[Editor's Note: It has been fun the last year or two to go back and update some early posts on the blog. Most of you have never read them, so they're new to you. Some require almost no changes as they're quite evergreen. Others require a fair amount of updating or they don't make sense to current readers. This one is from 2012 and is somewhere in between. I'm still using Turbotax, but I certainly don't harbor any ill will toward you if you choose to use one of their competitors or even hire a great professional tax preparer.]
7 Things I Still Love About Turbo Tax in 2020
#1 Easy to Re-do forms
I used to do my taxes by hand. That was a wonderful way to learn the tax code and become familiar with the 1040 and the various schedules and forms. But every time I remembered something new I could deduct, I had to go back and re-do at least one form. That was getting to be a serious pain. With Turbotax, I just log-in, change one number, and the program changes a half-dozen other forms instantaneously. Very cool. In fact, this simple feature allowed my state tax return(s) to be done in something like 2 minutes. Too bad they couldn't do that with my very complicated federal tax return.
#2 Imports Last Year's Tax Return
I've used Turbotax multiple years in a row. I'm surprised how much stuff you get to skip after year one: Addresses, sources of income, deductions, bank account numbers…anything that remains the same year to year is imported directly in.
#3 The “Pro” Option
Turbotax allows you two options as you go through their “Income” section and their “Deductions” section. You can either have them lead you by the hand and ask you dozens of questions about each item, or you can “explore on your own”. If you already understand the basics of the tax code, that's a real shortcut. I don't use Turbotax because I don't know what's deductible. I use it to speed up the process and make it more accurate. But either way, Turbotax has an option for you.
#4 Computers Add Better Than I Do
It's not that I'm bad at math. I always received good grades in math, at least until college calculus (it was still a B, but I'm not sure I deserved even that). But when you have dozens of calculations, all dependent on one another, one little error screws up everything else. It shouldn't surprise you that Turbotax makes fewer math errors than I do. Aside from having an inaccurate return, possibly losing me money or even triggering an audit, miscalculations also mean I have to do re-do more forms, which can be immensely time-consuming.
#5 Automatic E-filing
It's no secret that the IRS and your state tax commission want you to e-file. It's easier for them, easier for you, more accurate, and you get your refund faster. That process is literally a click of the mouse with Turbotax. You don't have to deal with your state website, or fill out any new online forms. No printing, stamping, addressing, walking out to the mailbox, etc. If for some reason you WANT to paper file, you still can. Perhaps if you owe money you might be able to delay their withdrawing it from your bank account by a few days by doing so. Turbotax even has an option where you can do your tax return now, and have Turbotax file it automatically in April without you ever thinking about it again (which I recommend if you owe money).
#6 You May Only Need the Basic Version
Turbotax makes a lot of money off up-selling. They used to have a Basic Version. But they've basically replaced that with a free version. The next step up is “Deluxe”, for those who itemize their deductions (Schedule A). They have a Premier edition aimed at those with rental property or investments. They even have a Home & Business edition for small business owners. Guess what? Back in 2012 when I had rental property, investments, and a small business I was still able to use Deluxe. So start there and upgrade as needed. The free version won't import last year's data, and if you need to file Schedules C (small business), D (Capital gains and losses), or E (Rental Property) you can't use it. But it's a great option for many filers.
So what does Turbotax cost? Here are the online version prices through our affiliate link (sale pricing as of 2/4/2020):
- Free Version – $0 Federal, $0 State
- Deluxe Version – $39 Federal, $39 State
- Premier Version -$69 Federal, $39 State
- Home and Business – $89 Federal, $39 State
I used to use the cloud version, but due to a need to use “Forms Mode” to make one adjustment each year due to my defined benefit plan, I have had to buy the PC/Mac Download version (also available as a CD) the last few years. However you choose to buy the product, you'll save hundreds compared to hiring a CPA to do it.
#7 You Can Get a Free CPA on the Phone
Turbotax offers free support and advice both for using their software and calculating your tax bill. There are two things I don't like about online software. The first is that you learn more about the tax code by doing your taxes by hand. You lose some, but not all of that, by using software. But the main issue I have is that when you can't figure out how to do something on the paper forms, you can go to an IRS publication easily with Google and figure it out. Tax software, in trying to make things easier for those who have no clue how the tax code works, sometimes makes it hard to figure out where to input data that I know where to put in on the paper forms. A good example is explained by The Finance Buff where he explains How to Do a Backdoor Roth Using Turbotax. It's actually more complicated to do it in Turbotax than by hand! I had an issue a few years ago with doing an ESA to 529 conversion. It wasn't that I didn't understand the tax code, it was that I didn't understand where to put the information into Turbotax so it would put it on the forms correctly.
