Buying guide for best turbotax software
Working on a tax return can lead to significant stress for a lot of people. That’s where tax return software like TurboTax can help. With TurboTax, you can complete your taxes with a minimum amount of effort. The software uses an interview process to make sure you don’t miss any deductions that you deserve. The software also performs all of the calculations for you, which removes the stress of doing the math by hand.
Reasons to use TurboTax software
Rather than traveling to a tax preparer’s office, you can use TurboTax to work on your taxes anywhere and any time. TurboTax has multiple features that will help almost any taxpayer.
Reading tax code and deciphering tax form instructions can be daunting. TurboTax explains tax terminology in easy-to-understand language. This can save you both time and frustration.
The interview feature within TurboTax acts much like a professional tax preparer as it gathers your data through a question-and-answer process. This ensures you don’t miss any deductions. TurboTax also has a “live” service that allows you to speak with tax professionals who can answer your questions as you’re working.
TurboTax can help you e-file, which is highly convenient and results in a faster refund.
If you have a simple tax return, you can use TurboTax’s free edition and avoid paying any fees. But even if you opt for a version of TurboTax that carries a fee, you will save time using TurboTax as compared to doing the calculations by hand or hiring a person to do your taxes. The time you save may be worth the cost of the software.
How it works
As previously mentioned, TurboTax software takes you through an interview process that is a lot like working in person with a tax preparer. During the process, you never have to look at a traditional tax form unless you want to. Instead, the software prompts you to enter data and answer questions. Based on your entries, the software determines what to ask you on the next screen.
To complete your taxes with TurboTax, simply work through each screen’s questions or data entry boxes. TurboTax performs computations and places the numbers on the correct lines on the forms.
Should you have missing information, TurboTax runs a final overview process at the end. This double-checks for any oddities in data entry or any information that might be missing.
Try it for free
One of the best things about TurboTax is that you can start the process for free. With the online version, just start working. This gives you a feel for whether you like TurboTax’s interview process without having to pay. You’ll pay fees when it’s time to file, and you can deduct your fees from your refund if you’re getting one.
Using this method, you don’t have to worry about which version of TurboTax software to buy. As you move through the interview process, TurboTax determines which version of the software you need. This ensures you won’t overpay for a version that has features you don’t really need.
TurboTax software prices
Pricing for TurboTax software varies depending on the complexity of your return. For those who don’t have a complex return, you may be able to use the free version of TurboTax. The basic version of TurboTax is inexpensive, usually ranging from $25 to $50.
More complex versions of TurboTax cost $50 to $100. These are aimed at people who have non-traditional income sources, investments, or multiple sources of deductions.
Should you need to file a state income tax return, you will end up paying an extra $25 to $40 per return. Some state returns are bundled with the TurboTax federal return version you’re using, so this can help you save a little bit.
With some versions of TurboTax, you can e-file for no extra cost. If you need to pay to e-file your federal return, it typically costs $20 to $25. But if you also want to e-file your state tax return, you’ll potentially pay another $20 to $25.
Should you want to print copies of your tax return, there is no extra cost beyond the price of printing. With TurboTax, the software saves a PDF file for you with all of your tax return data entered on traditional tax forms. You can create as many printed copies of your tax return as you want.
Additional costs
A potential added cost with TurboTax is the manufacturer’s Audit Defense service. Basic audit features are free and would protect you in the event of a mathematical error in the software. But if you want actual audit representation, you would need to purchase the MAX service, which costs about $50.
If you want instant help from a CPA at any time, TurboTax offers its Live service, which costs $50 to $75.
Did you know?
Many employers and financial institutions allow you to download your financial documents directly into TurboTax. This saves you from potential data entry errors.
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Tips
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Online tax preparation is safe. If you’re worried about using an online tax prep package, don’t be. As long as you have a secure internet connection, these online services are extremely safe. TurboTax uses high levels of encryption to keep your data protected in the cloud.
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Downloading data saves time. Employers often allow you to download your W-2 forms, importing them directly into TurboTax. This saves data entry time and prevents potential data entry errors. If you use a version of Quicken to track your finances, you can import data from Quicken into TurboTax to save time, too.
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Always use the correct tax year. Never try to save money by using an older version of TurboTax to do this year’s taxes. Tax laws and tax forms change, so older software almost certainly would result in errors in your calculations.
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Download all updates immediately. When using the CD version of TurboTax, you’ll regularly need to download updates to the software. Always download all updates before working on your taxes.
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Import your previous year’s tax data. If you’ve used TurboTax or other tax prep software in the past, you’ll be able to download some of that data into this year’s TurboTax return. This saves data entry time.
- Accurate data entry is very important. TurboTax can only generate accurate information for your tax return if you enter accurate information. Give yourself the time needed to enter data and answer questions correctly.
Other products we considered
TurboTax software has been around for a long time, and it has become a trusted brand name. But you may pay a slight premium if you choose to use TurboTax over other software packages. We’ve picked a few other tax preparation software options to consider if you want to save a bit of money.
TaxAct Premier+ is one of the least expensive options for completing complex tax returns. However, it’s an online download option only.
If you own a home and only need a federal return, H&R Block Deluxe is an inexpensive choice.
There’s also an H&R Block Premium version that includes both federal and state returns while handling self-employment income, all at a reasonable price.
FAQ
Q. Can I calculate my taxes without an internet connection?
A. If you have a computer with a CD drive, you can order TurboTax software on a CD. Just install the software on the computer and follow the interview format to complete your taxes. All of the files will be stored on your computer. When you’re ready to e-file, though, you will need an internet connection.
Q. Does the online TurboTax version work like the CD version?
A. Yes. The two versions use the same interview format to help you enter data and find all of the deductions to which you’re entitled. With the online version, you can work on your tax return from any device where you have internet access. TurboTax stores all of the files in the cloud on its secure servers, so your return data will be safe.
Q. Will I receive a bigger refund when using TurboTax?
A. Maybe. The software will help you find all deductions to which you’re entitled, including some you may not have used previously. So if you didn’t take all of your deductions in the past when doing taxes on your own, you may receive a bigger refund with TurboTax.
Q. Are there hidden costs with TurboTax?
A. Beyond the initial cost of the software, you may encounter some add-on costs with TurboTax. However, these costs are not “hidden.” The software will alert you to any add-on costs and give you the option of accepting them. If you purchase one version of TurboTax but need to upgrade to a more complex version based on your information, you will have to pay extra. You may also need to pay to e-file, to complete a state tax return, to access live help, or to receive an audit protection service.
