Content of the material
- Whats New in TurboTax for 2021
- Comparing The Online “Deluxe” Tax Filing Software
- TurboTax Self-Employed Edition
- Is TurboTax Live worth the cost?
- Read more
- Is TurboTax or HR Block better?
- TurboTax Deluxe
- Checking Your Work
- Why isn’t TurboTax part of IRS Free File anymore?
- Getting Started With TurboTax
- TurboTax Pricing
- HR Block vs. TurboTax: Comparing Free Options
- Bottom Line
- Other TurboTax Fees
Whats New in TurboTax for 2021
TurboTax added a feature that can help make filing your taxes considerably easier, called TurboTax Live. With TurboTax Live, you’ll pay more for your software program upfront, yet real tax experts are available to answer questions and help you figure out problems as they arise.
That’s not all. Once your tax return is complete, it’s reviewed by a tax expert. If any changes are needed before filing, the CPA or EA will make them for you.
This is an excellent option for someone who wants to have the highest level of tax preparation expertise but doesn’t want to pay the high cost of engaging a CPA to do the entire job. Just remember that, for TurboTax Live, you’ll pay about twice as much as you normally would for the software.
Not only that, but TurboTax Live also offers a full-service option as of 2021 (for the 2020 tax year). This full-service option takes place using technology and live video, and lets you have your tax return completed in full by a licensed CPA or tax expert. If you want an expert to do your taxes but you don’t want to leave your home, this is your best option by far!
Also note that TurboTax is primed to help you navigate all of the new tax changes that apply in 2021 for the 2020 tax year. For example, the Consolidated Appropriations Act became law in 2021, which governs child tax credits, deductions for certain business expenses, and deductions for charitable contributions, among other important topics.
Other tax changes will come into play this year to account for inflation, deduction and credit phaseout adjustments, and planned changes to the alternative minimum tax. Several CARES Act provisions also expired in 2020, and TurboTax is prepared to help you account for changes in your return.
Comparing The Online “Deluxe” Tax Filing Software
The Deluxe pricing tier is typically targeted toward people who want to “maximize deductions and credits.” A lot of people think this means people who itemize their taxes, but many tax filers who take the standard deduction will still find that they need to upgrade to the Deluxe tier of their tax filing software for various reasons.
TurboTax Self-Employed Edition
- Cost: $89 for federal + $39 for state
- Should you get it? For peace of mind, yes! Self-employed taxes can be a doozy to figure out, but TurboTax makes it simple by searching for industry-specific deductions and offering guidance on expenses like cell phones, home office supplies, and mileage.
- Free alternative: Prepare your taxes yourself with Free File Fillable Forms from the IRS. You can also avoid the $39 TurboTax fee for state by filing through your state’s website for free.
Is TurboTax Live worth the cost?
In our view, most tax situations will not require TurboTax’s expert help upgrades. The main strength of TurboTax is that it’s accessible and comprehensive, meaning that the process offers enough information that you don’t need to dig to find it. Many of your questions can be answered through its online resources. That makes the added Live assistance category, where you can ask an expert questions and have them review your return at the end, mostly unnecessary.
The category of Full Service is akin to a separate product. You’re simply sending your tax documents to a CPA or tax preparer, so you’re not using any of TurboTax’s interface — it’s just a way to find a qualified tax preparer through TurboTax. Our recommendation would be to compare the cost of a local tax expert with TurboTax’s Full Service option to determine which makes sense for you.
Is TurboTax or HR Block better?
When it comes to cost, TurboTax is slightly more expensive than H&R Block, but its product is about the same. Both offer solid customer service, an easy-to-use interface, and clear instructions and guidance, though there are some variations between packages.
Beyond the free versions, here’s how they stack up on cost for the DIY online filing options (not considering any discount offers):
|Additional state return fee||$49||$36.99|
This is the most popular edition of TurboTax since it’s designed for preparing Form 1040.