So I decided to try out the free support. I started out 120th in line, but within about 20 minutes (which I killed working on another part of my return), I had a CPA chatting online with me who answered my question clearly after just a couple of minutes of research. He had the same problem I did – he understood the code, but not necessarily the software. He even sent me an email a few minutes later with a more detailed explanation.
Turbo Tax Competitors
Overall, I continue to be very pleased with Turbotax year after year. They've been around the longest and frankly are the number one seller for a reason. Most tax-prep services allow you to import previous returns no matter which tax service you have used, so if you want to try something new, give it a go. The usual competitors are H&R Block, Tax Slayer, and Tax Act. I've tried a couple of them over the years, but always came back to Turbotax. Yes, it usually costs a bit more, but frankly, the value of my time is the expensive part of the whole process so I prefer to go with what I know.
If you're looking for the absolutely cheapest way to do your taxes, do paper returns. Otherwise, I don't know that you should really make a decision based on just a few dollars. If you've used any of these tax software solutions recently, please post about your experience in the comments. Online reviews I've seen seem to indicate you get what you pay for here.
Another Free Option
There is another option that has come out since I wrote this post originally. It is a free option provided by the IRS that takes advantage of one of ten commercial software products (including Turbotax). However, there is a catch. You can't use it if you made more than $69,000 (for tax year 2019). I find that really painful. Not only do I pay much more in taxes as a high earner, but I also have to pay more just to file them. At any rate, if you are a med student, resident, or retiree, these might be options for you. The IRS does offer “free, fillable tax forms” but don't kid yourself. This is the equivalent of doing your returns on paper. That's always been free.
The Most Expensive Option
The most expensive option (at least until you consider the value of your time) is to hire a professional to do it. Our Recommended Tax Strategist (more than just preparation) list has been growing over the years. If you hate doing taxes, you might be surprised just how cheap it is to have a real pro do it for you AND give you advice on keeping that bill as low as possible.
Buy TurboTax Today! or
Hire a Pro Today!
What do you think? How are you preparing your taxes this year and why? Comment below!
i used turbotax myself until i became a contractor and started my own business. I really like it as well. I might be able to handle my current situation but am currently using an accountant. Not cheap at all. Occasionally they do point out ideas that may or may not be worth doing. Some of the ideas brought to my attention in the past have been using GA film credits to pay for state taxes and setting a salary within my s corp (a topic you have covered).
I previously used either Turbo Tax or Tax Cut, I can’t remember which. Last year I switched to TaxAct and was very happy with it. It was easy to use, didn’t seem to make any mistakes, and this year it had most of my information already imported from last year.
It is the cheapest, and they didn’t try to hide costs or get me to spend more. The big guys try to present it as a free service, but then hit you with state and efiling charges. TaxAct costed me 18 bucks for everything, and told me that upfront.
Incidentally, the software I previously used did make a mistake and I ended up having to send my state another check that year. No such issues (so far) with TaxAct.
Used accountants for years. Each year, the cost went up–$600 a year despite my tax situation seemingly easier. I secretly think he had someone in the back room using turbotax-like software to do my taxes. I switched last year to Turbotax and it worked great. If I had $600 to waste, I’d have had the accountant do it as well to see what the difference was. Turbotax for me this year.
Compared to using an accountant, TurboTax is cheap. Compared to other software, TurboTax is darn expensive. Right now you can buy H&R Block At Home Deluxe + State on Amazon for $25. $25 for both federal and state is less than half price of what you get after so-called “discount” through Vanguard (except for Flagship millionaires).
As I recall, this software is most expensive this time of year, and only gets cheaper as the year goes on.
What deductions are most often missed by physicians? What deductions do you find most useful as a physician? I’ve tried to look at mileage deductions but logging the miles has become a real pain and I’ve become somewhat lackadaisical. thanks, i’m newish at this.
There are several great phone apps that track your mileage… and you can download a log at the end of the year!
