Updated · Aug 03, 2022
Best for: Individuals
What Is TurboTax?
TurboTax is a software package for preparing and filing tax returns to the American and Canadian tax authorities, known as the IRS and CRA. Businesses also use it to perform the same activity.
Chipsoft, an American software company, created the first version of TurboTax in 1984. In 1993, Intuit purchased the company, which continues to develop and market TurboTax.
TurboTax Features and Products
The TurboTax app can do many things for you, including;
Under the Free File program, the IRS allows American taxpayers earning below a specific amount to file taxes for free. And while TurboTax stopped participating in this program in 2021, it still offers free tax filing with some limitations.
You can file both federal and state tax returns with the free edition.
Filing taxes involves inputting a lot of data, which can be demanding. Often, you need to input the same data on multiple forms, and it’s reasonable to find this laborious. TurboTax helps users file their taxes quickly by transferring data from elsewhere. For example, you can import W-2 Forms provided by employers.
Employer payroll must be a TurboTax Import Partner to transfer external forms, but many are not. Don’t fret, though, if you fall into this camp. You can also import data through the exciting feature - photo capturing.
On the mobile app, you can snap a tax form, and TurboTax's recognition system will extract the data for you. The system isn't perfect and requires high-quality images to be most effective. Fortunately, the app supports this with guidance and automation.
AGI stands for adjusted gross income, calculated as your gross income minus specific deductions pertaining to the tax law. Your AGI is critical because it helps determine tax credit eligibility. The IRS also uses it to verify your identity.
Calculating your AGI isn’t always easy due to the number of variables involved, starting with the type of tax form. TurboTax assists in determining your deductions accurately without requiring much understanding of the system.
TurboTax Multiple States
People working in multiple states must consider tax liabilities related to each state, and figuring such out can be complex. Some states require you to separate the income earned in different states and tax only the earnings in their jurisdiction. Others require you to calculate as if you are a resident and tax you based on both in- and out-of-state income.
You may have to file more than one state income tax return, depending on your circumstances. TurboTax helps you do this with ease.
In most cases, your resident state lets you take a tax credit on any that you must pay to another. Not to worry - this platform assists with such calculations and can help maximize the credits.
This feature allows you to contact experts when you need a helping hand. There are many cases where clarification is necessary, and TurboTax provides a team of professionals you can reach on-demand.
You can connect with a TurboTax Live expert to ask your questions through chat or video call. Likewise, you can ask them to check your tax return as you go or request a final review.
You’ll have to pay separately to connect to these experts, between $79 and $389, depending on income levels. TurboTax vets its representative rigorously, making the premium price worthwhile in most cases.
TurboTax Complete Check
To ensure users file their tax returns correctly, TurboTax uses a final inspection process called Complete Check. It’s an automated system for error detection. Though not perfect, it goes a long way in helping to avoid significant mistakes.
At times, the IRS opens formal audits into specific taxpayers to ensure accurate reporting. These investigations can commence for various reasons, such as questionable deductions, large cash deposits, or simple math errors.
The overall audit rate for taxpayers is low, less than 1% in a given tax year. But, if you fall into that camp, TurboTax can assist you with its Audit Defense service through its partner company, TaxAudit.
By subscribing to Audit Defense, you receive formal representation if audited. For example, TaxAudit will facilitate all formal communication with the IRS or State authorities, including letters and telephone calls.
TaxAudit is the largest audit defense firm in the US, so be assured that the people representing you possess the necessary experience.
TurboTax Crypto Support
Cryptocurrencies may be all the current rage, allowing for transactions to be outside the usual spheres of governmental oversight. But, people still have to consider cryptocurrency transactions when filing taxes.
The IRS considers cryptocurrencies as property, meaning you must report their capital gains or losses. The gains are taxed short-term or long-term, depending on how long you hold them.
Estimating and reporting crypto gains or losses can be hectic, especially if you have many trades. To assist, TurboTax enables users to import cryptocurrency transactions directly from over a dozen platforms.
The supported platforms include Coinbase, Robinhood, Binance.US, FTX.US, Crypto.com, etc. You can link your account to any of these platforms with your TurboTax account and directly import the transactions. Likewise, you can download your trades in a CSV format and upload them to TurboTax.
TurboTax Crypto Support saves you much time that you’ll otherwise spend manually entering transaction data.
TurboTax Donation Calculator
According to IRS rules, you can deduct a percentage of your charitable donations when filing taxes. But determining what you can deduct and how much is allowable is tricky. Fortunately, this TurboTax feature helps you accomplish this. There is even a separate app called ItsDeductible to track your donations and what you can deduct from them.
Self-employed people don’t file taxes the same way as people that earn their income from regular, full-time work. According to IRS rules, they have specific provisions, including deductions and write-offs.
Finding the provisions to minimize your taxable income manually can be daunting, but the TurboTax app can help. On it, you can search through hundreds of deductions covering specific industries and take advantage of the permissible ones.
The platform also has many guides for the self-employed. And If you face any challenges beyond their scope, you can always contact a TurboTax Live expert to assist.
Like individuals, incorporated businesses must also file their tax returns with the IRS. As a company is not a living individual, the owner(s) must submit the tax returns.
Business tax preparation is in many ways different from filing for individuals. For example, businesses pay taxes on revenue (profits) rather than earned income.
TurboTax has a specific package for business tax filing that supports different incorporation structures, including Partnerships, S Corp, C Corp, multi-member LLC, trusts, and estates. This package provides numerous features to ensure you can file tax returns correctly, no matter which structure.
As TurboTax fully integrates with QuickBooks, you can directly import your income and expense data. This is a great help, as you never have to manually input data - saving you heaps of time.
