Filing Taxes Online: TurboTax Review

Last year, TurboTax became the first tax software to allow taxpayers to file both federal and state taxes for free. While limited to relatively simple tax situations, the idea of free filing for federal and state returns has taken off, and competitors are following suit. A spokeswoman for Intuit, which makes TurboTax, said about 60 million taxpayers will likely qualify for its free programs this year. (Last year, about 5 million used TurboTax’s free product.)

TurboTax will appeal to consumers who want a very user-friendly interface and easy-to-understand guidance about filing taxes.

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Quick facts

• Free option for federal and state taxes
• Paid option for complex returns
• Data entry from a photo of your W-2

Learn More At the TurboTax site

Learn More At the TurboTax site

 

Using the free version

Happily, “simple tax situation” doesn’t necessarily mean you worked only one job all year and have no deductions or credits. While you do have to be able to file either Form 1040A or Form 1040EZ, don’t think that having credits or deductions automatically disqualifies you. You can file for free even with:

• Deductions for student loan interest
• Child Tax Credit and Child and Dependent Care Credit
• Earned Income Tax Credit

TurboTax calls its free offering Absolute Zero, and it’s much like the TurboTax you may already know: intuitive, with interview-style questions to help you along, and a large library of online resources.

The user interface is simple and appealing, and is widely considered to be the most user-friendly on the market. Case in point: It offers data entry via photo. Snap a picture of your W-2 with your smartphone or tablet, and the information is automatically transferred to your tax return. It’s even easier than importing data from your employer (and we thought that was pretty nifty at the time).

All users, including those on the free version, can get real-time help using SmartLook, which connects customers to an expert via one-way video using the TurboTax mobile app. Not only can you ask questions, but the experts can also see your screen and highlight areas you might need to address or show you where information should be entered.

• What’s free: Absolute Zero option allows you to file federal (1040A or 1040EZ) and state income taxes for free.
• Deluxe ($34.99) – If you itemize, this version will help you maximize your deductions. Extra fee for state taxes.
• Premier ($54.99) – TurboTax recommends this version if you’re an investor or own rental property. Extra fee for state taxes.
• Home & Business ($79.99) – Intended for those who are self-employed or own a small business. It’s set up to help you find deductions and credits you qualify for. Extra fee for state taxes.

Get Started

Using the paid version

But free isn’t the best online tax filing choice for everyone. If you have an income higher than $100,000 or a tax situation that is even slightly complex, the paid product is going to be a better fit and may save you money by allowing for more deductions. The paid versions include the ExplainWhy feature, which offers concise answers to consumer questions about how deductions work, how to file and more.

With the paid versions, the additional fee for filing state taxes is $36.99. While the prices listed here are accurate at time of publication, note that some tax programs’ prices fluctuate during the tax-filing season. It’s a good idea to verify costs before purchasing.

Other considerations

TurboTax doesn’t require that a filer know much of anything about taxes. You can skip around the interview if you’d like (or, if you prefer, skip the interview altogether and go straight to the forms). The program will alert you to possible audit triggers and ways you might save on taxes next year.

A library of resources is available, and experts are available if you need them via phone, video and online. It’s easy to upgrade to a paid version during the process, but you may find that TurboTax’s prices are higher than those of the competition.

While the online version is the more popular option, security experts say that using a version you download to your computer may keep your personal information safer. When you download the software, prices are higher (discounted prices start at $29.99 for Basic, topping out at $99.99 for Home & Business; prices typically rise in March). All but the Basic version include a free state tax return. You’ll lose the seamless transition from smartphone to tablet to laptop, but the tradeoff may be worth it to some.

One thing we would like to see TurboTax offer is an identity-monitoring program, particularly after last year’s problems with fraudsters using information stolen from TurboTax. The company has beefed up security, but we suspect consumers would welcome additional assurances that filing taxes online — whether for free or at a price — does not come at an unexpected cost.

How you can get your refund

No matter how you file, you can choose to receive any refund you may have coming via direct-deposit to a bank account (the fastest option), loaded onto a NetSpend Visa prepaid card, or in the form of a paper check.

Bev O’Shea is a staff writer at NerdWallet, a personal finance website. Email: boshea@nerdwallet.com. Twitter: @BeverlyOShea.