Filing your taxes can be a confusing and stressful process. Some taxpayers who find the tax filing process annoying and frustrating may delay preparing and submitting their tax return, which can lead to negative financial consequences. The Internal Revenue Service (IRS) has strict penalties for filing late, including a 5% late filing penalty on unpaid taxes for each month the balance isn’t paid.
Tax filing solutions software takes the guessing and headache out of tax filing. When you enlist the help of a tax preparation software company to prepare your taxes, you’ll feel more confident in the accuracy of your tax return and reap the benefits of a streamlined process.
TurboTax is one of the most popular tax filing solutions companies in the industry today. Review the following to learn more about TurboTax so you can decide if this tax preparation software is right for you.
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Quick Facts on TurboTax
- TurboTax is best for filers with simple tax situations and those who want to ensure they’re taking advantage of all tax credits and deductions.
- The paid software versions can be higher in price than some competitors, but include audit assistance and help with lowering your tax liability.
- Both the TurboTax mobile app and website have extensive security features to ensure your account stays safe.
- The TurboTax website may be confusing for users to navigate and in-person tax assistance isn’t available.
Features of TurboTax
TurboTax uses a step-by-step coaching process to help you work through your taxes. The system asks you simple questions about your life and finances to determine whether you should file taxes and the best strategy for filing. In addition to a simple tax filing system, TurboTax software offers many other benefits including the following:
- The latest tax laws: TurboTax stays updated on the most recent tax-related legislation to ensure customers are filing returns properly.
- Track refund status: By visiting the TurboTax website and logging into your account, you can track your tax return refund status online.
- TurboTax preparation or filing fees: If you owe TurboTax filing or preparation fees, the company can take them directly from your tax refund.
- Audit assistance: If the IRS audits your return, TurboTax provides assistance to answer your questions.
- Auto-filling information: The system imports information from your W-2 to tax forms in the system.
- Secure mobile app: The TurboTax mobile app is convenient and offers multi-factor authentication and Touch ID for added security.
- Accuracy guarantee: If you pay a penalty due to a filing error directly related to advice provided by a TurboTax professional, the company refunds your fees.
- Notifications: You’ll receive email or text notifications if there’s an attempted login to your account from a new device.
The specific features you have access to depends on the TurboTax software version you choose.
Comparing the Free, Deluxe, and Premier Versions
TurboTax offers different products depending on the complexity of your tax situation and the assistance and features you want. The Free Edition of Turbo Tax is truly free. It allows you to file both your federal tax return and one state income tax return at no cost. However, you only qualify for this version if you have a “simple tax situation” and meet the following criteria:
- You only have W-2 income.
- You’ve only earned limited interest or dividends throughout the year.
- You’re planning to claim the standard deduction.
- The only tax credits you want to claim are the Earned Income Tax Credit (EIC) and/or child tax credits.
If your tax situation is more complicated, you may need to upgrade to the Deluxe Edition, which costs $60 to file your federal return and $50 to file your state taxes. With this software version, you’ll benefit from:
- Analyzing over 350 deductions and credits to see if you qualify.
- Maximizing your homeownership discounts, including tax deductions for property taxes or mortgage interest.
- Ensuring you’re claiming charitable deductions.
- Assistance deducting student loan interest and claiming education credits.
- One-on-one assistance with a TurboTax representative at any time.
The TurboTax Premier version costs $90 to file your federal return and $50 for each state return. It offers all the features of the Deluxe version but also includes:
- Help with claiming capital gains from investments, such as stocks and bonds.
- Assistance with rental property income and tax deductions.
- The ability to import your investment income information.
- Assistance claiming rental property depreciation.
If you’re self-employed or own a small business, you may benefit from using the Self-Employed version. It costs $120 to file your federal return and $50 for each state income tax return. This software includes all features of the Premier version but also includes:
- The ability to auto-fill information from your Form 1099-MISC.
- Access to industry-specific tax deductions you may qualify for.
- A free audit assessment.
- Access to a year-round tax estimator.
Before deciding which software version is right for you, consider the tax forms, deductions, and credits you want to use when filing your taxes.
TurboTax Pros and Cons
As with any tax preparation software, TurboTax customers have noticed both pros and cons when using the system to prepare and file taxes.
Various Software Versions
You can choose the specific software that meets your needs. This ensures you have the support you want and the capabilities to take advantage of tax credits and deductions without paying for features you won’t use.
As a TurboTax customer, you have instant access to technical support and a community forum to get your questions answered. You can also choose to pay extra for assistance from a tax professional.
TurboTax takes guarding your personal information seriously and offers advanced security elements within the mobile app. It also alerts you about new account logins and authenticates your identity before allowing you to sign in.
No In-Person Tax Assistance
Although you can pay extra for live help from a tax professional, you can’t visit a TurboTax store for in-person assistance. If you prefer to meet with a professional face-to-face, you won’t have that option, no matter which software version you purchase.
Expensive Software Packages
If you don’t qualify for the free version, you’ll pay higher prices for tax preparation with TurboTax than some of its lesser-known competitors, such as TaxAct.
How Does TurboTax Compare to Other Platforms?
TurboTax is a popular tax preparation assistance company because it offers several packages to meet your needs. When compared to its competitors, the prices for these packages may be high, so it’s best for taxpayers with simple needs who qualify for the free version.
While H&R Block and several other tax preparation companies offer in-person meetings with tax professionals, TurboTax only offers this assistance online. If you’re comfortable with filing virtually and want to ensure you’re taking advantage of all tax deductions and credits you qualify for, a TurboTax software package may be the best way to file your return.
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