You can use this version if you itemize deductions and if your income is too high to qualify for the free edition of the program.
Note: If you’re self-employed or you own rental real estate, you’ll need to use a different edition, which we go over in detail in the next section.
TurboTax Deluxe comes with all the features of the Free Edition, plus:
- Deduction Finder. TurboTax searches for more than 350 tax deductions and credits, which can help you get you the biggest refund possible.
- One-on-one help, on demand. A TurboTax specialist is available to provide customized answers to your tax questions. They can even patch into your computer screen to provide you with the most specific information.
- Easy importing. If you used TurboTax to prepare your return last year, your information is automatically transferred to this year’s return. You can also import a PDF of last year’s return from other major tax-prep services. Either way, you save time and effort.
- Your refund in real time. TurboTax software updates your tax refund as you proceed through their questionnaire, which helps you see how information you input impacts your total tax bill (or refund).
Checking Your Work
When you come to the end of your data-entry chores, TurboTax Deluxe’s final review, called Complete Check, examines your return for accuracy. If it finds any errors, it helps you correct them by taking you directly to the problematic fields, allowing you to change them, and taking you back to Complete Check. Most sites do not work as smoothly. TurboTax Deluxe also transfers pertinent data into your state return and tells you about any additional entries you need to make there. The last step is to pay for the product and e-file your taxes.
Why isn’t TurboTax part of IRS Free File anymore?
TurboTax announced in a blog post last July that it was not renewing its role with IRS Free File due to its limitations and “conflicting demands from those outside the program” that leave it unable to continue participating while still delivering “all of the benefits that can help consumers make more money, save more, and invest for the future.”
However, the company vowed not to give up on free tax filing options. TurboTax said it processed 17 million free tax filings last season; of that, only 3 million came through the Free File program.
“Moving forward, Intuit is committed to continuing to offer free tax preparation while accelerating innovation to address all of consumers’ financial problems,” it added.
It’s worth noting that TurboTax came under fire a few years ago for using code that hid its Free File page from Google results, as reported by ProPublica. It later changed the code.
Getting Started With TurboTax
Once you create an account or sign in with an existing one, TurboTax helps you select the correct version for your 2021 taxes. It displays several life situations that might affect taxes (owning a home, having children, selling stock, paying off student loans, and so on) and recommends the best solution for you. Once you’ve entered the site, it asks how you did your taxes last year and helps you import that data from TurboTax or another personal tax preparation website. Next, it asks you a second time to indicate which life situations apply to you. Finally, you get a list of the topics you identified as well as the tax documents you’ll need for each, which is very helpful. It also supplies tax tips for some topics.
If you’re using TurboTax for the first time, you have to provide answers to the site’s questions about your personal background, including your address, Social Security number, and occupation, along with several other queries about you and others on the return. If you’ve filed using TurboTax before, the information appears automatically. If you’re new to the site, you can automatically fill in some of that data by scanning the barcode of your driver’s license or state ID.
When you come to issues that may be confusing, like filing status and dependents, TurboTax Deluxe asks questions and provides extra guidance, just as sites like TaxSlayer do. As you finish, you see a summary of your personal information. The service also asks whether you want to subscribe to MAX Defend and Restore, which includes full audit representation, priority care, and help with identity theft monitoring and identity restoration for $49.
At this point, you’re ready to move on to the meat of the site: entering your income, identifying your deductions and credits, and taking care of other tax-related situations. TurboTax, like some competitors, tries to streamline and accelerate data entry where possible. For example, you can import W-2 data if your employer supports this option or upload a copy of your W-2 to automatically fill in the details. Reporting interest from a Form 1099-INT is similar. You can upload a copy of the form, or you may be able to import the information directly from your bank. Where these options aren’t available, you click through related clusters of questions. Other times, you fill in blank fields.
TurboTax offers several pricing options, starting from a free version for users with straightforward tax returns to pricier packages for people who’d rather turn their taxes over to a professional.