Great tool to not have to be constantly tracking the miles.
That would make a great article ed. I’ll put it on my list of things to do.
As I start my tax prep for 2018 taxes, just wanted to give this topic idea a bump.
> “What deductions are most often missed by physicians? ”
Also, are you still on the TurboTax train? Or do you like other software? I know your finances have become increasingly complicated with WCI and real-estate/website investments. Do website investments depreciate?
Yes, still use Turbotax. Actually did a corporate return by hand, but it’s a very simple corporation so no big deal.
No websites don’t depreciate like real estate. Only equipment and buildings can be depreciated and there isn’t a lot of that.
How does one “self match” for their 401K?
The plan has to allow it. Basically the 401K is combined with/turned into a “profit-sharing plan” for highly-compensated employees like docs.
Had a question about turbo tax and the backdoor roth option. wondering if it is worth it to hire a CPA this year or if i can figure it out on turbotax. i am basically dealing with the “pro-rata” issue. Doing conversion on Trad—>Roth IRA this year. In the Traditional part of it is deductible and part is non-deductible. In your experience is turbo tax helpful in filling out these issues? don’t want to mess it up on my own. thanks and i really enjoy your site.
Jon-
I remember it being just a little tricky, but very doable on Turbotax. If you have trouble email me when it comes time and I’ll walk you through it step by step. As I recall, The Finance Buff did a tutorial as a blog post once. Here it is:
http://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html
Please contact me regarding using your TurboTax link to click thru and file my tax return
I would like to know how you were instructed to handle a transfer from an ESA to a 529. Could you forward the instructions you got from the Turbotax expert?
It’s been a year since I wrote this post, so I’m not sure I can reproduce the instructions given to me. I think if I went back and looked at Turbotax that I could recall what I did though. I assume you’re dealing with the same issue?
Looking back at my tax forms for 2011, the only place I see anything that went to the IRS about the rollover (I did one in 2011 and one in 2012) was on my state tax form and it looks exactly like a cash contribution to the 529. Vanguard sent the IRS a 1099 Q indicating I did the rollover, but I don’t see that it actually showed up anywhere on the tax forms I filed with the IRS. You may find this link helpful:
http://turbotax.intuit.com/support/iq/Education/Form-1099-Q–Payment-for-Qualified-Education-Programs/GEN12272.html
It says this:
Select the Federal Taxes tab (the Personal tab in the Home & Business edition).
Select the Wages & Income subtab.
Scroll down the Wages & Income screen until you see the Less Common Income group.
Click on the Start/Update button to the right of the Miscellaneous Income, 1099-A, 1099-C category.
On the Miscellaneous Income screen, click on the Start/Update button next to Coverdale ESA and qualified tuition programs (Form 1099-Q)
Follow the prompts.
I hope that’s helpful. I do recall that in a certain part as you enter the 1099Qs that Turbotax asks if you rolled it all over to another ESA when Turbotax means to ask if you rolled it all over to another ESA OR a 529. This guy had a similar question-
https://ttlc.intuit.com/questions/1640166-coverdell-esa-roll-over-to-529
The answer is from me. Perhaps someone else will chime in as well.
Not sure if you’re still responding to this thread, WCI, but I wonder how much is reasonable to pay a CPA (and how much your readers are spending) if you opt to have a professional do it. I’ve been using TurboTax for years, but really messed up in 2011 and was hopelessly lost in 2012, so I caved and paid for a CPA after filing an extension for 2012. Turns out, I owed the IRS an extra $5k in 2011 from my wife’s 401k, which we rolled into a Roth… forgot we had to pay taxes on that. Then, in 2012, I had 3 different employers (military salaried, independent contractor and employee/partner) in 2 different states, with a rental property business in yet another state (with income taxes). To make matters more complicated, we contributed max to our Roth IRAs and were phased out of the contributions due to AGI. So, I had to recharacterize a portion of the contributions… oh, did I mention I switched from USAA to Vanguard mid-year, so neither of them wanted to help me with this and the CPA had to step in. In all, I spent $1058 on the CPA, or the equivalent of 4 hours of work in the ED. Seems pretty steep, but they offer tax advice all year for this price and they also manage my 401k at a pretty low total expense ratio (0.63). I hate to pay this, but I also don’t have the time/inclination to keep up with tax knowledge to the degree necessary to save a few hundred bucks. What do you think?
