Beginning last year, Intuit began disabling key features in some of its TurboTax offerings so users would have to upgrade to more expensive versions. The change rolled out a year ago to people who prepared returns online, and this year it also affects those who buy the software for installation on their computers (CD or download). For some reason, last year’s change in the online version didn’t cause much of a stir, but the angry response to this year’s follow-on change in the installed version has been widely reported, including in the New York Times and Wall Street Journal.
Intuit has responded with an apology for not doing enough to communicate this change. The company offers no apology, however, for the underlying strategy of forcing users to migrate to more expensive products. The TurboTax apology comes with a rebate offer, but one that won’t fully compensate for the difference in cost, and won’t be available to all affected customers.
Intuit offers four versions of TurboTax for installation on your computer. We’ll mention the list prices currently shown on the company’s website, although discounts are often available through Intuit and other sellers.
The Basic version, now with a list price of $29.99, previously handled Schedule A (itemized deductions). If you itemize, you’ll now need the Deluxe version, listing at $69.99, to prepare the same tax return. Customers hit by this $40 increase aren’t eligible for the rebate offer.
Changes in the Deluxe edition have received more attention. Deleted from this offering are Schedules C, D, E and F, covering business income, capital gains, rents and other items. Most of these forms are now available in the $99.99 Premium edition, although Schedule C moves all the way up to the $109.99 Home & Business edition, so the added cost is $30 or $40 depending on which forms you need. These added costs may be partially offset with a $25 rebate if you qualify.
The $25 rebate is available only to certain customers:
- You get no relief if you’re affected by the need to pay $40 more due to Schedule A being removed from the Basic edition.
- You get no relief if you used the online version of the software to file your 2013 return.
- You get no relief if you use the online version to file your 2014 return.
- You get no relief if you’re a TurboTax Advantage customer (a designation for people who pre-order the software, which in this case appears to be a Disadvantage).
- You get no relief if you buy the software but don’t actually use it to file your return.
- Intuit won’t provide the rebate automatically: you have to go to their website and apply, providing personal information including your social security number.
- You get no relief if you apply after April 20, 2015. Apparently the offer is not available to those who file on extension.
- The offer is “subject to change without notice,” so there’s no assurance you’ll receive the rebate if you buy this software, even if you meet all the conditions listed above.
- Intuit is apologizing only for the manner in which they rolled out this change, and not for the strategy of forcing customers to upgrade by partially disabling some of their products. They make no promises about how they’ll handle these issues next year.
Some of these restrictions appear only in a lengthy list of “important offer details and disclosures,” which isn’t visible until you click to open that part of the web page, and which includes promotional material you have to read before getting to all the disclosures.
You have choices
TurboTax is the market leader, and uses that clout to charge far higher prices than its competitors. If your return happens to include a capital gain, and you want to efile federal and state returns, the list price for the CD/Download product would be $89.98 and a whopping $119.98 for the online product. You pay even more if you have to file state returns with more than one state. Discounts are currently available, but may be terminated at any time.
H&R Block would charge a total of $64.90 for their download version that covers capital gains with efiling a single state return. (You would need a higher-priced edition for Schedules C and E, however.) Their online version to cover these items would be $66.98.
TaxACT will charge $21.99 for the download version or $19.99 for online preparation and filing. These prices apply to their Deluxe edition (with prior year import capability and free phone support) and include efiling a single state return. They also offer versions that are even less expensive. In fact, they offer a free version that includes free efiling (of the federal return only), without restriction as to the complexity of the return. They also promise not to increase the price after you start preparing the return, whereas TurboTax reserves the right to do so.
It’s reasonable to ask whether the extremely low prices for TaxACT products reflect low quality. The answer is no. While the offerings are not identical, most taxpayers will notice little difference between TaxACT and TurboTax. Our sense is that TaxACT charges less than full value for their offerings in a bid to build market share. They appear to be poised to overtake H&R Block, and while their market share gap with TurboTax is much larger, Intuit’s push for higher prices may spur more defections to TaxACT.
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