TurboTax is one of the most popular online tax preparation and filing software programs in the United States. I’ve personally used it to file my taxes for many of the past several years. And while I don’t personally qualify, TurboTax’s free filing package is one of the best free tax filing options around.
That’s not to say that TurboTax is perfect. Though its interview-based filing process is highly intuitive and the mobile-friendly platform is a snap to use, it’s a bit pricier than most competitors and requires people with complicated tax situations (myself included) to upgrade to more expensive plans – unlike some alternatives that offer most or all forms and schedules at lower price points. And though I’ve never gotten a bigger refund from another program, TurboTax isn’t the fastest filing service I’ve ever used.
Plans, Pricing & Features
TurboTax uses an interview-style tax preparation process, using your answers to a series of simple questions (such as “Do you have any children or dependents?”) to evaluate your tax situation and determine which forms and schedules you need to successfully complete your return.
Depending on the complexity of your tax situation, TurboTax assigns you to one of five plans, each of which has a specific cost and feature suite. If TurboTax recognizes that your return requires a form or function that isn’t supported by your current plan (such as itemized deductions or self-employment income), it automatically prompts you to upgrade without losing the information you’ve already entered. If you opt for a paid plan, you don’t have to pay until you actually file.
It’s worth noting that, regardless of the plan you select, TurboTax guarantees the accuracy of its calculations. If it’s responsible for any errors that cause you to misfile and result in an IRS penalty, TurboTax promises to pay the penalty and any associated interest costs.
Federal Free Edition
This plan offers free federal and state tax returns. Since it doesn’t support most schedules, it’s only appropriate for very simple tax situations.
Furthermore, it comes with an important drawback: Federal Free doesn’t let you transfer or import last year’s return or any information contained on it, regardless of whether you filed with TurboTax or another service.
- W-2 Importing. The Free plan allows you to import as many W-2s as you need, and also allows you to record all W-2 income. This is particularly useful if you have more than one job.
- Earned Income Tax Credit. If you’re eligible for the Earned Income Tax Credit, the Federal Free edition lets you file Schedule EIC.
- Affordable Care Act Forms. This edition also lets you file any forms related to the Affordable Care Act and can help you determine whether you qualify for subsidies to purchase health insurance under the Act.
- Credit and Deduction Checks. As you fill out your return, TurboTax asks targeted questions that determine whether you qualify for particular tax credits and deductions. If you qualify for enough deductions, you’ll be notified that you should itemize your deductions, rather than take the standard deduction. However, the Federal Free edition doesn’t support itemized deductions, so you need to upgrade to a paid plan (Deluxe or better) to go this route.
- AnswerXchange. TurboTax’s AnswerXchange is an interactive forum where users can post questions on topics related to taxes, such as, “What is Form 1099-R?”, and questions about the TurboTax platform, such as, “How do I import my W-2?” Both users and TurboTax customer care employees can answer these questions, though TurboTax reserves the right to delete unhelpful or profane answers from users. A powerful search engine guides you through the massive amount of content to find relevant answers.
- SmartLook. New for the 2015 tax year, SmartLook is a free, live tool that lets you chat and screen-share with a TurboTax support representative in real-time. On the desktop version, it’s accessible through the Contact tab. On the mobile app, hit the question mark icon, then “Connect with an expert.” Once you’re in the SmartLook feature, you’re prompted to enter your question, then paired with a rep qualified to help.
TurboTax PLUS costs $29.99 for your federal return and $36.99 for each state return. PLUS isn’t advertised on the company’s main pricing and plans page – it’s only offered as an upgrade for people who begin filing with the Federal Free edition, and is suitable for the same tax situations covered by the free plan (except with more convenient features).
PLUS comes with all the features and functions of the Federal Free plan, plus:
- Previous Year Transfer. If you filed with TurboTax last year, you can transfer the information on that return to your current year’s return. This automatically populates basic information, including your adjusted gross income (AGI) and home address.
- Previous Year Importing. If you filed with another tax service last year, you can import your return (if saved in PDF format) into TurboTax and save the trouble of filling out basic information fields. TurboTax supports importing from all online and in-person tax filing services, as long as they allow you to download your return in PDF format.
