We’re in the middle of tax season and one of two major problems is about to happen to every single one of you:
- Either you think your taxes are simple so you file the most basic return and miss out on getting a better tax refund, or
- You think your taxes are so complicated you spend hundreds of dollars paying a CPA to prepare them for you.
Both situations are costing you money.
Here’s what you need to know: filing your tax return yourself doesn’t have to be complicated, doesn’t have to result in you leaving money on the table, and doesn’t have to take ten hours.
How can you get the best of both worlds? TurboTax online tax software.
TurboTax is the nation’s best-selling, #1 rated tax software.
The company offers 100% accurate calculations, guarantees you will receive your maximum refund, and provides free audit support in the unlikely event the IRS wants to dig deeper into your tax return.
Let’s dig a little deeper ourselves to see how TurboTax works and what to expect.
TurboTax Online and Mobile App Tax Software Review
TurboTax is the leader in software tax returns. The company has consistently received high ratings from customers. Based on this year’s edition it seems things will stay that way moving forward.
Before we take a look at the different editions of TurboTax, I want to show you a cool part of using TurboTax: mobile apps.
TurboTax Mobile Apps
Gone are the days of manually typing or writing out your tax returns. Just about everything on earth is available on your smartphone or tablet… even your taxes.
TurboTax has five different mobile/tablet tax apps:
- SnapIt: For Free Edition users. You snap a photo of your W2, answer some simple questions, and file your taxes in minutes.
- TurboTax for iPad: Equal to TurboTax Online Deluxe. You can completely do your taxes on an iPad. Welcome to the future.
- MyTaxRefund: Want to know when your tax refund will show up? This app — usable by anyone, not just TurboTax customers — shows you when your refund will be in your hands.
- TaxCaster: Want to estimate how large your refund will be before you sit down and do your taxes? You enter in some basic information and TaxCaster shows you what to expect.
- ItsDeductible: Donating is great to do but it’s a pain to track. You have to track when you donated, what you donated, and the value of what you donated. This handy mobile app helps you keep track of everything you donate throughout the year and import the total into TurboTax at tax time.
A Version for Every Situation
TurboTax Online comes in four different versions each targeted at specific tax situations.
TurboTax Online Free:
For the most basic returns.
If you can file a 1040EZ this is the basic software for you. Simple returns mean simple-to-use software. There’s no need for all the bells and whistles that the other versions offer. The federal return is free; if you have to file state income taxes there is an extra fee of $29.99 (currently discounted to $27.99).
TurboTax Online Deluxe:
For slightly more complicated returns such as taxpayers that want to itemize their taxes rather than taking the standard deduction.
Had a significant life change such as getting married, buying a home, or having a baby? TurboTax Online Deluxe walks you through these events with simple questions and provides guidance based on how you answer the questions. The software walks through 350+ deductions and credits to make sure you get the largest refund possible. You also receive the maximum deduction for your non-cash donations thanks to TurboTax’s database of item values as well as handling things like charity miles driven and stock donations.
With Deluxe you also get the Audit Risk Meter. Audit Risk Meter is a neat little tool that shows how “dangerous” your return is in terms of being flagged for an audit. If your audit risk is significant, TurboTax provides tips to help you bring that risk down.
TurboTax Online Premiere:
For complicated returns with buying and selling of investments (including calculating cost basis), rental property income and deductions, plus everything covered in Deluxe.
One of the most tedious tasks in tax planning is putting in it your investment data yourself. You bought 20 shares of GE on February 1st and sold 15 of those shares on July 1st. In the midst of that you bought shares in a mutual fund, received some dividends, and sold it before the end of the year.
This investment data represents a big problem. Not only does it take a long time to enter, but accurate data is necessary to calculate an accurate return.
Thankfully, TurboTax Online Premiere allows you to automatically import your investing data. It calculates your cost basis and capital gains (or losses), and then tracks your loss carryover into the following years.
Landlords will also enjoy Premiere: it identifies which depreciation method nets you the largest return. Plus, it even helps you set up new rental properties and determine what the median rent is in your area so you can maximize occupancy and generate positive cash-flow.
TurboTax Online Home & Business:
For taxpayers that run a small business or a business out of their home that need guidance on home office income and deductions. Also includes small business asset depreciation, plus everything covered in Premiere.
As long as you aren’t running a massive business that would need a dedicated CPA, TurboTax’s online and mobile/tablet friendly software has an edition for you. Running a business out of your home provides you many avenues for legal deductions, but taking those deductions isn’t easy. Calculating what percentage of your home your office is, tracking things like utilities and mortgage costs, and coming up with the right deduction is fraught with audit risk.
The Home & Business edition of TurboTax Online helps you get the maximum deduction from your home business as well as business use of your vehicle. It knows specific deductions your industry can receive and helps you generate W2s and 1099 forms for employees and contractors. When you’re done you’ll have the maximum refund guarantee with a legal Schedule C attached to your taxes.
More You Need to Know About TurboTax
TurboTax runs an extensive and profitable business. This is good for the company and its customers as they can afford to hire tax specialists and programmers to create accurate tax software.
As an added protection for customers, TurboTax offers to pay for any interest and penalties you face if you receive notice from the IRS that your return was inaccurate due to a calculation error. You must file a a claim online within 30 days of being assessed the penalty using a form on the TurboTax website.
Guarantee of Maximum Refund
The company believes in the tax returns its software generates.
If you get a larger refund through another tax preparation method (without changing any other factors) they will refund you the purchase price you paid to use TurboTax (or $14.99 if you are a Free Edition user) plus any fees paid to file your state taxes.
TurboTax is willing to put its money behind their tax product; this reduces risk for customers and is a win-win.
“Free” Audit Support
When I write reviews I try to give a fair and balanced report.
I do believe TurboTax is a great product with accurate results. One issue is the advertised free audit support. There are varying levels to this: you can get free one-on-one phone consultations to determine next steps, answers to audit questions all year, and free advice about what to expect during your audit.
For true audit support, though, you have to buy “Audit Defense” for $39.95. TurboTax partners with a company called Tax Resources to allegedly provide you with audit defense in the event the IRS audits your tax return. The company provides you representation and works to resolve your issues with the IRS.
That said, reviews of Audit Defense and specifically Tax Resources haven’t always been positive. This may be typical bias you see when someone isn’t happy — unhappy customers complain significantly more than happy customers compliment. I felt the unhappy customers are worth mentioning here since the Audit Defense fee can easily double the cost of your tax return.
One thing I don’t doubt is the cost of Audit Defense. Some wonder what kind of service you’re going to get for $39.95. The idea isn’t that you alone are buying audit representation for $39.95. Instead, thousands of people buy the add-on service, but only a handful use it. TurboTax pays for the representation needed out of the profits of the add-on.
Is Audit Defense worth it?
Only if you get audited, and only if the company they outsource the work to does a good job. If you get audited you can always go to a CPA or tax attorney, but those resolutions can cost thousands of dollars.
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It’s an interesting twist, but I’d be hesitant to recommend this when the dollars can be better used to boost your emergency fund or pay down debt.
Final Thoughts on TurboTax Online
This isn’t TurboTax’s first rodeo. They’ve been around the tax block.
The software works, and it works well.
Perhaps the best part is you can get started on any edition for free. You only pay TurboTax when you are about to file your return. There’s no financial risk to starting your tax return with TurboTax Online. Plus, you might be surprised at how large a refund the company can get you.