia have signed onto the agreement. “Intuit cheated millions of low-income Americans out of free tax filing services they were entitled to,” James said.

RELATED: Have you ever bought ads on Facebook or Instagram? You may be entitled to a refund. Tap or click here to learn more.

Deceptive practices

Through the IRS Free File Program, companies like Intuit offer free tax filing services for low-income customers (earning about $34,000) and military members.

Intuit itself has a TurboTax Free Edition product, which is advertised as free for “simple returns.”

The problem is that Intuit pushed people to use its own Free Edition, which only about a third of Americans are eligible to use for free. In contrast, about 70% of taxpayers are eligible to use the IRS Free File products.

Millions of people who used TurboTax Free Edition ended up paying out of pocket, despite aggressive marketing strategies that depicted it as a free service.

Intuit went as far as to pay for search engine advertisements to direct people to the company’s TurboTax Free Edition, even when they were searching for the IRS Free File service. In 2019, Intuit blocked its IRS Free File landing page from search engine results, pushing away taxpayers who were eligible for free filing.

How to get your cut

Nearly 4.4 million Turbo Tax customers who used TurboTax Free Edition for the 2016 to 2018 tax years will be compensated about $30 for each year they were tricked into paying for filing fees.

Even better, you don’t need to act to get your share. Impacted clients will automatically receive notices and a check by mail. It doesn’t seem like much in the way of compensation, but this is often the case in massive payouts with millions of victims.

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