Which TurboTax Version Should I Use in 2021?

Time to do your taxes right?

If you're looking for a cheap option for tax preparation, you're probably considered Intuit's TurboTax software. For years, I used TurboTax when I was working a corporate job at Northrop Grumman. It was easy to use, affordable, fast, and more importantly, accurate.

TurboTax Free Edition is their free version. It's $0 to prepare your Federal return. It's $0 to prepare your state return. And it's $0 to file both returns.

There is, however, a minor catch. It's only meant for the simplest of tax situations.

If you only have:

  • W-2 income
  • Limited interest and dividend income reported on a 1099-INT or 1099-DIV
  • Claim the standard deduction
  • Earned Income Tax Credit (EIC)
  • Child tax credits

You're golden.

If you need any of these schedules… you will have to pay:

  • Schedule A for itemized deductions
  • Schedule C for business or 1099-MISC income
  • Schedule D for stock sales
  • Schedule E for rental property income
  • or have credits, deductions and income reported on Schedules 1-6 (like student loan interest deductions)
TurboTax Free Edition
Free is nice! (if you qualify)

The free version is very powerful (it includes taking a photo of your W-2 to get the information in) but it's very basic.

If you have a more complicated return, then you will need one of the paid versions.

So before you start your tax return on TurboTax and discover which version of TurboTax you need (by then, let's be honest, you'll just pay for it because of the time you've just put in), why not use our handy guide to figure out which TurboTax version you'll settle on?

Don't want to do this? You can always do your taxes with Credit Karma Tax. It's 100% free with very few restrictions.

In all the questions and answers below, you can always use a more expensive version of TurboTax. We list the cheapest version you'll need. For example, if you sold stock, you'll need TurboTax Premier or better, which only includes TurboTax Home & Business.

So, which Turbotax do you need?

What can all versions do?

All of the paid versions include:

  • The ability to prepare, print, and e-file your return,
  • The ability to import last year's tax data,
  • The ability to import from Quicken or Quickbooks.

Deluxe, Premier and Home & Business also include features that can help maximize your deductions. This includes ItsDeductible to help calculate the value of your deductions and the Audit RiskMeter to help reduce your chances of being audited.

Each one includes tech support but only Premier and Home & Business include phone support and guidance from Certified Public Accountants.

Do you only have Form-1099s?

If you only have a W-2 from work and various Form 1099s, you may only need the TurboTax Free Edition.

The Form 1099's the Basic version supports are:

  • 1099-MISC – Miscellaneous Income
  • 1099-INT – Interest Income
  • 1099-DIV – Dividend Income
  • 1099-G – Certain Government Payments

These questions can help you figure out which version you need:

Do you own a home? Make donations?

If you want to itemize your deductions on a Schedule A, you'll need to get the Deluxe edition. Keep in mind, the standard deduction for 20200 was $12,400 so it's possible you've itemized deductions in the past but won't this year.

Do you run a business?

If you run a business, you need to declare your income on a Schedule C and so you must use TurboTax Self-Employed (also called Home & Business). No other version offers this.

A business can be anything from a formal corporation with Articles of Incorporation to something less formal, like being a rideshare driver or selling clearance items on eBay. If you earned income from a side hustle, you will need to claim it on a Schedule C.

If you need them, TurboTax will help you create W-2s for your employees and 1099s for any contractors you paid throughout the year. It will also help you with self-employment tax as well as any business-specific deductions.

Do you own rental property?

If you own rental property and collected rent, you'll need to use TurboTax Premier because it includes Schedule E.

Did you sell stock, bonds, or mutual funds? (or other investments)

If you sold any investments (stocks, bonds, mutual funds, options, etc.) then you'll have to file a Schedule D – which also means you'll need TurboTax Premier.

If you received a Schedule K-1 (Form 1065), which you would get if you are in a partnership, that's another reason you'll need TurboTax Premier.

How much does each version cost?

When we looked up prices on Amazon, here were the prices for the digital download (Mac and PC prices were the same, the disc is sometimes cheaper):

As you can see, the first two versions (Free and Deluxe), are available without State. You can't buy Premier or Home & Business without having it include State. If you don't have to file a state return, then those may be good options. If you do, adding on a State filing can be expensive.

Sometimes, it's possible to do the Federal return with software and to file your state return on paper. This can save you money and state returns are often less complex.

Can I Share TurboTax Software?

When you purchase the TurboTax software (disc or download), it says that it “comes with 5 free federal e-files.” This is actually an IRS rule, not a TurboTax one. The IRS only allows you to prepare and electronically file up to five federal and (related) state tax returns.

When you buy TurboTax, you're allowed to install it on any computer you own. When you do, you can prepare the returns of you and your immediate family. I've seen families do this alot where a parent does their returns as well as their children, often when they're in college.