Those pricing options generally fall into three categories:
- Do-it-yourself: If you feel comfortable filing on your own with step-by-step guidance
- TurboTax Live: To get unlimited help and advice from a tax expert while you do your taxes, plus a review of your return before you file
- Full Service: A tax expert prepares, signs and files your tax return for you
Currently, those pricing tiers are:
Package Price Includes Free Edition $0 Free filing of federal and state returns Covers W-2 income, limited interest and dividend income, the Earned Income Credit, Child Tax Credit, the standard deduction, and student loan interest deduction Do-it-yourself optionsDeluxe $59 Federal $49 Per State Allows itemized deductions Premier $89 Federal $49 Per State Allows reporting of capital gains and losses Allows reporting of income and expenses from rental properties and pass-through businesses Self-Employed $119 Federal $49 Per State Allows reporting of income from a trade or business, contract work, and freelancing Also works for the home office deduction Basic $79 Federal & State Essentially the free version but with on-demand help from a tax pro via video and a final review of your self-prepared return TurboTax LiveDeluxe $119 Federal $54 Per State Everything included in Deluxe, plus on-demand help from a tax pro via video and a final review of your self-prepared return Premier $169 Federal $54 Per State Everything included in Premier, plus on-demand help from a tax pro via video and a final review of your self-prepared return Self-Employed $199 Federal $54 Per State Everything included in Self-Employed, plus on-demand help from a tax pro via video and a final review of your self-prepared return Basic $199 Federal and State Everything included in the free version, but a tax pro prepares your return for you Full-ServiceDeluxe $249 Federal $54 Per State Everything included in the Deluxe version, but a tax pro prepares your return for you Premier $359 Federal $54 Per State Everything included in the Premier version, but a tax pro prepares your return for you Self-Employed $389 Federal $54 Per State Everything included in the Self-Employed version, but a tax pro prepares your return for you
These prices reflect the list prices advertised as of Feb. 10, 2022, without any discounts that TurboTax may offer to people who file early in the tax filing season. If you want to pay your filing fee out of your federal refund, TurboTax charges an extra $39 refund processing fee for the convenience.
HR Block vs. TurboTax: Comparing Free Options
TurboTax’s Deluxe option is the more comprehensive option for the average filer, but let’s briefly consider the free options again.
H&R Block and TurboTax both offer a free option for filers with simple returns. You can often use those options if you don’t own a home, you have no investment income other than simple dividends or interest and you don’t have rental properties or business expenses.
You cannot use either form if you itemize deductions. However, there are a few deductions available with the free plans. Notably, you can claim the EIC and Additional Child Tax Credit. H&R Block also includes Schedules 1 through 6, unlike TurboTax.
So if your finances are simple, the biggest consideration is exactly what forms you need to file, because H&R Block includes more forms and schedules with its free plan.
So, who wins? Well, it depends what exactly you’re looking to do. H&R Block covers more filers with its free option. The two Deluxe options are the same in terms of price, but TurboTax’s Deluxe option supports more forms that self-employed, freelance and contract workers may need. Both services are user-friendly but TurboTax is slightly simpler with more straightforward language.
Beyond these factors, which tax filing service you choose may come down to personal preference. Some people prefer one over the other because they simply like the way it looks. They might also choose H&R Block so they can have the option of filing at a physical location.
Of course H&R Block and TurboTax are not the only two tax filing services. You may want to consider other options like TaxAct or TaxSlayer if you’re looking for a budget option. Credit Karma also allows you to file entirely for free.
Other TurboTax Fees
- $40 Tax Refund Processing Fee (Optional, but you’ll need to opt out): TurboTax will automatically deduct its charges from your tax refund for an additional $40 processing fee. You can avoid the fee by changing your payment method and paying with a card when you file. Here are clear instructions on how to do it.
- $44.99 Multi-State Package (Optional): If you need to fill out multiple state income tax returns, you can purchase TurboTax State to file for unlimited states.