Time to do your taxes right?
If you’re looking for a cheap option for tax preparation, you’ve 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.
We’ve partnered with TurboTax to offer up to $20 off all their online federal products. Free Edition is still free, Deluxe falls to just $30, Premier is only $55, and Self-Employed costs just $70. This offer expires February 28th and you don’t need a promo code, just click on a link to TurboTax from WalletHacks.com and you should see the promotion applied. If you want, you can click this link now to activate the promotion (even if you don’t end up filing your taxes with TurboTax).
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
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)
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?
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?
Table of Contents
- What can all versions do?
- Do you only have Form-1099s?
- Do you own a home? Make donations?
- Do you run a business?
- Do you own rental property?
- Did you sell stock, bonds, or mutual funds? (or other investments)
- How much does each version cost?
- Can I Share TurboTax with a Friend?
- What are some TurboTax alternatives?
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 2020 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 (these are the retail prices, listed price may be lower because of discounts and promotions):
- TurboTax Free – $0.00
- TurboTax Deluxe with State – $59.99
- TurboTax Premier with State – $89.99
- TurboTax Home and Business with State – $99.99
Now the packages are only available with state – if you don’t have to file a state return, you may want to go with TurboTax online.
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 with a Friend?
Yes, you can share it with a friend, with some conditions.
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.
You can, however, prepare an unlimited number of returns and print them out to mail in.
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 a lot where a parent does their returns as well as their children, often when they’re in college.
In that way, you can share TurboTax with someone else when you buy the software but you are limited to five e-files. E-filing is the fastest way to get a tax refund.
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.
If you happen to need a form that isn’t covered by Credit Karma Tax, then you won’t be able to file with them.
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 different versions of TurboTax!