- ExplainWhy. This popup feature brings more transparency to the tax preparation process with “personalized, bite-sized explanations of the changes to your refund as you go” – for instance, when you add a new deduction or income source.
- My Docs. My Docs is a cloud storage service that offers up to 100 MB of online storage for tax-related documents.
- Customer Support via Phone. PLUS customers have on-demand phone access to TurboTax’s customer support team, including tax experts, reachable by calling (800) 414-5644. The call center’s hours run from 5am to 8pm PST throughout the year.
- Access to Your Returns Through 2017. PLUS customers have unlimited access to their returns through October 16, 2017.
Deluxe is ideal for filers with more complex tax situations, such as those involving itemized deductions and some miscellaneous income. It costs $54.99 to file a federal return and $39.99 for each state return.
TurboTax Deluxe comes with all the features and functions found in lower-priced plans, plus:
- Itemized Deductions. If it makes financial sense to itemize your deductions, a determination that TurboTax can help you make, you’ll need to file Schedule A. The Deluxe package offers all the support necessary to do so.
- Support for Miscellaneous Income. If you earned miscellaneous income (indicated on Form 1099-MISC), TurboTax Deluxe allows you to log it in your return. You can log unlimited 1099s with the Deluxe plan.
- Support for Schedule C. If you’re an independent contractor, sole proprietor, or consultant, you may be liable for self-employment tax. If so, the IRS requires you to file Schedule C or Schedule C-EZ. TurboTax Deluxe provides partial support for Schedule C and C-EZ filers. However, you can’t claim all applicable business credits and deductions with Deluxe – you’re only able to deduct vehicle mileage, phone expenses, and/or miscellaneous expenses up to $100, for instance. Other important deductions and credits, such as home office deductions, aren’t available with this version.
- Access to All Previous Tax Returns. Deluxe customers have access to all previous tax returns filed with TurboTax, as well as all user data tied to their TurboTax accounts.
TurboTax Premier costs $79.99 for your federal return and $39.99 for each state return. It offers support for most common schedules, including B, D, and E, so it’s appropriate for filers with investment income, rental income, and other forms of non-wage income.
This plan comes with all the features and functions found in lower-priced plans, plus:
- Support for Schedule B. If you have more than $1,500 in ordinary dividend or interest income, you may need to file Schedule B. TurboTax Premier provides all necessary forms and support, including checks for relevant credits and deductions.
- Support for Schedule D. TurboTax Premier can help you file Schedule D, which covers capital gains or losses from the sale of securities, real property, and other assets, and walk you through relevant credits and deductions. You can import transaction records from your brokerage – potentially saving lots of time over entering each transaction manually. TurboTax automatically calculates your cost basis for multi-part transactions as well.
- Support for Schedule E. If you’ll be reporting income from rental properties or pass-through entities (such as S-corporations, trusts, estates, and certain types of partnerships), you need to file Schedule E. TurboTax Premier provides all necessary forms for doing so and can walk you through all appropriate credits and deductions.
Home & Business
TurboTax Home & Business costs $104.99 for your federal return and $39.99 for each state return. With full support for all credits and deductions related to Schedule C, it’s ideal for small business owners. TurboTax Home & Business comes with all the features and functions found in lower-priced plans, plus:
- Full Support for Schedule C. TurboTax Home & Business provides full support for Schedule C filers. This includes guidance on all relevant credits and deductions, including those not supported by Deluxe and Premier (such as home office deductions).
Additional TurboTax features available across all packages include:
- Mobile Apps. TurboTax has slick, user-friendly mobile apps for both Android and iOS devices. The apps have all the important features and functions of the main website, which is pretty mobile-friendly in its own right.
- Pay Filing Fees With Your Refund. Regardless of which plan you use, TurboTax lets you pay your filing fees with your federal refund. The charge is rather steep: $34.99.
- Real-Time Refund Display. TurboTax calculates your estimated federal and state refund in real-time, visible in the upper left corner of the interface. As soon as you enter a new piece of information that affects your tax liability, this number changes to reflect it.
