TurboTax vs. FreeTaxUSA (2024 Guide of Pros & Cons)
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Summary:
Among tax preparation services, TurboTax and FreeTaxUSA are two popular choices. TurboTax offers extensive features and support, albeit at a higher cost, while FreeTaxUSA is budget-friendly but offers limited support options. This article looks at the comparison between TurboTax and FreeTaxUSA—including features, pricing, and the support options of each platform—to help you decide which one best suits your needs.
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TurboTax vs. FreeTaxUSA comparison
While both TurboTax and FreeTaxUSA serve most taxpayers’ needs, they differ in pricing and support options. TurboTax provides robust features and assistance at a premium cost, while FreeTaxUSA offers a no-frills approach with minimal support. It’s important to consider your tax situation and preferences to determine the best fit, says Armine Alajian, CPA and founder of Alajian Group Inc.
TurboTax
TurboTax is a widely recognized tax preparation service offering various plans tailored to different user needs. Its user-friendly interface, comprehensive tools, and extensive customer support make it a go-to choice for many. Here’s an overview of TurboTax’s pricing options:
- Do-it-yourself options
- Live Assisted
- Live Full Service
TurboTax guarantees accuracy and promises to refund fees if another tax preparer gets a larger refund, and it covers any penalties or interest resulting from errors. You can also purchase TurboTax Audit Defense if you’re worried about an audit, which for most people is unlikely.
Pro Tip
It’s important to understand the difference between audit assistance or audit defense and audit support. TurboTax offers free audit support (on qualified packages), but that assistance is informational only. This means you can ask questions about an audit, but TurboTax will not work with the IRS on your behalf. If you want TurboTax to defend you in a tax audit, you’ll need to pay for the Audit Defense add-on.
FreeTaxUSA
FreeTaxUSA provides a cost-effective solution for tax preparation, offering federal filing at no charge and a flat fee for state returns. The following are its filing options:
- Basic: Designed for simpler returns, Basic includes only the major tax forms.
- Advanced: Advanced offers more comprehensive options catering to homeowners and those who are eligible for credits and deductions.
- Premium and Self-employed: These options are tailored for investors, rental income earners, contract workers, self-employed individuals, and small business owners.
If you would like additional support while preparing your taxes, you have two options to choose from. The Deluxe Support package includes live chat with tax experts and priority support, meaning you essentially jump the line to get online assistance. In addition, Deluxe allows you to file unlimited amended returns at no extra cost.
If you have more complicated tax questions, you can upgrade to Pro Support. Pro Support offers telephone access to tax experts (you’ll need to schedule a call) and screen-sharing capabilities.
FreeTaxUSA also offers audit assistance for both federal and state returns. In addition to standard audit assistance, the Audit Defense package includes tax identity theft support if someone fraudulently files a tax return in your name.
TurboTax vs. FreeTaxUSA: Pros and cons
Here’s a quick comparison of TurboTax and FreeTaxUSA:
Do you need a tax pro?
If you require assistance with your taxes, consider consulting with a tax expert who can help you with the process. This is usually an option best reserved for individuals with complicated tax returns, because it’s more expensive than doing your taxes online. Plus, a tax professional can guide you through some trickier tax situations, says Dana Ronald, CEO of Tax Crisis Institute.
“Navigating tax issues and leveraging the right software are critical components of financial health,” explains Ronald. “For those wavering between digital aid and professional assistance, it’s vital to assess the immediate year and your long-term financial landscape. While convenient, even the most robust software may not capture the nuanced tax advantages or obligations tied to unique personal or business circumstances. A personal consultation can unearth potential savings or flag risks that automated systems might overlook.
In short, if you’re too busy, you’re unfamiliar with filing tax returns, or you’re nervous about making a mistake (and you can afford the help), a tax professional is never a bad idea.
FAQ
Which tax preparation service is better for complex returns?
TurboTax offers more comprehensive support and guidance for complicated tax situations, making it a preferred choice for many. For example, if you are self-employed, run a business, or have a lot of investments, TurboTax can help to walk you through these more intricate circumstances.
Does FreeTaxUSA offer free audit assistance?
FreeTaxUSA does offer a version of audit protection, but it is not included with your free filing options or even if you upgrade to Deluxe Support or Pro Support. To take advantage of Audit Defense, you’ll need to pay an additional fee.
Key takeaways
- TurboTax provides extensive features and support, but it’s more expensive.
- FreeTaxUSA offers budget-friendly federal filing, but the support options are limited.
- Those with more complicated financial situations may benefit from using a tax service or hiring a CPA.
- Consider the complexity of your taxes and your individual preferences to choose the best service for you.
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