TurboTax Software Review
The average cost for a tax professional to prepare a basic federal and state return was $129 in 2010. And if your taxes were a little more complex, that number would have been much, much more. That’s why approximately 31% of all American households found a cheaper alternative and filed their taxes online last year. What’s even more amazing is that number has increased by 15% since 2005. No doubt about it, Americans are smart when it comes to paying Uncle Sam.
But for many, choosing the right tax software is not an easy decision. Each of the major services has it’s own set of bells and whistles which makes it difficult to figure which is best. So we’re going to sift through all the trash and stress test each of the major online tax preparation services for you. Then we’re going to tell you which we think is best and why.
The Good
- Easy to use interface that’s nice on the eyes
- Solid guidance based on information you input
- Cheaper than a “Tax Store”
The Bad
- Save your work often because if the service is idle for 20 minutes you’ll lose it
- Deduction section can be a bit overwhelming
- Constant offers to upgrade and cross sell
Intro
Based on software sales, TurboTax is the largest in the land. It’s also the number 1 rated tax software by sources like USA Today, CNET, and PC Magazine. So with all this positive mojo, we expected to be blown away by what TurboTax had to offer. Not to spoil it, but the product definitely lived up to the hype.
When you first sign in, TurboTax says it’s going to guide you through your return like a GPS. Interesting analogy. My GPS isn’t always accurate and all brands essentially work the same way. I would say comparing yourself to a commodity isn’t the best way to differentiate yourself from your competitors. But the software is so good I’ll give TurboTax a pass.
What You’ll Like
One thing is for sure, TurboTax sports a beautiful interface that’s ultra easy to use. There are personal touches too, like when it tells you your family is worth every penny you spend on them and gives you the deduction amount per dependent. It also chooses a filing status, based on the information you give it. No doubt about it, TurboTax is extremely intuitive.
I know this is standard (and been going on for years), but I dig how it calculates your refund as you move through your return. It also makes a seamless transition to your state filing by importing all your data to that form and if you’re a returning customer, data from last year. This is a terrific timesaver and a smooth way for TurboTax to earn more of your business.
The first-time-user guidance is a nice feature as it gives newbies the extra help they may require. TurboTax also boasts a live community where you get answers to just about any tax question known to man. It also reduces your risk of an audit by guaranteeing its calculations and triple checking your returns for any errors. If you get audited, the software has systems in place to help you. That’s cool.
The service is pretty cheap too. TurboTax offers a free federal file if you meet an income requirement and you only need to use a 1040EZ form. Just be aware that you’ll need to pay $27.95 to file your taxes with the state. So in this case, free isn’t technically free.
The next level up is $29.95 and you’ll want to use this “Deluxe” version if you have a lot of itemized deductions. If you own investments like stock, bonds, and rental property, you’ll want to use TurboTax Premier. It costs $49.95 and is designed to look for all the deductions associated with these conditions. Lastly, if you own your own business, check out TurboTax Home and Business. It costs $74.95 and looks for every business expense under the sun. All the state filings from the Deluxe version on up costs $36.95, which isn’t terribly expensive.
What You Won’t Like
Make sure you save your work often because if you leave the program idle for 20 minutes it will log you out and you will lose all your work. Unfortunately for me, I found this out the hard way. Click the save button constantly.
Some may find the deduction section to be a bit overwhelming. But we’d argue there isn’t an efficient way to look for over 350 tax deductions. Here’s the thing though, this section could take you an hour to work through. And if it reduced your tax liability that would be time well spent. But if your standard deduction is higher than what you itemized, the program will automatically use that amount. Ultimately, we’re happy the software is doing what it needs to do to maximize the returns of its customers, but I’m sad that I just wasted an hour of my time, trying to itemize when I didn’t need too.
By far the biggest aggravation with TurboTax is the constant cross- and up-selling. If you select the free version, TurboTax tries hard to get you to upgrade. If you want a tax pro to review your return, (before you send it off), that will cost you $39.95. You can also pay an additional $39.95 for extra audit defense. It also tries to direct you to Mint.com during the early stages of your process to see if you’ve maximized your IRA deduction for the year. When you’re done fending off all this marketing pressure, you’ll feel like you just walked out of a car dealership
Fin
TurboTax strengths are its ease of use, interface, guidance, and cost. Its primary weakness is predicated on its constant pushes to get you to upgrade and the cross selling of other services. If you know what you want and need, these marketing techniques will serve to only annoy you. But if you’re on the fence, you could end up buying all this extra stuff, which will cost you a fortune.
How do H&R Block at Home and TaxAct compare? Check out their reviews before breezing through our final grudge match to see who won the tax software showdown!
