Content of the material
- About kevin
- Getting Started With TurboTax
- Help From Intuit
- Who Should Use TurboTax?
- Comparing The Online “Deluxe” Tax Filing Software
- Bottom Line
- A Quick Look at TurboTax
- What do you get with TurboTax?
- TurboTax Free Edition
- Snap. Tap. Done
- Answers 24/7
- TurboTax Live Full Service
- Dont Forget About TurboTax Live
- TurboTax Ease of Use
- Is TurboTax Live worth the cost?
- Read more
- Comparing The Downloadable Editions Of TurboTax, HR Block, and TaxAct
- TurboTax Self-Employed Edition
- Why we recommend it
- Read more:
Hi, I’m Kevin McCormick. I graduated from Rutgers U., and now live in Philadelphia with my wife, three kids, and a dog. I enjoy blogging in my free time, especially about finance and the history of taxation. Thanks for stopping by Mighty Taxes!View all posts by kevin →
Getting Started With TurboTax
Once you create an account or sign in with an existing one, TurboTax helps you select the correct version for your 2021 taxes. It displays several life situations that might affect taxes (owning a home, having children, selling stock, paying off student loans, and so on) and recommends the best solution for you. Once you’ve entered the site, it asks how you did your taxes last year and helps you import that data from TurboTax or another personal tax preparation website. Next, it asks you a second time to indicate which life situations apply to you. Finally, you get a list of the topics you identified as well as the tax documents you’ll need for each, which is very helpful. It also supplies tax tips for some topics.
If you’re using TurboTax for the first time, you have to provide answers to the site’s questions about your personal background, including your address, Social Security number, and occupation, along with several other queries about you and others on the return. If you’ve filed using TurboTax before, the information appears automatically. If you’re new to the site, you can automatically fill in some of that data by scanning the barcode of your driver’s license or state ID.
When you come to issues that may be confusing, like filing status and dependents, TurboTax Deluxe asks questions and provides extra guidance, just as sites like TaxSlayer do. As you finish, you see a summary of your personal information. The service also asks whether you want to subscribe to MAX Defend and Restore, which includes full audit representation, priority care, and help with identity theft monitoring and identity restoration for $49.
At this point, you’re ready to move on to the meat of the site: entering your income, identifying your deductions and credits, and taking care of other tax-related situations. TurboTax, like some competitors, tries to streamline and accelerate data entry where possible. For example, you can import W-2 data if your employer supports this option or upload a copy of your W-2 to automatically fill in the details. Reporting interest from a Form 1099-INT is similar. You can upload a copy of the form, or you may be able to import the information directly from your bank. Where these options aren’t available, you click through related clusters of questions. Other times, you fill in blank fields.
Help From Intuit
Before the days of online tax prep services, there was one advantage to using the actual IRS instructions to do your taxes: They were comprehensive. They may have been difficult to understand if you weren’t a tax preparer, but the answers to your questions were in there somewhere.
You really can’t expect personal tax prep websites to be so all-encompassing. They’d collapse under the weight of all that tax code. But the explanatory content on these sites has been revised and expanded so many times over the years that it’s usually easy to understand. TurboTax does an especially good job at being clear. It often provides brief and simple explanations of tax topics while asking you questions. Many hyperlinked words and phrases open windows containing additional detail.
Often a question mark or Learn More link opens context-sensitive help in the right vertical pane. Sometimes, TurboTax even guesses that you might have a question and provides related FAQs. Competing sites work similarly, but TurboTax and H&R Block Deluxe are the best at this. H&R Block, in fact, changes the content of the right vertical pane every time you open a new screen, so what’s displayed there is always context-sensitive. In TurboTax, you have to click a link to get it to change.
When you click the question mark link at the top of a page, the TurboTax Assistant opens in the right pane. It’s an interactive tool that lets you enter a question and see links to corresponding FAQs and other site-related information. It converses with you in a friendly manner and walks you through your query until you’re satisfied or need to call Intuit. H&R Block Deluxe has a similar tool, which isn’t as capable, as well as phone support, where both English and Spanish speakers are available to help.
Though the TurboTax Assistant might meet your needs, I found it faster to click the Search link and enter a phrase or question. The vertical pane that opens articles and FAQs might answer your question right away and might not because it doesn’t always prioritize the best or most sought answers. Much of the content comes from Intuit itself (in both English and Spanish), but some of the responses come from TurboTax’s online community. This means that the answer could come from Intuit staff, but it might also come from a non-professional who was visiting the community. In some cases, these responses clutter up the list of search results, which doesn’t happen in H&R Block Deluxe.