That sounds like the going rate for a complicated return like yours. It might make an interesting poll though.
Hi. I read your comment and it reminded me of my concerns about costs to hire a CPA. Is your CPA handling your booking through out the year as well for the $1000? In my case, I have an added complication of being hearing impaired.. I need accomodations for any voice communications, which can make convesations a little slower. AndI am concerned that this could add to cost of hiring a CPA or a CPA may not want to work with someone like me because of difficulies it may cause for them. I am just starting to, again, to try and get some businesses going. I have a permanent total disabiity from military service, but am in desperate need to supplement this meager income. And with something I can do that works around my disabilities. And I will need some help, like with a CPA. This last year I was offered a free promo for TurboTax Premier from my financial institution, just around the time the pandemic hit. I have had mixed results so far. I have gotten help to sort out an issue with being taxed as income for the recharactorising (i didn’t know what that meant till 2020) when my bank, Fidelity, had fixed the error I made. I had initially set up and funded a Traditional IRA instead of a ROTH IRA. I wasn’t sure which to fund or the differences betweent them. Boy, have i learned alot since then. I caught the error before the end of December 2019 and contacted fidelity and told them i made a mistake and asked them to fix it for me before the end of the calender year.. they moved everything over to the ROTH I created. (I think that was mistake 2. I should have had them just recharactorise the Traditional IRA, I think. I am still working that out with them.) I fully funded that ROTH IRA with another $7k in January 2020. Things seemed to be going smoothly. Except, out of the blue the Traditioanl IRA I had got a dividen in January 2020. Which not created a dilema. I now had a Traditional IRA acct that had money in it in 2020 when it had zero dollars in it at the beginning of 2020. I hadn’t considered that happening. I know.. i am, or was so GREEN, at IRA accounts. In any case, I tried to reach out to FIdelity for help on what to do.. They really were of no help. I spoke tot thier live Chat reps online. (side note: I later learned there is a deptartment with specialists at Fidelity that specifically help customers with IRA conderns like “recharactorising” IRA or portions of them. Or for removing excess contributions. The other fidelity reps can’t answer these questions. And I learned the hard way, when i spoke to a fidelity rep who was not one of those specialists with Questions on how to remove excess funds from a ROTH IRA account.) 2019 will be my first year i need to file a tax return/statement becuse of gains from dividends and capital gains from sellling securities/sstocks for more than i initially paid for them. It is now October 2020. I spoke to a “Retirment Group” rep at Fidelity for the first time.. And they were way more knowledgable and walked me through filling out a request form to remove excess contributions. I still think I may not have excess contributions for 2019, but i can’t sort this out before the deadline to file and to remove excess contributions.. So i am just taking out everything i contributed, along with Attributable gains/losses for that contribution for 2019. and filing my taxes for 2019. I figure this will at least give me some breather room where i can then continue to investigate the situation.. And if necesary file an ammende return if needed or if i didn’t get full deductions or to communicate with IRS about the situation. In particular how i acted in good faith and due to the pandemic and not being able to reach any of their agents or anyon from my financial insituation way earlier in the process to get thigns sorted out (Fidelity was unreachable for help. And they had closed their branches and were not even allowing customers to go int to branches to speak to fidelity reps, because of the pandemic. Best Wishes To You,
Quick question, I’m a fellow doing moonlighting on the side. I have to file taxes from my W2, 1099, plus SEP-IRA and my wife’s work including W2 and 403b. Do you know by any chance which turbotax would be enough?
On their website they say “If you’re self-employed, we’ll help you complete the Schedule C with your business income tax return and also let you know if a Schedule SE, “Self-Employment Tax” is also required by the IRS. ” – then I need to pay for most expensive Home & Business version. Is it truth? Thank you!
Probably. But you can buy the cheapest and wait until they force you to upgrade in the program. No biggie. You used to be able to do Schedule C with deluxe but I think they changed that. I use home and business.
I used TurboTax for many years, but with a rental home and side moonlighting business, it began to take me a whole weekend to do it. Since I get paid a chunk for working a weekend, I turned it over to a CPA.
The fees have averaged $600, with a high of $700. I needed to get the TurboTax home and business, so I’m saving about $470 doing them myself, but could make 8-10 times that working that weekend. I was basically paying myself about $30 an hour.
