TurboTax is charging you $40 because you likely opted for the Refund Processing Service, which allows you to pay your TurboTax product fees directly from your federal tax refund. This $40 is a processing fee charged by the bank that handles the transaction, not by TurboTax directly for their software.
Understanding the $40 Refund Processing Fee
When you choose to have your TurboTax fees deducted from your tax refund, a third-party bank facilitates this transaction. This service, often called "Pay with My Refund" or "Refund Processing Service," involves the bank receiving your refund from the IRS, deducting the TurboTax fees (plus their own processing fee), and then disbursing the remaining balance to your chosen bank account.
- Who charges it? The $40 is a processing fee levied by the bank that manages the refund transaction, not by Intuit (the maker of TurboTax).
- When does it apply? This fee applies specifically when you choose to pay your TurboTax product fees and any other applicable add-ons (like Audit Defense) directly from your federal tax refund.
- What is its purpose? It covers the cost for the bank to handle the secure processing of your refund, deduct the necessary fees, and then deposit the remainder into your account.
How the Refund Processing Service Works
The Refund Processing Service is a convenient option for taxpayers who prefer not to pay their tax preparation fees upfront or use a credit card. Here’s a breakdown of the process:
- File Your Return: You complete and file your federal tax return with TurboTax.
- Choose Payment Method: During the filing process, you select the option to pay your TurboTax fees from your federal refund.
- Bank Facilitation: A designated bank partners with TurboTax to handle the financial transaction.
- IRS Processes Refund: The IRS processes your tax return and sends your refund directly to the partner bank.
- Fee Deduction: The bank deducts your TurboTax product fees and the $40 Refund Processing Service fee.
- Remaining Balance: The bank then sends the remaining portion of your refund to your personal bank account.
Key Considerations
- No Double Charge for Rejection: If your tax return is rejected by the IRS, you won't be charged the $40 fee a second time if you need to resubmit your return and re-enter your bank information.
- Availability: This service is typically available for federal tax refunds. State refund processing might have different rules or not be available.
- Not a TurboTax Product Fee: It's important to distinguish this $40 processing fee from the actual cost of your TurboTax software edition (e.g., Deluxe, Premier) or other services you might add.
Avoiding the $40 Fee
If you wish to avoid the $40 Refund Processing Service fee, you have an alternative payment method:
- Pay Directly: You can pay for your TurboTax product and any other services directly using a credit card or debit card at the time of filing. This eliminates the need for the third-party bank to process your refund and deduct fees, thus avoiding the $40 charge.
For more detailed information on payment options and the Refund Processing Service, you can visit the official TurboTax support page:
