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Review: TurboTax Software

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Tax return check

TurboTax offers an online tax filing software that’s fully capable of helping everyone electronically file a tax return on their own.

The benefit of using an online software like TurboTax is the user-friendly interface. You answer easy questions about your household and income. Then, TurboTax calculates the tax return for you – no math required from you. At the end, you put in your bank account information to have your refund direct deposited (or payment withdrawn).

This easy to use software will cost you. The price of filing with TurboTax ranges from free (for very basic tax returns) to $80 for sole proprietors and small business owners.

Tax Prep Process

TurboTax has a streamlined process that takes you through the tax return step-by-step. First, you enter information about you and your family which is used later to determine your credits and deductions.

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Information you need to enter includes your name, marital status, Social Security number, birth date, your dependents, occupation and where you live. After these details you move on to reporting your income.

[7 Best Online Tax Prep Software for the Self-Employed]

Entering Taxable Income

When you arrive at the income module, TurboTax asks if you want to go through it on your own or if you want TurboTax to walk you through it.

If you choose the self-guided option, you can hop around to different parts of the section to enter income from your salary, unemployment, interest and dividends, investments or rental property.

One convenient aspect of TurboTax is it automatically populates data from your W-2 after you put in your employer identification number. In past versions of TurboTax, you had to fill in each box from your W-2. This upgrade saves you time and limits data entry errors.

If you’re not sure what to work on, TurboTax can instead guide you through each part one at a time. TurboTax also provides links to other areas you may need to visit if you have unique tax situations like below.

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After you’re finished entering data for your income, you move on to the deductions and credits area. TurboTax brings up the deductions and credits you can take to get the best refund.

Again, you can choose to go through the deductions and credits section on your own or have TurboTax take you through each part step-by-step.

TurboTax Tools Center

TurboTax has a tools area that’s helpful if you run into trouble or you can’t find a tax form. If you click on “topic search”, it shows a full list of forms. When you click one, it takes you to the section of TurboTax where you answer questions to fill out that specific tax form.

Using the tools center you can also view your tax summary and search for answers to tax questions. If you have a question answered in the help section, then you can reach out to a tax advisor or post a question to the TurboTax community.

 

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TurboTax Review and Smart Check

When you’re finished with each module, TurboTax does a review. If there’s missing information, TurboTax will alert you and then take you back to the section to fix the problems. Afterward, you’ll go through audit defense to see if your tax return is likely to trigger an audit.

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If your return passes analysis and audit defense, you arrive at the summary page where you can pull up and review your entire tax return form.

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Pricing for TurboTax

TurboTax has a few pricing tiers. The first tier costs $0 for simple Federal and State returns including forms 1040EZ and 1040A. If you have a more complex tax filing where you want to itemize deductions, enter investments or income from self-employment, you’ll have to upgrade to premium products. Each product (except for the Federal Free Edition) includes access to a tax advisor if you need it.

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[Free Tax Filing for Seniors: Easy Ways to Get Access]

Watch Out for the Add-on Products

Beware of extra charges when using TurboTax. At the end, you’ll get asked to add on different services like access to refund copies, audit and identity theft protection. These additions are not necessary to file your tax return, but it’s easy to click on buttons by accident and tack on upgrades. Before signing off on your tax return click the “view your receipt” link to give your statement a once over to avoid paying anything extra.

Another fee you should be aware of is the refund processing free of $34.99. This fine print fee applies if you choose to have the cost of filing with TurboTax taken from your refund instead of paying for it separately with a credit card.

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You can easily avoid this fee by choosing the “pay with your credit card” option.

Who Should Use TurboTax Software?

If you want to take a DIY approach to filing taxes, TurboTax is a software you should think about using. Filing taxes can be confusing; TurboTax software simplifies things. It’s also capable of handling a range of tax situations from basic returns to more involved ones that include income from rental properties or small businesses.

Simplicity aside, there are other affordable ways to file your tax return if you make less than $62,000 per year and need to use more than just basic tax forms.

However, if your income disqualifies you for other affordable e-filing options and you’re confident enough to file on your own, TurboTax may be more cost effective than hiring someone to work with you one-on-one.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Taylor Gordon
Taylor Gordon |

Taylor Gordon is a writer at MagnifyMoney. You can email Taylor here

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Market Data

Research on Bank Branch Penetration

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

MagnifyMoney has conducted a study of bank and credit union branch concentration in America, and the results indicate a strong correlation between race and the presence of branches. Counties that are majority white have much higher branch penetration than minority communities.

This data has been gathered using FDIC and NCUA branch data along with United States Census data. The full report can be downloaded here.

