W ith tax season right around the corner, it’s a good time to review the #1 most popular tax software on the market–TurboTax 2014. I’ve used TurboTax for years, and have reviewed several versions of the software over the years.
With our tax returns, my wife and I really put TurboTax through its paces. In addition to itemizing deductions, we have real estate investments (including depreciation) to deal with and self-employed income. We’ve used TurboTax to prepare and file our taxes online for several years now, and I believe it’s the best tax software available. So let’s look at some of its key features, and then we’ll walk through the different flavors of TurboTax that are available for the 2013 tax year.
What’s New with TurboTax 2014?
One of the first things I look for is what new features have been added to TurboTax. In 2013, Intuit outdid itself by offering free one-on-one tax advice. This new feature allowed customers to speak with a tax specialist by phone or via online chat. The expert advice was a great improvement!
This year, though, TurboTax made a now-notorious mistake: adding extra expenses to its desktop version. For some reason (likely because the majority of its customers use the online version of the program) TurboTax moved Schedules C, D, and E from Deluxe to Home & Business. Customers who had typically used Deluxe in the past found that they had to pay extra if they needed those three schedules.
Luckily, Intuit quickly realized its mistakes. It first offered a $25 rebate to affected customers, but is now offering free upgrades for those who bought the desktop version of Deluxe but need Schedules C, D, or E. So if you’ve already got the Deluxe desktop version of TurboTax 2014, you can take advantage of this offer.
Here’s the guarantee that applies to these customers:
$0 Upgrade Offer: Valid for customers who filed their 2013 taxes with TurboTax Deluxe (CD or download), completed prior year data transfer this year, and encounter an upgrade to either 2014 TurboTax Premier or 2014 TurboTax Home & Business (CD or download). Valid February 6, 2015 through April 20, 2015. TurboTax Advantage users are ineligible for this offer. This offer may not be combined with our $25 cash back offer. Terms and conditions are subject to change without notice.
Ease of Use
Perhaps the most important criteria in choosing tax preparation software is how easy it is to use. In general, all the tax software that’s out there has gotten easier to use over the past few years. But I’ve found TurboTax to be the most straightforward.
The interface makes it easy to navigate to any part of the return. And TurboTax offers a guide that walks users through each part of the return with a series of questions. Sometimes I use the guide when I’m not as familiar with a certain part of the return. You can always bypass the guide, if you choose, and go directly to different areas of your return on your own.
There are two other features that can make TurboTax much easier to use. First, if you’ve used TurboTax in the past, importing last year’s data is easy. I wasn’t able to do that two years ago because I switched from a Mac to a PC and didn’t want to fuss with the conversion. But this year, the import feature will come in handy. Second, you can import W-2 and 1099 information if you work at a participating company.
This is where tax preparation software can really pay off. The TurboTax Deluxe, Premier and Home & Business versions will walk you through all the possible deductions for your return. Even though I’ve done our taxes for years, I’m always concerned that I’ve missed something. With TurboTax, it covers every available deduction, so it acts as a great reminder so you don’t miss anything.
Just to give you an idea, here is a screen shot from my Home & Business version of TurboTax that shows the various categories of possible deductions:
You can either click on each item to get more details and enter your tax information on your own, or you can let TurboTax walk you through every deduction. If you choose to have TurboTax help, it will ask you a series of questions to see if you qualify for each possible deduction. If you don’t qualify, it will move on to the next deduction. If you do, it will ask more detailed questions to fill in all the necessary forms on your behalf.
TurboTax even guarantees it won’t miss a deduction. The guarantee covers the cost of TurboTax, however, not the cost of the missed deduction. But if you were to overpay your taxes, you could always file an amended return.
Here are the terms of the guarantee:
*If you are a registered user of TurboTax and you receive a larger refund amount or must pay a smaller tax due amount using another tax preparation method other than TurboTax, then Intuit will refund to you the applicable purchase price paid by you for the federal and/or state TurboTax product license you purchased. Claims must be submitted within sixty (60) days of the date you filed your tax return using TurboTax, but no later than December 15, 2014. All other fees are excluded including, electronic filing fees, Audit Defense, Professional Review, Tax Advice, Refund Processing Service and technical support fees. This guarantee cannot be combined with the Satisfaction Guarantee in Section B.6 below.
Audit Risk Meter
Starting with the Deluxe version, TurboTax offers an Audit Risk Meter. The ARM tells you whether you are at high risk of an audit, and suggests changes you can make to reduce your risk. I wouldn’t buy the software for this feature, but it does come in handy. Almost every year TurboTax spots some error I’ve made in the return. which that gives me a chance to fix it before filing.
Finally, TurboTax has included free federal e-filing with the cost of its software. Remember that e-File not only makes filing your return a snap, but more importantly, it speeds up your refund. You can get your refund in as few as 8 days.
Most tax filers have their refund deposited directly into a checking account. If you don’t have a checking account and don’t want one or can’t get one, you can have your refund deposited onto a prepaid card. This is a much cheaper and safer alternative to check-cashing stores. TurboTax offers a prepaid Visa, but just
about any prepaid card can be used. You can check out a list of prepaid cards for tax refunds if this is an option you’re considering.