TurboTax Early Refund
During every tax season, the IRS issues refunds to millions of people. Most payments usually take 21 days to arrive following their confirmation date. In rare cases, they can take up to 120 days.
If you filed your tax return with TurboTax and have a confirmed refund, you can request an equivalent loan immediately. The loan has no fees and interest - it serves more as a strategy to keep clients satisfied. However, the platform only offers this service for refunds over $500.
A mobile app is one of the most convenient ways to use any platform, and TurboTax doesn’t lack one. You can download it for iOS or Android and use it on the go. The app supports some exclusive features, such as importing data from photos.
Security is an essential aspect of every app. This is especially necessary for TurboTax, which involves confidential financial details. The platform ensures users’ information is secure against unauthorized access with many features.
The platform has multi-factor authentication. This mode of authentication requires identity verification in more than one way before granting access to an account. A valid email and password, prone to theft, will not suffice. You'll also need to verify your identity through a unique, single-use code or answer a series of questions.
On the iOS platform, you can also enable Touch ID to access the app with your fingerprint. Likewise, the TurboTax software sends email confirmation notifications to your account if any changes. You can also monitor your login history to see what devices accessed your account.
Ease of Use and Interface
Many TurboTax Reviews claim that TurboTax is easy to use. And considering the number of features offered, we also found it easy to navigate.
You can access TurboTax through its web-based desktop interface or mobile app, so there’s no barrier to using it. You’ll need to create an Intuit account to access TurboTax. The good thing is that you can use that account to access other services from the company.
When researching this TurboTax review, we observed much praise for the platform’s customer support. You can receive direct customer support through live chat, email, or telephone if you encounter challenges. The customer service is available 24/7, which is commendable.
There’s also an official TurboTax support center, a FAQ section, and user guides. Likewise, there’s an official discussion forum where you can connect with an online community of TurboTax experts.
There are four TurboTax service packages depending on your requirements. And while a free edition is available, it has restricted features. If you need to upgrade, you can choose from the following:
In addition to the Deluxe version services, it includes income reporting from investments and rental property.
This edition incorporates all that Premier offers, plus business income reporting.
In the first three packages, you must pay an extra fee of $49 if you’re preparing returns for multiple states. For the last, the price is $55. You must also pay additional fees if you want access to live experts.
The extra charges can run into hundreds of dollars for specific services, making them a recurrent source of customer complaints.
TurboTax vs. H&R Block
There are several well-known alternatives to the TurboTax service. H&R Block is one of them, a tax preparation service operating in the US, Canada, and Australia. On the other hand, the former is only available in the US and Canada.
Both have a free version, but H&R Block’s version provides access to more features than TurboTax. It covers more forms and schedules and allows users to file multiple state returns. Meanwhile, the latter only gives one free state return. H&R Block is the superior choice if you intend not to pay.
Cost-wise, H&R Block is the better option with its slightly less expensive premium plans.
We also noticed a significant pricing difference to the access live experts. H&R Block charges considerably less for this service than TurboTax, giving it a competitive edge.
Another noteworthy distinction between these services is transparency. H&R Block shows all the calculations it makes concerning your taxes so that you can review them. By contrast, TurboTax just checks it for you and never reveals its calculations. While not sketchy, we think it’ll be better if both services offer the same level of transparency.
Overall, H&R Block is an excellent TurboTax alternative with comparable features for similar costs.
TaxAct is a tax preparation software that serves clients only in the US.
Both TaxAct and TurboTax have free tiers. But, the latter’s free trier is more robust than the former’s, covering more tax forms and deductions.
In the cost criterion, TaxAct is the clear winner. Its paid packages are significantly more affordable than ones from TurboTax. The platform has three paid subscriptions; Deluxe, Premier, and Self-Employed, costing $47, $70, and $95, respectively. Comparably, TurboTax plans cost $59, $89, and $119, respectively.
Both tax preparation platforms have similar looks and feel. They’re akin to interacting with a virtual tax preparer. Throughout using TaxAct, you'll get tips, explainers, and other learning resources. There’s also a banner running along the side, keeping track of your progress.
On TaxAct, you can receive live assistance from experts if you run into difficulties. You can do the same on TurboTax, but TaxAct offers this service for a more affordable price.
Both platforms offer almost the same features. The main distinction between them is that TaxAct is more economical.
TurboTax is a clever choice if you want software that makes filing tax returns less cumbersome. The app offers many features to help individuals or incorporated businesses file correctly and prevent any tax-related issues.
One great thing we can say about TurboTax is that it’s straightforward to use. It’s also cost-effective relative to the features it offers. Think of it as your virtual certified public accountant (CPA).
The main drawback we observed with TurboTax is the extra charges for specific services, which can be steep. The platform also tries upselling these services aggressively, which can annoy users.
Is TurboTax really free?
There’s a free version of TurboTax, but it has restricted features. You must pay to gain access to advanced functionalities.
Does TurboTax take money from your refund?
There’s an option to pay your TurboTax fees from your federal tax refund. But, the company doesn’t do this by default.
Can TurboTax mess up my taxes?
There can be mistakes when filing your tax returns that require corrections. In such cases, you can always contact TurboTax’s customer support representatives for clarification.
Is TurboTax easy to use?
Yes, ease of use is a typical highlight in many TurboTax reviews, and we found the platform easy to navigate.
Deyan has been fascinated by technology his whole life. From the first Tetris game all the way to Falcon Heavy. Working for TechJury is like a dream come true, combining both his passions – writing and technology. In his free time (which is pretty scarce, thanks to his three kids), Deyan enjoys traveling and exploring new places. Always with a few chargers and a couple of gadgets in the backpack. He makes mean dizzying Island Paradise cocktails too.
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