If you're using the online version, you can only do one return.

What are some TurboTax alternatives?

Credit Karma Tax is the free tax service of Credit Karma, a popular credit score monitoring site that I have used for years. They offer free federal tax preparation and e-file, with many of the forms supported by Premier and Home & Business. They don't have a deluxe/premium paid version, it's 100% free with no upsells.

FreeTaxUSA is a popular alternative that offers a free federal return with e-file. They make money on the state return, which costs $12.95, and on the deluxe version, if you need extra customer support, which only costs $6.99. The deluxe version is only about support. Their free version includes much of what is included in TurboTax Premier (investments, rental income) and Home & Business (1099 income and expenses). You can see our full review of FreeTaxUSA for more.

I hope this guide helped you understand the differences between the versions!

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While TaxAct doesn't have all the bells and whistles of other tax software out there it is generally cheaper to file with them. If you don't need extras, such as one on one support or audit assistance you may want to consider TaxAct. They offer a free version for simple returns and several other levels of service depending on how complicated your taxes are.

The Best Tax Software for 2021

Which tax software to choose depends on your specific situation. If you have a simple return in only one state you can likely get your taxes done for free with TurboTax or Credit Karma. But if things are more complicated or you want live help from a tax expert then you'll want an upgraded package as you can find with H&R Block.

How to Speak to a Live Person at the IRS

Reaching a live person at the IRS can be tough, but it can be done. If you are having trouble, try calling your local office. The wait times might be shorter and you can make an appointment to meet with an advocate. Also, calling after 5 pm on Friday may be your shortest wait time.

Jim Wang

About Jim Wang

Jim Wang is a thirty-something father of three who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and a farm in Illinois via AcreTrader.

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  1. Kathlyn Jenson says

    In the past 8 years, I have used both Turbo Tax free file on the IRS website and Credit Karma free file. This year, I started with Credit Karma and discontinued, going with Turbo Tax free file.
    Here’s why:
    > Was found not eligible for the CA Renters Credit of $60. I’ve been eligible for every year since 2003 when I moved back to CA. No explanation as to why I wasn’t eligible. I had answered the questions in the CA Tax Form 540 instructions already (more questions than Credit Karma’s 3, including landlord’s name and contact information) and was deemed eligible by the official CA tax form instructions. I redid Credit Karma’s questions but the result was the same: not neligible. NOTE: Not needing this credit is not the same as not being eligible.
    > My CA state standard deduction was exactly the same as my federal. Not possible. And no questions or calculations were used. No information provided.
    At this point, I switched over to Turbo Tax free file and was greatly relieved to have more pertinent questions asked, more information volunteered, eligible for the CA Renters Credit and my CA standard deduction was calculated as indicated in the official paper CA Tax Form 540 instructions and worksheet.
    I went back into my Credit Karma account, did the review several times but nothing changed. So I officially filed with Turbo Tax. My federal and state forms were efliled and accepted in less than 2 hours.
    If there were other errors, I didn’t catch them. The federal results were the same: no refund, no taxes owed. But I know how Turbo Tax arrived at that result whereas I don’t with Credit Karma.
    As I didn’t know how the changes would impact my no refund, no taxes status held for the past 8 years, I was glad to have more information and understanding for 2018 and beyond in order to plan accordingly.

  2. John Craig says

    It depends on how much money you make as to whether Turbo Tax will charge you. You left out that question between being free and being charged!!

  3. R Stamps says

    Jim is wrong unless he’s only talking about online versions. The CD/download versions contain all the tax forms you need. TT Deluxe CD/download does have Schedule D and anything else you need for handling your investments. If you stick with the CD/download version you get more features and can switch to another tax software that can still import your previous year TT data.

  4. Ron Frank says

    The CD Basic has done my Schedule A deductions for years! I believe Jim is wrong. Intuit IMPLIES lots of things to get you to spend more, like “Deduction Maximizer” which is not the same as being able to do itemized deductions. Just a little more hand holding.

  5. Jenn Varner says

    I purchased 2019 TurboTax Deluxe. It does contain Schedule C which I have used in the past (small sidehustle). I am just wondering if it handles the new QBI calculation correctly, since it’s asking me for manual entries upon federal review.

  6. Harry O'Donnell says

    I have used TurboTax Deluxe for many consecutive years now, and while the instructions online and here always say if you have stock sales, you need the Premier Edition, I have had stock sales virtually every year and the Deluxe version has been quite adequate! I can import my Ameritrade Consolidated Form 1099 easily and have never needed a higher version than the Deluxe one. Perhaps one would need the Premier version if one sold stock options … I cannot comment on that, but with just common stock sales, I’ve always been fine with Deluxe!

    So why the “You will need the Premier version” in all the instructions on how to choose which version?

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