Why is Turbo Tax now charging educators to be able to claim the Educator's Expense Tax Deduction by forcing them to upgrade to TurboTax Deluxe?

[DFWeducator]

On the years, when I have a simple tax situation/return to complete, I have used TurboTax's free online tax return site.

As you may know, all educators qualify for a Teacher (Educator) Expenses Deduction which can help offset up to $250 of an educator's personal expenses towards classroom supplies, professional development, PPE, etc. This is an above-the-line deduction meaning you can still receive this deduction without itemizing (using the standard deduction).

TurboTax and all the other big name do-it-yourself online tax preparation companies have always allowed for this deduction within the free version of their software. However, Turbo Tax has recently made it where you have to pay to claim this deduction.

What makes this more egregious is since this amount gets taken off your AGI, you don't get that deduction back in-full on your refund, instead, it reduces your taxable income. Therefore, it could actually cost more to upgrade to the deluxe version to receive this deduction than what it would net you dollar-for-dollar in your refund.

Really, TurboTax? Why are you sticking it to teachers? This particular deduction ONLY affects teachers, so you must have made the conscious decision to now charge teachers access this above-the-line deduction.   Now, according to your website and a subsequent phone call* I had with a TurboTax agent, in order to take this deduction it is now part of your paid Deluxe edition. This is a bad look. Several other competitor's sites aren't making teachers pay/upgrade to take this deduction on their (free) online tax platforms.

It's been a rough two years teaching through a pandemic - I have been teaching in-person since August of 2020. We teachers frequently buy classroom supplies and have even paid for our own PPE. Now, having to pay to upgrade to the Turbo Tax Deluxe Edition just to claim the Teacher (Educator) Expenses Deduction is a slap in the face. Again, the fee to upgrade is likely going to be more than what it nets an educator on their tax return. You'll lose money in the upgrade fee to be able to claim this deduction. 

My advice to my fellow educators is to use another company that doesn't charge you to put this above-the-line deduction on your tax return. 

*During my phone call with the TurboTax agent, they explained this change was (paraphrase) "due to all the changes over the past couple of years" (read: pandemic) and some things that used to be on their free version aren't anymore. They also tried to offer me a 20% discount on the Deluxe Online Version. (I declined) Then, they also reminded me of a service that TurboTax has where I could have the cost of the tax preparation deducted from my refund check. (I again declined)

[xmasbaby0]

WHY DO I HAVE TO PAY?  I WANT THE FREE EDITION

The information that you can enter in Free Edition is pretty limited now.  Thanks to the new tax laws that began for 2018 returns, there are no more simple Form 1040EZ or 1040A's.  Everything goes on a Form 1040 that has three extra "schedules" with it, and if you need any of those schedules, you are not able to use the Free Edition.  Using the standard deduction instead of itemizing does NOT mean you will not need any of those schedules.https://ttlc.intuit.com/questions/4511011-what-happened-to-the-1040a-and-1040ez   If you started in the Free Edition and entered any data that required any of those three schedules, you have to upgrade to a paid version and if you are watching the screens carefully you are alerted to the upgrade.

When you chose to “start”  in the Free Edition —

Directly below the words “Free Edition” there is a blue link that says “For simple tax returns only”   If you click that link it brings up this information:

You can file with TurboTax Free Edition if you have a simple tax return.*

*A simple tax return is Form 1040 only.

Situations covered in TurboTax Free Edition include:

• W-2 income
• Limited interest and dividend income reported on a 1099-INT or 1099-DIV
• Claiming the standard deduction
• Earned Income Tax Credit (EIC)
• Child tax credits
• Student Loan Interest deduction

Situations not covered in TurboTax Free Edition include:

• Itemized deductions
• Unemployment income reported on a 1099-G
• Business or 1099-NEC income
• Stock sales
• Rental property income
• Credits, deductions and income reported on schedules 1-3

How does TurboTax make any money?

Customers with more complex tax situations will file with our paid TurboTax products that provide all the additional forms and guidance they need. We also offer additional benefits that go beyond filing your taxes, but they are optional and are not required to file simple taxes for free. We hope that, over time, as our customers with simple returns need more capabilities as their financial situations change (for example owning a home, having a child, managing investments), they have loved our products and services so much that they will choose our paid TurboTax offerings to prepare and file their returns.

Or—-Use this IRS site for other ways to file for free.  There are 8  free software versions available from the IRS Free File site

https://apps.irs.gov/app/freeFile/

[DFWeducator]

This doesn't exactly answer this specific question. It's just a broad copy-paste answer as to why Turbo Tax charges fees. 

[xmasbaby0]

I also provided a link near the bottom of the reply so that you could try using one of the free software versions on the IRS site.

[rjs]

"Why are you sticking it to teachers? This particular deduction ONLY affects teachers, so you must have made the conscious decision to now charge teachers access this above-the-line deduction."

TurboTax did not make a decision specifically about teachers. They made a broad decision to not include Schedules 1, 2, and 3 in Free Edition. The IRS put the deduction for educator expenses on Schedule 1, so it is not included in Free Edition.

"It's just a broad copy-paste answer as to why Turbo Tax charges fees."

TurboTax charges fees because it's a commercial company that is in business to make money by selling software and services. It is not a charity. They don't make any money by giving away their products, and there is no reason that they should give it away. Offering a very restricted version of the product for free is a marketing strategy. They do it in the hope that you will buy something. It's like any other business that gives free samples as a way of introducing their product to potential new customers. When a food store gives you a free sample, they don't give you a full portion or a full meal. They give you a taste. If you want more, you have to buy something.

[lislenlaw]

Yes!  It is shameful that Turbotax does this.  I was helping my daughter - (a special ed teacher) do her taxes.  She had one w-2, less than $20 in interest and the teacher deduction.  Turbo tax feels that requires extra money for the deluxe edition.  Teachers are heroes.  They do so much.  This is not right.  If they want more money they should get it from someone else.

[rjs]

@lislenlaw  Nobody is forcing your daughter to use TurboTax. There are many options for free tax filing: IRS Free File, VITA and TCE, and a number of companies that offer free filing that might not have the same restrictions as TurboTax.

[SDun12]

Ugh.  It doesn't "just stick it to teachers".  This upgrade and fee applies to anyone that needs the schedule that this deduction is on - which is tons of other people - not just teachers.   The schedule handles many things, not just this single deduction.

Teachers do a job, just like the rest of us.  A job they chose to do.   They are no more entitled to "free" than anyone else.  These days everyone is a "hero".  It's getting tiring.