Key Findings

  • In counties that are majority (more than 50%) white, there are 40.6 financial institutions for every 100,000 people
  • In counties where more than 50% of the population is not white, there are only 27.1 financial institutions for every 100,000 people
  • Native Americans have the lowest bank branch penetration, with only 20.53 per 100,000 people, which is half the number of branches found in white communities.
  • Majority Hispanic communities have 22.51 branches per 100,000 people and majority black communities have 32 branches per 100,000 people

The image below demonstrates the branch penetration based upon the percentage of whites in the county. As you can see, the higher the percentage of white residents in a county, the more bank branches that are available:

The following image has been created for black communities. You can clearly see that the fewer the African Americans living in a community, the more bank branches:

Implications

  • Bank branches provide communities with access to vital, affordable financial products. In particular:
    • Checking accounts are foundational products that provide access to the financial system. Checking accounts are essential transactional products, enabling people to cash checks, make payments and store savings. In the absence of checking accounts, consumers turn towards:
      • Check Cashing Companies: in order to have immediate access to cash, consumers pay fees and commissions at check cashing companies, which can be up to 4% of the check amount.
      • Pre-paid Cards: In order to make payments and avoid carrying cash, consumers turn towards prepaid cards that can often be loaded with fees and charges.
    • Credit cards, personal loans and overdraft lines of credit are offered by most banks. In the absence of bank branches, payday lenders and pawn shops often fill the lending vacuum.
      • Payday lenders typically charge $15 – $20 for every $100 borrowed for a two week period. More importantly, payday lenders provide instant access to cash to help fulfill a short-term need. For consumers who repeatedly use payday lenders, the effective APR can exceed 400%.
        • Interestingly, payday lenders are not always more expensive than overdraft fees charged at traditional banks. Overdraft fees at the largest banks average $35 per incident. In extreme cases, consumers can be charged $70 to borrow $6 for 6 days.

Important: The presence of bank branches does not necessarily mean that the most economically marginalized individuals will have access to products that meet their needs. And for consumers with strong credit scores, bank branches are not required for access to those products.

Small businesses rely heavily upon banks for financing, and the bank branch plays a large role in the underwriting process. 48% of business owners use a major bank for their financing needs, and an additional 34% use a regional or community bank. Without a neighborhood branch, small businesses owners can find it difficult to find working or growth capital.

Alternatives

Historically, the bank branch has been the key to accessing the banking system. And for many people, that remains the case. However, digital and mobile technology are rapidly replacing traditional bank branches for the distribution and maintenance of financial products. Increasingly, alternatives to traditional bank branches have been appearing. Here are some new alternatives:

  • Traditional bank accounts can now be replaced with Pre-Paid and Internet-Only accounts that have significantly reduced fees. Low or no-fee pre-paid accounts are now being offered by major banks. Many of these accounts offer mobile deposit functionality. However, check holding periods remain a challenge for many consumers who still turn to check cashing companies, especially for people who have had a history of bounced checks.
  • Short-term borrowing needs for consumers are increasingly being filled by marketplace lenders. A number of lenders are experimenting with lending models that do not rely upon FICO.
  • Small businesses can increasingly borrow money online. However, many of the new marketplace small business lenders charge extremely high interest rates, which have the risk of trapping businesses in un-affordable and costly debt. In addition, most new marketplace lenders hold borrowers personally liable for borrowings, increasing the risk for the individual.

Challenges

Despite the growth of alternative products for banking and borrowing, significant challenges remain for the most economically marginalized. Neither bank branches nor startups have been able to solve the following consumer needs:

  • The need to have rapid access to cash: 56% of Americans have less than $1,000 combined in their checking and savings accounts. Living paycheck to paycheck means that many people need to cash their check immediately upon receipt. Imagine someone has to pay the electricity bill. The tradeoff is between paying a check cashing company to have access to the funds immediately, or paying a late fee to the utility company and possibly having electricity switched off. Many people would rather pay a check cashing fee and get immediate access to their money. Until banks find ways to get immediate access to a bigger portion of checks, check cashing alternatives will remain appealing.
  • The need to borrow money on a short-term basis. A significant portion of the new internet-only checking accounts and prepaid cards eliminate overdraft fees. But these accounts also eliminate the ability of people to borrow money. Many people will have the need to obtain access to short-term credit. In the absence of low-cost alternatives from banks, people will continue to turn towards payday lenders. Many banks would like to offer short-term loan options. And some regulatory agencies (the Consumer Financial Protection Bureau) would like banks to offer affordable low-cost lending options. However, the prudential regulators (FDIC) worry about the risk of this business. So long as the regulatory environment remains conflicted, banks will not be able to expand into this business, and payday lenders will continue to fill the gap in the market.

