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Updated on Wednesday, February 17, 2016
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 At the end, you put in your bank account information to have your refund direct deposited (or payment withdrawn).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.
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.
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.
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.
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.
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.
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.
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.
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.