- Automatic Information Transfer to State Returns. If you need to file a state return after completing your federal return, TurboTax automatically transfers all relevant information to the state forms. This cuts down on redundant, tedious entering of basic information on two different sets of forms.
- Audit Support. This free feature is available to all TurboTax customers, regardless of plan. It includes a free phone consultation with a tax professional, during which you can ask open-ended questions about any IRS correspondence you’ve received. However, if you’re worried about actually being audited, TurboTax recommends purchasing MAX, a more hands-on package, when you file.
- MAX. If you’re worried that your audit risk is elevated, you can purchase TurboTax’s optional MAX bundle as an add-on to any plan before completing your return (you can’t buy it after the fact). MAX costs $44.99, though TurboTax reserves the right to change the price at any time, and covers all state and federal returns in a given tax year. MAX’s signature inclusion is Audit Defense, which activates in the event that you’re audited by the IRS. Audit Defense provides access to a tax professional who reviews and interprets all IRS correspondence, schedules all audit-related appointments, and helps you gather any documents necessary to respond to your audit. MAX also includes Tax Identity Resolution, which helps mitigate the damage if someone files a fraudulent tax return in your name, and Priority Care, which expedites your access to TurboTax’s on-staff tax professionals whenever you call in with a question about your return (or any issue that arises after you file).
- Military Discounts. Active-duty military members and reservists qualify for several different discounts with TurboTax. Servicemembers classified E1 (private trainee) through E5 (sergeants and petty officers) can file federal and state taxes for free using the Federal Free or Deluxe plans, or take $5 off federal filing costs under more expensive plans. Those ranked E6 (staff sergeant or petty officer first class) or higher can take $5 off federal filing costs under any plan.
1. Customer Service and Knowledge Base (AnswerXchange) Is Extremely Comprehensive
TurboTax’s customer support system, anchored by the interactive AnswerXchange knowledge base and a phone support hotline, is impressively robust. I’ve never had a question that couldn’t be answered by searching through the AnswerXchange, and I’m usually the type of person who prefers a back-and-forth conversation. But the phone support component is great too, with short wait times (less than 10 minutes every time I’ve called, though I’ve never waited until crunch time to do my taxes). And, for filers who want quick answers to complicated issues without picking up the phone, the SmartLook screenshare/chat feature is a lifesaver.
2. Military Discounts Are Better Than Some Competitors
TurboTax offers discounts or completely free filing options to active-duty and reserve military members. All servicemembers qualify for at least a $5 discount off federal filing fees, and lower-ranked enlistees qualify for a free upgrade to TurboTax Deluxe (normally a $54.99 value). These deals are better than those offered by some competitors, including TaxAct, which doesn’t offer a free upgrade for lower-ranked enlistees.
3. Automatic Transaction Importing and Cost Basis Calculation
If you have a brokerage account, you can quickly and easily import a complete transaction record (up to a limit of 500 individual transactions, so probably not ideal for active day traders) for the previous tax year by selecting “Add Other Documents” from the Import Summary menu in your TurboTax interface. (You don’t need to download a PDF or any other file type – the importing is done automatically.) If you made lots of securities trades during the year or simply don’t like the tedious process of entering each transaction individually, this is a big help. Some competitors, including TaxSlayer, require you to enter transactions manually and separately – a potential time sink.
4. Great for Mobile Users
With a mobile-responsive website (bright colors, clean navigation, large-font text, and minimal clutter), as well as apps for iOS and Android, TurboTax is ideal for filers who prefer to use mobile devices. By contrast, competitors like eSmart Tax and FreeTaxUSA aren’t as mobile-friendly, with cluttered text and navigation systems that are difficult to navigate on a touchscreen.
5. Popup Menus Can Be Useful
I’m normally not a huge fan of popup windows. However, TurboTax’s sparing use of popup windows is actually helpful. For instance, early in the filing process, a window appeared, briefly explained that I could use the top toolbar to navigate to any point in my tax return at any time, and then disappeared with one click. This was useful because I had assumed that the toolbar was more of a status indicator and that I couldn’t use it to go back or forward in my return.
