A growing number of TurboTax customers in Ontario are facing unexpected bills from the Canada Revenue Agency after audits showed they were given financial credits to which they weren’t entitled after using the popular tax preparation software for several years.
Cheryl Wong, a teacher in Markham, was surprised when she received an unexpected bill in the mail.
“We now owed $10,000. (Of that), $8,000 was a credit I received that shouldn’t have been paid, and $2,000 in interest,” Wong told Global News.
Michael Ribeiro was in a similar situation after the Mississauga resident was told he owed the government for credits he shouldn’t have received. He was given 21 days to pay or face additional interest charges.
“It was a very unfortunate surprise the day we got the three letters from the CRA,” said Ribeiro, who has used TurboTax software for many years.
In every case, the demand came out of the blue, as it was for Oakville resident Tim O’Shea.
“A very big surprise — a nasty surprise, I dare say,” the long-time TurboTax customer said.
They’re all among TurboTax customers who contacted Global News frustrated with the American company that manufactures and markets the tax preparation software.
At issue is how TurboTax calculated eligibility for the Ontario Child Tax Care Credit, also known as the Ontario Access and Relief from Expenses (CARE) tax credit. The program was instituted during the COVID-19 pandemic.
Under the program, as defined by the Ontario government, eligible families are permitted to claim up to 75 per cent of their eligible child care expenses, including services provided by child-care centres, homes and camps.
The TurboTax users all said they filled out the software honestly and accurately, according to instructions.
Even so, they’re facing unexpected tax bills.
“When preparing joint tax returns, the program incorrectly defaulted to calculating child care expense credits based solely on the income of the lower-earning spouse,” said Jordan Cera, one of those affected.
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Households earning more than $150,000 per year don’t qualify for the credits.
Cera said in an email to Global News that attempts to deal with TurboTax have been unsuccessful.
“Despite numerous attempts by impacted users to engage with TurboTax and seek resolution, we have encountered persistent roadblocks, vague responses, and an overall lack of accountability,” Cera said.
None of the tax filers interviewed by Global News blamed the Canada Revenue Agency for the reassessment. They pointed the finger at TurboTax, owned by Intuit, based in Mountain View, Calif.
For O’Shea, who prepares tax returns for several members of his family, including his daughter who was re-assessed for three years of returns and owed more than $17,000 for disallowed credits and interest, the resolution seems straightforward.
“My expectation was that Intuit, once they investigated, would see that they had made a mistake,” he said.
Diana Martins, another TurboTax customer, was reassessed for the 2021, 2022 and 2023 tax years. The government demanded she and her husband pay more than $21,000, including credits, penalties, and interest.
The Pickering couple, who have three children, pay more than $12,000 for child care annually. As a result of the audit, she says her family had to dip into their education savings to repay what was owed.
“We want TurboTax to take accountability for that fact that they have put thousands of families with children out like this,” said Martins.
Global News asked the Canada Revenue Agency how many TurboTax customers in Ontario have been audited specifically because of the child care credit program. The CRA did not immediately have an answer.
A Facebook group of more than 100 TurboTax customers tell similar stories about what happened to them.
Intuit has denied any responsibility for the audits that are affecting Ontario TurboTax customers.
“We are aware of customer feedback regarding the Ontario Childcare Access and Relief from Expenses form,” said a TurboTax spokesperson in an email to Global News.
The company’s written statement appears to put the responsibility squarely on its customers.
“We can confirm that our product is calculating the tax credit correctly. The accurate calculation of this credit relies on user inputs as per CRA requirements,” the spokesperson wrote.
“Customers are encouraged to double check the information they enter, such as dependent information and household income, to ensure their personal information is entered correctly. We can confirm that the CRA has reviewed and certified each version of our software.”
TurboTax pointed out that there are two modes in the software, one of which “features a review portion, which we are aware some users are declining, leading to the software relying on their inputs to apply credits they may not be eligible for,” the statement read.
But that explanation doesn’t satisfy TurboTax customers who contacted Global News.
“Software is software is software,” O’Shea said. “It should arrive at the same answer.”
In its marketing, TurboTax guarantees its calculations and claims it will stand behind them fully.
“We guarantee our calculations are 100 per cent accurate,” according to the guarantee on its website.
“If you pay a penalty because of a TurboTax calculation error, we’ll reimburse you the penalty and interest. This doesn’t include calculation errors due to errors in CRA tables,” it reads.
Intuit was recently challenged about its marketing and public statements about TurboTax.
In 2022, the company agreed to pay $141 million in restitution after a New York State investigation into a misleading ad campaign. Intuit did not admit any wrongdoing in settling that action.
“They’re just not taking accountability,” said Martins, who said she’s been using TurboTax for 16 years without a problem until now.
She said the company should honour its guarantee and repay affected customers for penalties and interest.
For O’Shea, who says he corresponded with Intuit’s senior management to make a case for compensation, Intuit was not willing to offer anything except a refund for the cost of the purchase of three years’ worth of the tax software, not penalties or interest.
He says he refused the offer, deeming it insufficient.
“They’re battening down the hatches because if they pay one person like me, they’ll have to pay everybody.”
Note to readers: Tim O’Shea is no relation to Sean O’Shea, who put together this story.
