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July 18, 2019 12:45 am

TurboTax Started Charging the Disabled, Unemployed and Students To Make Up For Trump Tax Law

The 2017 tax overhaul directly threatened the lucrative business of Intuit, the maker of TurboTax, so it pushed students, the disabled, and unemployed to a paid tier to make up for the lost profits. ProPublica reports: Although the company draws in customers with the promise of a "free" product, its fortunes depend on getting as many customers as possible to pay. It had been regularly charging $100 or more for returns that included itemized deductions for mortgage interest and charitable donations. Under the new law, many wealthier taxpayers would no longer be filing that form, qualifying them to use the company's free software. Intuit executives came up with a way to preserve the company's hefty profit margins: It began charging more low-income people. Which ones? Individuals with disabilities, the unemployed and people who owe money on student loans, all of whom use tax forms that TurboTax previously included for free. The shift was described to ProPublica by two people familiar with the process. Because the new law almost doubled the standard deduction, Intuit faced a loss of users of its Deluxe edition. Most of the millions of Americans who would no longer be itemizing their deductions are relatively affluent -- making more than $75,000 a year -- but they would now potentially be eligible to use the Free Edition. In response, the company bumped a number of forms typically used by lower-income filers, which were previously available in the Free Edition, into paying editions. "They were always supposed to be customer focused, customer first," one former staffer said. But the income levels of the groups that were being driven to paid products "was never really considered." One of these forms was for a tax credit that goes exclusively to poor taxpayers who are elderly or get disability benefits. Another is used by low- to middle-income households that receive a credit for putting money in a retirement account. A third is used by taxpayers who collected unemployment benefits.

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