1. More Expensive Than Most Competitors
Of all the major online tax filing programs, TurboTax’s sticker prices are the highest, ranging up to $104.99. By contrast, comparable paid plans from H&R Block range from $24.99 to $49.99 (federal) without compromising on any features, forms, schedules, or support.
TaxSlayer’s paid plans are even cheaper, ranging from $12.99 to $34.99. And state filing fees at those competitors are comparable to or less than TurboTax’s, which clock in at $39.99.
2. Frustrating Website Errors
TurboTax seemed to have more website bugs this year. At several points, I got an error message or nonsensical request when attempting to enter my account dashboard or navigate to a previously completed page from the most recent page on my return.
Also, when I attempted to do something that wasn’t supported by my current TurboTax plan, the text on the upgrade prompt screen was replaced by plain HTML text reading “Bad Request” – a typical webpage loading error. I could still cycle through the upgrade prompts (separate pages outlining cost and confirming that I wanted to upgrade) by hitting “Continue” repeatedly, but couldn’t see any text or images on the pages.
3. Steep Processing Charge When You Pay Filing Fees with Your Federal Refund
If you opt to pay your TurboTax fees with your federal refund, the company charges a stiff processing fee of $34.99. This is a hefty sum to pay for avoiding out-of-pocket filing fees. By contrast, TaxSlayer doesn’t charge any processing fees when you pay with your refund.
4. Doesn’t Offer a Refund Bonus
In previous years, TurboTax used to offer a 5% refund bonus to customers who elected to receive their refunds on Amazon.com gift cards. Unfortunately, the company discontinued the deal for the 2015 tax year. Some competitors still offer similar, or even better, promotions. For instance, H&R Block offers bonuses of 5% to 10% (depending on the plan you select) and lets you choose gift cards from several dozen retailers, including Kohl’s and Best Buy.
5. Misleading Setup to the Free Filing Option for Returning Customers
When a returning customer (someone who filed with TurboTax the previous year) signs into their account for the first time in the current year, they’re immediately told that they can file their taxes for free. The next screen asks if they’d like to transfer information from the previous year’s return to their current-year return. If they agree, TurboTax shows what information has been transferred – AGI, address information, previous year’s refund/amount owed, address, employers, and lots of other data. It then says something to the effect of, “If you want to keep all this information and not start from scratch, sign up for the PLUS Plan,” which costs $29.99.
You have the option to select the Free plan here, but doing so wipes out already-stored information, lengthening the time it takes to file. While it’s understandable why TurboTax would want to push the PLUS plan before beginning your return in earnest, there’s probably a more straightforward way to do it.
6. Many Forms and Schedules Unavailable With the Free Plan
TurboTax’s Federal Free edition can only handle relatively straightforward tax situations. Since it doesn’t support Schedules A, C, D, E, H, or K, it’s not ideal for filers who wish to itemize deductions, pay self-employment tax, or report investment income or losses. If any of those situations apply to you, you need to upgrade to a paid plan. By contrast, competitors like TaxSlayer provide all forms and schedules at all price points, including the free version.
7. Prices Jump a Month Prior to the Filing Deadline
TurboTax’s paid plan prices jump by upwards of 50% about a month before the April 15th filing deadline (on March 18, 2016) – for instance, the Deluxe Plan’s federal return cost rockets from $34.99 to $54.99. That’s a major inconvenience for people who wait until relatively late in the game to file their taxes, and a potential deal-breaker for people with complicated tax situations, who sometimes don’t have all the requisite forms in hand until a few weeks before April 15th.
The nice thing about reviewing tax software is that I get to try out a lot of different products and use the one I like best to actually file my taxes. However, most people don’t have the luxury of trying out multiple brands during tax season. No matter how smooth the filing process or straightforward the tax situation, there’s simply not enough time in the day.
That might partially explain why TurboTax remains so popular. For all its faults, it enjoys enviable brand recognition. In a competitive industry serving time-pressed customers, it’s easier to go with what you know than stray too far afield. That’s not to say that TurboTax doesn’t shine on the merits – just that, if you’re looking to go with what you know, it’s hard to beat TurboTax.