Views from MagnifyMoney Co-Founder Nick Clements:

In an increasingly digital world, bank branches are no longer required to access a number of financial services. Consumers can now open bank accounts with internet-only banks and use their cell phones to deposit checks. People can quickly apply for credit on their phones, and have the money deposited to their internet-only bank account the next day. And lenders are increasingly finding ways to use alternative data sources, helping more people qualify for better products.

However, traditional bank branches remain critical to small businesses that require affordable working or growth capital. Minority communities have fewer bank branches. As a result, businesses that are owned and operated in minority communities with fewer branches will likely have less access to affordable capital.

In the absence of bank branches, payday lenders, check cashing companies and pawn shops often take their place. Consumers with excellent credit scores need to recognize that they can use their phones to shop for, open and maintain excellent financial products. They no longer need to choose their lender based upon the proximity of the branch.

Unfortunately, new marketplace lenders, internet-only banks and even traditional bank branches still provide limited value to the most economically marginalized people. When banks hold checks for too long, check cashing companies remain in business. When people have an immediate borrowing need, often only payday lending companies are willing to lend quickly. There is still a shortage of products from traditional banks and startups that meet the needs of the most vulnerable.

10 Worst Counties

Below are the majority black counties that have the lowest branch penetration rates:

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

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Reviews

Review: eSmart Tax Preparation Software

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Tax return check

ESmart Tax’s tax preparation software is an online tax preparation software affiliated with Liberty Tax Preparation. The software is best for filers with low to moderately complex filings who don’t want to pay for features they won’t use.

Esmart Tax’s features robust knowledge articles, streamlined deduction and credit calculators and helpful customer service for paying customers, but has significant drawbacks in user interface and the ease of importing documents.

Tax Prep Process

Before users start their tax prep, the software informs users of the types of documents that they need to collect. Although bare bones, the list proved to be a helpful guide especially for first time filers.

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[7 Best Online Tax Prep Software for the Self-Employed]

List of Tax Prep Documents

ESmart Tax then prompts users to enter basic information about themselves, their income, and how they will file. The software response time is occasionally sluggish, and some of the information proved redundant. Still, the software gets the basic information out of the way reasonably quickly.

ESmart Tax then directs users to the income portion of the software. At this point users cannot choose a guided path as is the case with some higher end softwares. Instead, users must enter relevant income types on his or her own. However, if users become confused the hyperlinks entitled “Learn More” offer helpful pointers.

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[H&R Block tax prep review]

Entering Income- Learn More Hyperlinks are helpful

Users who need further help can also read the curated knowledge articles on the right hand side of the software. These short articles are especially helpful in directing users into and out of the relevant sections. If further help is required, eSmart Tax features Live Chats and email support with software specialists.  For tax related questions, Deluxe and Premium package users can receive individualized tax advice from professional tax advisors via email or phone calls.

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Within the income section, eSmart Tax features a direct import for W-2 forms, but the W-2 import doesn’t always work. Only people whose employers have set up an ADP Control Number or who have submitted W-2 forms to Equifax will be able to use the import feature.

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Users must manually enter 1099-INT and 1099-DIV forms if they have interest bearing bank accounts or brokerage accounts.

Although manually entering forms can be cumbersome, users will appreciate the ease with which eSmart Tax completes complex calculations (like real estate depreciation, or home office deductions). Many users will also appreciate the ease with which they can move from income type to income type (or even toggle from Income to Deductions to Credits).

When a section is complete, the software automatically prompts users to move to the subsequent section before a final review.

Pricing

ESmart Tax Software is priced as a mid-tier tax filing software. All tiers (except Free) offer excellent functionality for the price, but the software has a less intuitive and clunkier interface than some of the higher end competitors.

eSmart pricing

The final verdict

In general, users seeking free filing, should look past eSmart tax to a software with a lower priced state-filing fee. However, eSmart Tax offers uniquely low prices for users who require itemized deductions or users with self-employment income. The Basic and Deluxe versions are especially robust relative to competitors with tiered pricing options. However, the value from the low price comes at the cost of usability. Filers who want more answers or the ability to import forms easily need to look to different higher priced software.

Likewise, real estate investors and business owners will see low prices relative to the software’s capabilities, but the low price will come at the cost of additional time entering forms and understanding the software.

Despite the drawbacks, users with low or moderately complicated tax filings, or complex filers looking to save money over time should consider eSmart Tax for their online tax software needs.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here

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