TurboTax is a leading tax preparation software package that offers free federal and state tax returns for taxpayers with simple returns. The software was first developed by Michael A. Chipman of Chipsoft. Intuit acquired Chipsoft, in 1993. Chipsoft, now known as Intuit Consumer Tax Group, is based in San Diego. Intuit is also the owner of Quicken, QuickBooks, and EasyStep. Intuit (TurboTax) is a member of the IRS Free File Alliance and an authorized IRS e-file provider. The company has been the best-selling tax software for over 25 years and has an A+ rating with the BBB.
What Services Does TurboTax Offer?
TurboTax provides the following services:
- Federal Tax Returns
- E-file Service
- Account Information Roll Over
- Automatically imports W-2 tax forms
- Printing of Tax Return
- Online Backup of Completed Returns
- Complex Tax Filing
- Federal Tax Extension
- State Tax Filing and Preparation
- Amended Tax Return
- Priority Customer Support
- Audit Risk Identification
- Military edition
- Mobile app
What Is TurboTax's Pricing Structure?
TurboTax has four editions: a free edition, a deluxe edition ($34.99), a premier edition ($54.99), and a self-employed edition ($89.99).
The Free edition offers free federal and state tax filing, but it is only for taxpayers with simple tax returns. It only includes forms 1040EZ/1040A. If you are a freelancer, self-employed, or you want to import last year’s tax information, you will need to purchase another edition. On the other hand, if you make less than $100k, don’t own a business or rental property, and you don’t have large medical bills, this is an excellent deal.
The Deluxe edition ($34.99) is designed for taxpayers with more complex tax returns who want to maximize their deductions. It searches over 350 tax deductions and credits, calculates mortgage/property tax deductions (Schedule A), converts charitable donations into deductions, covers independent contractors and freelancers, and allows customers to import data from the previous tax year.
The Premier edition ($54.99) is for taxpayers with substantial investments and rental property. As well as the services offered by the deluxe edition it also provides coverage for stocks, bonds, and other types of investment income (Schedule D). It also covers rental income (Schedule E), but it doesn’t offer support for self-employment and small business income (Schedule C).
The Self-Employed edition ($89.99) is designed for self-employed and small business owners. As well as all the services offered by the Premier version, it also covers small-business tax deductions and asset depreciation (Schedule C).
Only the free edition includes state returns. Customers who use any of the other packages must pay an additional $36.99 for state returns.
Audit assistance is only provided to clients who purchase Audit Defense; an optional, fee-based service TurboTax offers through TaxAudit.com.
What Are the Advantages & Disadvantages of TurboTax?
Benefits of TurboTax:
- Customers with simple tax returns can file federal and state tax returns for free.
- The software provides free advice on the credits and deductions you can claim.
- Best-selling tax software and over 25 years of experience in the tax preparation sector.
- Returning users are not charged additional fees for rolling-over prior year tax data.
- Automatic Error Detection is a feature.
- E-Filing is included in the free edition.
Disadvantages of TurboTax:
- The free returns are only for people with very simple tax returns. There are additional fees for “complex” returns. “Complex” returns include federal returns with investments, self-employed taxpayers, taxpayers who own homes, and taxpayers with rental income.
- The paying editions do not include state returns, which come with an extra $36.99 fee.
- TurboTax has some of the most expensive tax software packages.
- Does not provide in-person support.
Compare TurboTax with other leading tax preparation services to ensure you are getting the best deal possible.