There’s another help feature that I like a lot: On many pages, you see the phrase “explainwhy” [sic] after you’ve completed a section. Click it, and TurboTax explains briefly what led up to a particular answer, based specifically on your situation.
Who Should Use TurboTax?
Whether you’re an experienced tax preparer or have little knowledge of tax law beyond knowing you need to file, TurboTax makes tax filing easy by walking you through the process with interview-style questions and options for live, on-screen support when needed.
TurboTax, a product of the financial, accounting, and tax-preparation software provider Intuit, is one of the most popular tax-filing options out there. Its popularity partly stems from its name recognition (having been around for nearly 40 years) but also from the company’s focus on design and offering users plenty of features.
Comparing The Online “Deluxe” Tax Filing Software
The Deluxe pricing tier is typically targeted toward people who want to “maximize deductions and credits.” A lot of people think this means people who itemize their taxes, but many tax filers who take the standard deduction will still find that they need to upgrade to the Deluxe tier of their tax filing software for various reasons.
So, who wins? Well, it depends what exactly you’re looking to do. H&R Block covers more filers with its free option. The two Deluxe options are the same in terms of price, but TurboTax’s Deluxe option supports more forms that self-employed, freelance and contract workers may need. Both services are user-friendly but TurboTax is slightly simpler with more straightforward language.
Beyond these factors, which tax filing service you choose may come down to personal preference. Some people prefer one over the other because they simply like the way it looks. They might also choose H&R Block so they can have the option of filing at a physical location.
Of course H&R Block and TurboTax are not the only two tax filing services. You may want to consider other options like TaxAct or TaxSlayer if you’re looking for a budget option. Credit Karma also allows you to file entirely for free.
A Quick Look at TurboTax
TurboTax has been around since the mid-1980s. Part of its popularity is due to the fact that it’s owned by Intuit. Intuit also makes a software called Quickbooks, which millions of companies use to manage their accounting. But TurboTax is also popular because it offers a user-friendly design and straightforward step-by-step guidance.
Like H&R Block, TurboTax has a free filing option that allows you to file your federal return and one state return at no cost. However, the free option only supports simple returns with form 1040. If you want to itemize your deductions with Schedule A or if you need to use any other forms, you will need to upgrade to a paid plan.
There are three paid TurboTax plans that run from $60 to $120 for federal filing. State filing is always $50 per state with the paid plans. The free option includes one free state return. Here’s a breakdown of your options with TurboTax:
|TurboTax Filing Options|
|TurboTax Free Edition||– Federal: Free – State: Free||– Best for simple returns using Form 1040 – Comes with easy import, error check, refund explanations, deductions for dependents|
|TurboTax Deluxe||– Federal: $59 – State: $49||– Best for homeowners and for maximizing deductions – Comes with all previous features, plus charitable donations calculator|
|TurboTax Premier||– Federal: $89 – State: $49||– Best for investors and rental property owners – Comes with all previous features – Focuses on investment and rental property income, accurate stock reporting, refinancing deductions|
|TurboTax Self-Employed||– Federal: $119 – State: $49||– Best for self-employed, independent contractors, freelancers, consultants and small business owners – All previous features, plus access to self-employment tax experts, maximizing business deductions|
As with H&R Block, TurboTax’s free option supports the 1040 with some child tax credits. The Deluxe option will be enough for most filers if they want a paid option, though. It costs $59, which is the same price as H&R Block’s Deluxe plan. You get slightly more features for that additional cost, however. Small business owners and self-employed individuals will need to upgrade to the Self-Employed option, which costs $119 for a federal return. TurboTax also frequently runs sales on its services and products during tax season.
TurboTax doesn’t have any physical locations like H&R Block, but it does provide access to tax experts like CPAs and EAs. It will cost extra for you to get access to an expert, but there are four plans available, corresponding to the four plans listed in the table above. For only expert advice, plans run from $79 to $199 for federal returns. But if you want full expert service, plans will cost you anywhere from $199 to $389 for federal returns. State filing still costs $54 per state with each of these versions.
What do you get with TurboTax?
