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This is a review of the popular tax preparation software TurboTax which is made by Intuit. There are a lot of different packages for this software – Free, Deluxe, Premier, Home & Business, Business. As well, some of those packages comes in an online version and a desktop version. We will be discussing the differences between the various editions and which one is right for you. We’ll also take a look at whether you should get the online version or desktop version.
Here are the different versions of TurboTax available in order of popularity:
TurboTax Deluxe Edition
The Deluxe Edition of TurboTax is what most filers will use if they need more than what the Free Edition offers. This version will help guide you through your tax return with a LOT of extra help provided for deductions and life changes (new baby etc). The cost is $29.95 for your Federal return, but you don’t have to pay anything until you want to eFile. The idea is that you can try out the software and all the features and then decide if you are happy with the product.
Here are some of the main features:
- You can copy all your information from last year’s tax return to save on data entry.
- You can also import tax data from other software packages such as TaxAct and H&R Block TaxCut
- If you work for a participating employer then you can have your W2 and 1099 forms automatically filled in.
- Access to live answers online from TurboTax tax experts.
- Free technical support.
- Free Federal eFile.
Here are the suggested guidelines from TurboTax to decide if you should use the Deluxe Edition – if any of these apply to your situation then you should try out the Deluxe Edition since the Free Edition probably won’t cover everything you need.
- You own your home
- You donated to charity
- You have significant education or medical expenses
- You have childcare expenses
- You have lots of deductions
TurboTax Free Edition
This online-only TurboTax edition costs absolutely no money and offers a free federal efile. State efile is extra where applicable. It’s hard to beat the price but of course it won’t be sufficient for every filer’s needs.
One of the great things about the Free Edition is that if you find out part way through the return that you need to upgrade to a better version (TurboTax will help point this out) then you can upgrade and keep all the data you have already entered.
One thing to note is that the free edition does not have the same level of help available that the more expensive editions offer. Things like available deductions etc. This version also does not offer the ability to import the previous years tax data which is a big convenience.
Some of the more common forms covered with this edition:
- Form 1040
- Schedule A
- Form 1040A
- Schedule B
- Form 1040EZ
- Schedule EIC
There are also many other less common forms covered by this edition which you can find listed on the www.TurboTax.com site. Click on the “Learn more” at the bottom of the “Free Edition” column and then click on “Included forms”.
Let’s take a look at the online version vs desktop version option
Online version – this version is generally cheaper and quicker to set up since you don’t have to download any software. All the information you input is stored on TurboTax’s servers, not on your computer. The main concern some people have about the online version is security – if your software company stores all client information on one server then it would be a good target for hackers, regardless of how secure it might be. Of course not everyone has a secure desktop computer either. I ended up using the online version because it was so much cheaper.
One of the great things about the online version is that you can complete your tax return for free and you don’t pay until you efile. This is a convenient way to try out the software before you buy.
Desktop version – This version you download the software from TurboTax website and install on your computer. It is very easy to install but some users might not be comfortable installing software on their own. You also need to have a computer that is new enough and fast enough to handle the software.
The perceived benefit of the desktop version is that your financial information is not stored somewhere on the internet.
This edition has all the capabilities of the Deluxe Edition and also allows for the following scenarios:
- Investment sales – If you sold investments such as mutual funds, stocks, bonds or options for employee stock plan then you need this version.
- Rental property – If you own rental property then this is the correct version for you. This version will find every rental deduction and will show you the best rental depreciation method. It also provides guidance to maximize refinancing deductions.
- Estate or trust – If you received a K1 file from an estate or trust.
This version costs $49.95 for the Federal return.
Home and Business Edition
The TurboTax home and business edition includes everything in the Premier Edition and Deluxe Edition. The extras with this version have to do with business taxes. If you own a business and are sole proprietor, consultant, contractor or single owner LLC then you should use use this edition.
Here are some of the areas this version covers:
Small business tax deductions
Industry specific deductions
Create W2 and 1099 forms for your employees and contractors
Simplifies asset depreciation
Corporations, Partnerships and LLCs Edition
This version is similar to TurboTax business except it handles corporations, partnerships and LLCs.
You can import data from Quickbooks and operate multiple businesses with this edition.
Other tax software
If you think that TurboTax is not for you then considering using H&R Block at home (formerly TaxCut) for your taxes.