This story is part of Taxes 2022, CNET’s coverage of the best tax software and everything else you need to get your return filed quickly, accurately and on-time.
TurboTax’s parent company, Intuit, has agreed to pay out $141 million in compensation after the Federal Trade Commission filed suit alleging millions of customers were deceived into paying for tax-prep services that should’ve been free.
The FTC alleges that, in 2020 alone, two-thirds of eligible filers couldn’t use TurboTax Free Edition, including gig workers and people who earned farm income. Investigators said Intuit also engaged in deceptive marketing and trade practices, including intentionally blocking its IRS Free File landing page from search engine results.
The company also lured people in with ads that touted its free edition, “only to deceive them into paying,” according to New York Attorney General Letitia James, who brokered the multistate settlement.
“For years, Intuit misled the most vulnerable among us to make a profit,” James said in a May 4 statement. “This agreement should serve as a reminder to companies large and small that engaging in these deceptive marketing ploys is illegal.”
In a statement, Intuit admitted no wrongdoing and said it agreed to the deal to “put this matter behind it.”
Below, find out how much affected customers can expect to get from the settlement, and whether you qualify.
Who qualifies for the TurboTax settlement?
Intuit is providing restitution to nearly 4.4 million people in all 50 states who used TurboTax’s Free Edition between tax years 2016 and 2018.
These people were told they had to pay to file, even though they qualified for the IRS Free File program, a partnership between the agency and major tax prep software companies. Individuals and families with an adjusted gross income of less than $73,000 are typically eligible for the Free File program, as are members of the military.
How do I find out if I qualify?
No action needs to be taken, according to Halimah Elmariah, a spokesperson for the New York State Attorney’s Office. Eligible TurboTax users will receive notification, either in an email or letter.
Impacted customers will receive approximately $30 for each year that they were deceived into paying for filing services.
Naomi Antonino/CNET
How do I file a settlement claim with TurboTax?
If you qualify, you will automatically receive a direct payment of approximately $30 for each year that they were deceived into paying for filing services, according to James’ office.
The checks will come from the $141 million settlement, minus $2.5 million in administrative costs.
When will I receive a payment?
Because the settlement involves multiple states, payments will be handled through a third-party administrator. An exact timeline hasn’t been determined yet, but Elmariah told CNET she expects checks would be sent out in the next few months.
For more, check out how to keep your money safe from Zelle scams and what to do if your tax refund hasn’t arrived. If you missed the tax deadline this year, here’s what you should do next.