- Guidance for important tax forms. TurboTax tells you what you need to enter to do your taxes based on your unique circumstances. Get step-by-step guidance and directions for most tax forms.
- Mobile version. Work on your taxes on the mobile or web versions, or switch back and forth. This isn’t available for the desktop version.
- Easy tax form import and upload. Import many tax forms directly from banks and investment companies. With the mobile app, you can take a photo and upload supported forms. You can also upload your tax return from last year.
- Detailed help resources. Help and support resources that answer most questions about your taxes with simple and easy-to-follow advice.
- Option to upgrade for live support. Pay extra and you can talk to an expert at any time in just a few clicks, or hand off your documents to a professional who can do everything for you.
- Multiple ways to get your refund. You can get your federal refund deposited into your bank account, sent as a check, or loaded onto a prepaid debit card. TurboTax also offers refund advance loans at the beginning of tax season.
- Tax return storage. TurboTax will store your finished tax returns in your account for up to seven years.
- Accuracy guarantee. TurboTax will pay IRS penalties and fees related to calculation errors. If it’s determined that you entered information improperly, the guarantee does not apply.
- Access to Credit Karma’s new checking account. The Credit Karma Money Spend account is fee-free and has no minimum deposit.
TurboTax Free Edition
With TurboTax Free Edition, you can prepare and file your federal return absolutely free, and a state tax return is also included. However, TurboTax Free is only for the simplest returns. This means that, if you have any complexity in your tax return, you’ll likely have to upgrade to a paid version of the program.
You can use this version if you will be filing either 1040EZ or 1040A. You must have W2 income of less than $39,000 or file for the Earned Income Tax Credit. You can also use the free version if you’re military personnel with a gross income of $72,000 or less.
However, it’s not available if you’re self-employed, you itemize deductions, or you have 1099 income.
TurboTax Free comes with the following features below.
Snap. Tap. Done
We mentioned earlier that you might be able to import your W2 information if you work for a large employer (TurboTax can import the information from over 1 million employers).
On top of that option, TurboTax also lets you download your W2 from your smartphone.
All you need to do is snap a picture of the form and TurboTax does the rest. You’ll really appreciate this feature if you have several W2s and none of them can be imported from your employer.
Customer service is one of the features that most distinguishes TurboTax from the competition. It has a very large database with tax information that you can access from any screen in the program.
In most instances, all you have to do is enter a few keywords, and you’ll get the information you need. This feature can help you get your tax questions answered while you’re in the midst of finishing your return.
If you can’t find what you’re looking for in the information database, you can get answers online from a tax specialist. TurboTax really does make it easy for people who don’t know much about preparing income taxes.
Once you complete your return, TurboTax does a comprehensive review before filing the return.
It’ll let you know if any information is missing, if there are any math errors, or if you might save on taxes with certain deductions, such as making an IRA contribution.
File for FREE with TurboTax
TurboTax Live Full Service
- Cost: $0 federal + $0 state for Basic; $249 federal + $39 state for Deluxe; $359 federal + $39 state for Premier; $389 federal + $39 state for Self-Employed
- Should you get it? This is as hands-off as it gets. A tax expert will prep, sign, and even file your taxes. It comes with a hefty price tag, but if not having to worry about taxes is worth it to you then absolutely do it.
- Free alternative: None that we could find at this level, unless you qualify for the VITA or TCE programs.
Dont Forget About TurboTax Live
If you need help in preparing your return or you just feel overwhelmed getting started, don’t forget that TurboTax Live can help. For an extra fee, you can get help from a live CPA or enrolled agent (EA) through the add-on service.
What’s really impressive about this service is the fact that the tax expert can access your return remotely. They can even use a live video screen to speak with you directly on your screen. That means both you and the tax expert will be working on your return at the same time, which can create a significantly more personalized experience.
When your return has been completed, the CPA or EA can review it to make sure it’s correct. In a lot of ways, this means TurboTax Live gives you the best of both worlds. You get to do your taxes yourself and without having to spend the afternoon in a stuffy tax preparation office, but you can also access an expert when you need one, and you can get a final thumbs up from them before you hit submit.
TurboTax Ease of Use
Preparing your tax return with TurboTax is a lot like sitting down with a tax preparer. The software walks you through the tax preparation and filing process with a series of interview-style questions.