Investments & TurboTax Premier Edition
The first question to ask here is whether or not you need to pay the extra money for the Premier edition of TurboTax, which includes Schedules D and E. For most filers, I believe the answer is no. The Premier Edition adds features helpful for those who buy and sell investments. If you bought and sold a lot of investments in 2014, by all means consider the Premier Edition. For most of us, however, it’s just not necessary, unless you own rental properties.
First let’s talk about stocks and mutual funds. Most people own stocks and mutual funds in 401k, IRA or other retirement accounts. If that’s the case, buying and selling investments in retirement accounts does not trigger any tax consequences, so the Premier Edition would be unnecessary. Many others invest in mutual funds and trade very little during the year. That describes me, and I wouldn’t upgrade to the Premier version just for the few trades that I make. If you have a lot of trades, however, the Premier version can help you wade through all the tax implications.
If you own rental property, however, the Premier version is a must. I and my business partner own four rental units which makes tax time lots of fun (not!). I would not do our taxes without the TurboTax Premier version. One thing that I’ve found helpful is the depreciation calculations. We do this by hand, but I always check the results with TurboTax.
Home & Business Edition
Last year was my first year using the Home & Business Edition of TurboTax. It includes Schedule C. which you use to report business income and expenses for a sole proprietorship or LLC. I could probably get away with not using Home & Business, but it can be helpful. As with personal deductions, the program will walk you through all the possible business deductions you can take for the year. Here are some that the program will walk you through:
Still, most of the effort comes in gathering all of the information necessary to complete the return. That’s when you swear to yourself that next year you’ll be more organized.
Four Editions of TurboTax
Before we dive into the different versions of TurboTax, there is an easy way to figure out what you need. TurboTax offers a simple comparison of its software that makes deciding on a version a snap. You can check out the TurboTax comparison chart here .
TurboTax Federal Free Edition
TurboTax offers a free version of its software for those filing form 1040EZ or a very simple 1040. Online tax filing with e-file is included in the free package, although the state software and filing costs $25.95. The free edition is for those who have to prepare a basic return.
If you itemize your deductions, for example, the free edition won’t get the job done. If you think the free version might work for you, though, start with it. You don’t pay for TurboTax until you’re ready to file, so you can always upgrade midway through the process if you realize the free version isn’t enough for you. TurboTax will automatically transfer your information to the newer version.
TurboTax Free Edition includes the following IRS Forms (along with some others less commonly used forms):
- Form 1040–Individual Income Tax Return
- Form 1040A–Individual Income Tax Return
- Schedule B–Interest & Dividend Income
- Form 1040EZ–Income Tax Return for Single and Joint Filers With No Dependents
- Schedule EIC–Earned Income Credit
TurboTax also offers what they call a Basic edition, which is very similar to the Free version. The big difference is that with the Basic edition, you can import last year’s tax return information if you used TurboTax. So if you have used TurboTax in the past and still have the data, the Basic edition may be the better choice. Click the links to get more details on TurboTax Free and TurboTax Basic editions.
TurboTax Deluxe Edition
TurboTax Deluxe was designed for those who itemize their deductions. TurboTax has extensive screens to walk you through every conceivable itemization, which makes completing the return much easier and reduces the risk you’ll miss a deduction. So according to TurboTax, if any of the following apply to you, TurboTax Deluxe edition is probably the best version:
- You own your home
- You donated to charity
- You have significant education or medical expenses
- You have childcare expenses
- You have lots of deductions
TurboTax Deluxe federal is $34.99 and includes e-file. The state version, which is optional, costs $36.99. You can check out more information about the Deluxe version on TurboTax’s website by clicking here .
TurboTax Premier Edition
TurboTax Premier is designed for those who own rental properties or have bought and sold stocks, bonds, ETFs or mutual funds during the year. For example, the Premier edition will, according to TurboTax, “walk you through reporting sales of stocks, bonds, and mutual funds. Automatically calculates capital gains/losses and tells you how to deduct losses and associated expenses to help you get a bigger refund. Plus it keeps track of capital gains/losses that carry over to future tax returns.”
Having used the software for several years now, I found it pretty easy to figure out gains and losses on mutual fund sales. And it makes filing taxes for the next year that much easier, since it carries over future gains/losses and saves that information for you.
The Premier online version costs $54.99 and includes e-file. The state version is optional and costs $36.99. You can find more information on the Premier version at TurboTax by clicking here .
TurboTax Home & Business
Now we get to the Cadillac of TurboTax, the Home & Business edition. This is what I use because of my self-employed income (running a blog and other websites has become a real business!). The Home & Business edition is designed for those who are self-employed, have 1099 income, or run a small business. It costs $79.99, and like the other versions, comes with e-file. The state version is optional and costs $36.99.
You can get more information on the Home & Business edition from TurboTax by clicking here .
Regardless of which you chose, I’ve found TurboTax to make tax preparation as painless as possible. If you’d like more information on TurboTax, you can check out its website: www.turbotax.com .