This year, we sold our rental. So, figuring out how to take the many years of passive activity losses after factoring in 15 years of depreciation seems a challenge. The CPA has 7 years of records to draw on and can knock this bit out in a half hour. It would take me longer.
It’s a great product for less complicated tax situations, especially if one is taking the standard deduction (we don’t). But with the new pass through deduction and the sale of the rental, I’ll cough up the $650 again.
I agree that rental properties are particularly complex.
Hello Jim
Thanks for the post. Of your recommended CPA’s list do you know if specific person/firm any is more adept at two specific areas such as real estate investing or conservation easements (have not decided on this yet)? Income is all W2 so I dont need the advanced retirement stuff such as defined benefit plan etc.
Thanks
Duke
No, I have not asked them specifically about expertise on those two subjects. Why not call them each up, ask them, and report back here?
Just don’t forget that TurboTax and HR Block lobby the government to keep taxes complex, reason enough for me to avoid using them. I like FreeTaxUSA
Another bump for FreeTaxUSA. Seems to be basically TurboTax level of detail without the fees or the lobbying.
I just used FreeTaxUSA for the first time this year and liked it! I will say thought that my taxes are slightly complex (backdoor roth and capital losses carryovers) but fairly stable from year to year so I really just want easy access to all the forms without a lot of “help”. I was using TaxAct for the past several years, but it seems like they jacked up the “help” (which made it so I didn’t know how to easily do my roth) and cost this year. The backdoor roth with FreeTaxUSA took a quick google search but once I got it, it was pretty easy. Plus I like how they constantly have your 1040 on the right side so you can click and see it.
Just used the link to make sure I entered my backdoor Roth correctly. It was really helpful!!
Last year ( 2018 return submitted in 2019) , Turbotax Home and Business did not calculate the new pass through deduction from the K-1 information that was entered. That was an $ 8000.00 pass through deduction that it missed. There was no flag in the program to tell me if there was additional information needed , but I knew it was an erroneous omission.
I could not even find any program information/instructions in Turbotax for this deduction. I have been doing our taxes for almost 30 years , often with a program to enter the information and usually with a CPA to review prior to submission.
My accountant advised me that I needed the depreciation schedule and he was able to fill out additional forms. I ended up having him re-do the return. ( $500.00, well spent in my opinion ).
I use the H+R and keep coming back as I’ve learned all its idiosyncrasies (minor). But if I was going to start new I’d use the Turbotax. I think it’s a little more user-friendly for the beginner, although H+R is easy too. Both sure beats doing it by hand or the CPA. I first went to the tax program route when I last visited my CPA and saw her just enter my info in a tax program. Plus, I enjoy doing it. The only time I got a letter from the IRS was back when I was using a CPA.
We use TaxAct. Turbotax software can be buggy. As another mentioned, some issues with K-1 and self employment taxes. We finally switched when we attempted to review what we had input in one area, only to have it create a new income stream, increasing our bill every time we clicked “continue.”
I don’t know if anyone has a different experience but I gave up Turbotax about 5 or so years ago when they started making me “upgrade” to get the forms I needed. Gone were the years of buying the Basic and doing the itemized deductions or self-employment income without upgrading. No problem doing that with H&R.
At a tax preparer, CPA, for an easy tax return, I would definitely recommend using Turbo Tax. If you have a challenging income tax return and use Turbo Tax, it is as if a doctor would recommend to me to do my own physical. Great idea, I would save money on doctor fees and all my yearly checks up would turn out great.
In 2018, I elected to aggregate multiple rental properties to increase my QBI deduction. Turbotax could not E-file my returns; I had to print them out and submit them the old fashioned way. Not sure whether this has been fixed in 2019.
I jumped from turbotax to creditkarma last year and so far like it. Just a resident level taxes though.
I didn’t even know CreditKarma did taxes. Wow.
Anything you felt CK couldn’t handle easily or missed? Previously my wife and I both had multiple sources of 1099 income in addition to W2 and we always used TurboTax, but since I started med school a couple years ago, it’s only been my wife’s W2 income and a pretty simple tax situation. I looked at CK last year, but they couldn’t do partial-year state returns; however, I won’t have to worry about that this year. A completely free tax return that still saves a bit of time over filling out each form by hand is tempting.