As part of my review process, I went through the process of preparing three sample returns. Here’s how long it took me to get from start to filing for each one:
- Single taxpayer, no dependents, W-2 income and the student loan interest deduction: 13 minutes
- Married couple filing jointly, one dependent, two W-2s, Child Tax Credit and child and dependent care credit: 20 minutes
- Single taxpayer, no dependents, self-employment income, federal and state estimated tax payments: 30 minutes
During the process, a banner at the top of the screen keeps a running tally of your estimated federal and state refund or amount due.
Embedded links on each screen offer tips, explain different income, deductions, and tax credits.
If you get stuck along the way, you have the option of paying an additional fee and upgrading to TurboTax Live to get on-demand help from a TurboTax expert or CPA. When you choose this option, the tax pro will do a final review of your return before you file.
You can also pay an additional fee to move to Full Service and have your tax return prepared for you. Before filing your return, a tax pro will schedule a time to review your return with you.
While the software offers many tips to help do-it-yourselfers, including a bot (known as the TurboTax Digital Assistant), you won’t have access to hands-on customer service unless you’re willing to upgrade to TurboTax Live.
And that’s another aspect of using TurboTax you should be aware of: near-constant urging to upgrade your package. During the 13 minutes I spent preparing a simple return, I encountered no fewer than three offers to upgrade.
Throughout the tax preparation process, you’ll periodically come across screens encouraging you to upgrade from Free* to Deluxe, get help from a TurboTax Live expert, or add TurboTax MAX—an add-on package that includes audit representation, identity theft resources, and priority customer service.
In some cases, these upgrades can be useful. For example, if you could reduce your tax bill by itemizing deductions, upgrading from the Free Edition* to Deluxe might make sense. And if you legitimately want extra help from a tax expert, you may be happy to pay for TurboTax Live. Just make sure you need and want the upgrade before accepting the offer.
Some reasons you may want to upgrade include:
- Your total itemized deductions are greater than the standard deduction available for your filing status
- You have self-employment or rental income, capital gains and losses, or other income, deductions or credits not covered by the Free Edition*
- You don’t feel entirely comfortable preparing your tax return on your own and want help from a TurboTax Live or Full Service tax expert
- You’re worried about an IRS audit or identity theft, and the peace of mind offered by TurboTax MAX is worth the extra $59 fee
Is TurboTax Live worth the cost?
In our view, most tax situations will not require TurboTax’s expert help upgrades. The main strength of TurboTax is that it’s accessible and comprehensive, meaning that the process offers enough information that you don’t need to dig to find it. Many of your questions can be answered through its online resources. That makes the added Live assistance category, where you can ask an expert questions and have them review your return at the end, mostly unnecessary.
The category of Full Service is akin to a separate product. You’re simply sending your tax documents to a CPA or tax preparer, so you’re not using any of TurboTax’s interface — it’s just a way to find a qualified tax preparer through TurboTax. Our recommendation would be to compare the cost of a local tax expert with TurboTax’s Full Service option to determine which makes sense for you.
Comparing The Downloadable Editions Of TurboTax, HR Block, and TaxAct
Tax filers have the option to choose downloadable products rather than using the cloud-based options. Theoretically, downloadable software may be more secure. The only direct risk of hacking is when you e-file your returns. However, these products aren’t risk-free. If your computer has malware, a hacker could steal your information from your computer rather than from a cloud-based server.
Also, we see a lot of issues of people failing to save their return, computers crashing, and more. As such, we typically recommend everyone use the online version.The downloadable function is the same as the corresponding online software, and they typically cost more. If you’re watching prices, you might have some luck shopping on Amazon.com. Choosing the downloadable software is almost always easier and higher-quality than buying a similar product in the store. Plus, Amazon sometimes offers 3% boosts if you choose to accept your return on an Amazon gift card
TurboTax Self-Employed Edition
- Cost: $89 for federal + $39 for state
- Should you get it? For peace of mind, yes! Self-employed taxes can be a doozy to figure out, but TurboTax makes it simple by searching for industry-specific deductions and offering guidance on expenses like cell phones, home office supplies, and mileage.
- Free alternative: Prepare your taxes yourself with Free File Fillable Forms from the IRS. You can also avoid the $39 TurboTax fee for state by filing through your state’s website for free.
Why we recommend it
For those who want to get their taxes done quickly and with as little headache as possible, TurboTax is the leading contender. While it’s not the cheapest option available, in our opinion the breadth of product options and smooth process make it worth the cost.
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