Which Version of TurboTax Do I Need?
Which One is Right for Me?
TurboTax self-preparation programs are incredibly user friendly and money well spent. They use an interview process that simply and clearly asks you questions and, depending on how you answer, guides you to the next section.
Perhaps the most difficult thing about TurboTax is not whether to buy TurboTax, but which version best fits your needs. I have used Basic, Deluxe, Premier, and Home & Business over years based upon what was going on in my life, and have been equally satisfied with each version.
Each version builds on the previous program, meaning they each add a few extra features based upon your tax preparation needs. As I mentioned previously, eachprogram walks you through an interview; you simply fill in the appropriate answers. TurboTax then double checks the information you have entered, and voila, your tax return is complete. TurboTax can also import your data from the prior year’s TurboTax, Quicken, Quickbooks, as well as other tax preparation software brands. Since this feature eliminates the need to input tons of data (and impliedly, avoid input errors) this can be a huge timesaver. TurboTax also allows you to import your W-2 and 1099 data from over 100,000 companies. Although it is super simple to use, should you want to speak with a tax professional, each version of TurboTax allows you to call one for a small fee. Finally, TurboTax allows you to e-file up to 5 tax returns for free (I do my kids' taxes on the same program).
Something else to consider: you can order TurboTax online and receive either a CD in the mail or download the program directly to your computer. Now, I was resistant to ordering a downloaded version, even though they usually cost less. However, after using TurboTax for years, I can tell you that once you insert the newly purchased CD into your computer, it needs to go online to update and download tax information that may not have available at the time your CD was manufactured. Because TurboTax may need to update the information from the internet anyway, if you are interested in saving a few bucks, buying a download may be for you.
When I used TurboTax Basic, it fit my needs when we received W-2s and 1099s for our income, owned a home, made payments on cars and used them for work, earned bank interest (back when banks paid interest), and had kids in school. I would consider this a straightforward tax situation: a little income, a few deductions, and poof…DONE! I should note that this is a very inexpensive program to purchase—generally less than $30—a very small price to pay for what you get.
As the kids got older, and our taxes became a little more complicated, TurboTax Deluxe was the right step up. It has all the same features that Basic provides, but it also adds Deduction Maximizer, a feature that searches for over 350 different deductions and credits to ensure you get the maximum refund. It also adds ItsDeductible that will help you accurately value charitable donated items.
As life becomes more complicated, so do your taxes. Have some stocks and bonds? Perhaps a rental? Then TurboTax Premier is going to make your life much easier. This program will provide the extra guidance you need to calculate your losses (oops!) and gains (yeah!) of stocks, bonds, mutual funds and employee stock plans. The program can upload information directly from many brokers, and uploads the necessary information quickly and accurately. And, if you own a rental property, this program will help calculate rental property income, expenses and refinancing.
Home & Business
Do you own your own business? TurboTax Home & Business will easily guide you through completion of the Schedule C and maximize home office, vehicle and other business deductions. There’s also a simplified income and expense entry section so you won’t miss a single deduction you’re entitled. It also creates W-2 and 1099 forms for your employees and contractors. And if this is a new business, the program walks you through what start-up costs new businesses can deduct.
TurboTax vs. H&R Block
Several years ago, I gave H&R Block’s TaxCut home preparation software a try. It was much less user friendly, so I quickly returned to TurboTax. I can’t comment on how it is now. Because I have been very happy with TurboTax, there has been no reason to try the competition again.
Finally, TurboTax offers an Audit Support Option that can be purchased for a small fee. This Audit Support supplies you with a tax professional in the event you are audited. I believe this is a small price to pay for a big piece of mind.