I had an accountant do my taxes for many years. After she retired, I started using TurboTax. It helped me discover crucial details about my finances that my accountant should have brought to my attention.
One of the most remarkable things I discovered with TurboTax is that I became more aware of how my money was used.
I've been using TurboxTax now for over 25 years for my business and personal taxes. As a result, I've learned about all their products. So I can guide you through what's required for your situation.
All software versions include free eFile, so you get your refund faster. And no worries about getting lost in the mail. You can eFile up to five returns. That allows you to file the taxes for your other family members or close friends, too.
TurboTax has an online version that you can use without installing software on your computer. However, all Mac or Windows PC software versions allow you to eFile up to five returns. The online versions only let you do one return.
In addition, all the software versions let you do as many taxes as you want on your computer, five of which can be eFiled.
All the versions create all the IRS forms for you, and they print on your computer's printer so you can save a copy for yourself. You can also save your tax return as a PDF file on your hard drive.
Besides correctly filling out your tax forms, TurboTax provides many additional benefits, such as these:
There are many details involved with changes to taxation, and TurboTax will always be up to date to accurately file your taxes by applying new tax laws.
I found that TurboTax guides me by asking for the required information so that I file my taxes with the correct information in the legally most beneficial way.
Good accounting software keeps track of everything and carries the necessary data forward from one year to the next. TurboTax does this, so you don't need to keep track of your prior year's information. And while you're preparing your taxes, it will remind you if you forgot anything.
Correct Forms and Schedules
The IRS eliminated Forms 1040EZ and 1040A, and Form 1040 now consolidates the three types of returns into a single form.
You never have to think about which IRS forms to use. For example, if you are over 65, it would use form 1040-SR, the proper return for Seniors.
IRS Schedules are just as easy. Itemized deductions will be included on Schedule A for taxpayers who have deductions such as home mortgage interest and property taxes.
Six new schedules were introduced recently for less common items. TurboTax determines if you need these schedules and easily guides you through them.
Real Estate
It will ask you if you have a home, so it knows to take deductions on your real estate property tax and mortgage interest. It gets easier as time goes on because it will remember to ask for your property data each year.
Inheritance
It will ask if someone died, so it files inheritance income properly. It knows when this is tax-free and will give you the most advantage.
Deductions
It even gives you the proper deductions for the sales tax you spent throughout the year. There's a quick, easy way to calculate this even if you didn't keep records. TurboTax helps with that.
Investing
If you invest in the stock market, it keeps track of your capital gains and losses. And it carries it all forward year to year, so you never miss anything.
Obamacare Compliance
All the Affordable Care Act forms are included to help you properly file your Obamacare entitlements if that applies to you.
Cryptocurrency Transactions
The IRS requires you to report Bitcoin or other cryptocurrency transactions. The first question on Form 1040 asks if you acquired a financial interest in any virtual currency. You have to report all these transactions, and the firms that allow you to trade cryptocurrency must report your activity to the IRS.
Many banks, and even PayPal, offer the ability to use cryptocurrency for purchases. However, reporting gains and losses on many small transactions could become a nightmare.
TurboTax will guide you through all the possibilities that help reduce your taxes. It helps find deductions for you so you can legally reduce your taxes. You will discover what you can claim as deductions and credits. Then, based on your overall tax reporting, it will suggest what you may have missed.
By the way, if you have a lot of deductions for a self-employed business and not much income, then TurboTax will warn you that your chance of an audit is high. Furthermore, it will help you improve your situation by not taking all the deductions that could trigger an audit.
You won't miss any opportunity to reduce your taxes. These are all covered with precise guidance according to IRS regulations as TurboTax walks you through your return.
The following are some items that can reduce your taxes:
There are several different TurboTax versions, each for a specific situation, as I'll explain below, so you can compare them to learn which to purchase.
You can use TurboTax online on Intuit's website (Intuit is the maker of TurboTax), or you can install the software on your computer. I prefer installing it on my computer rather than keeping my data on Intuit's online server.
The software version can be bought on disc from many local office supply stores or from Amazon, which also provides it via a safe and secure instant download. In addition, it's saved in your Amazon account for free repeat download if you ever need to reinstall it later.
Most software versions include the state return for your home state. The basic and business versions are the exceptions, but you can easily add the state return with an additional purchase if necessary.
Below is a complete review of the various versions to help you choose the right one. You can also safely download it right now and start working on your taxes when you buy from Amazon.
I used to buy directly from Intuit, the maker of TurboTax, but I discovered that Amazon has the lowest prices. I compare every year, and I always end up ordering from Amazon.
I even get offers from my bank every year to buy TurboTax at a discount, but that is a discount off the retail price, and Amazon ends up having the lowest prices anyway.
The Basic version is for individuals with only a salary and interest income from savings. If you have any investments, then you need one of the other versions I discuss below.
TurboTax Basic does not include state preparation. If you live in a state with an income tax, you should buy TurboTax Deluxe with state preparation.
You can buy the Deluxe version for federal taxes alone or with state preparation included if you live where you have state tax.
If you don't have investments such as stocks or bonds, this version is all you need. However, if you have investments, you'll need the Premier version, which I discuss below.
The Premier is the same as the Deluxe but also handles investments and rental property. This is the one that I use every year since I trade stocks.
I also like the fact that TurboTax Premier can log into my brokerage account and capture all the Form 1099 data, including stock purchases and sales. It saves the time I would otherwise spend typing in all my trades.
If you have a business and are self-employed as a sole proprietor or incorporated, then you need one of the business versions I discuss below.
If you create W-2 and 1099 forms or want help finding business deductions, you need to use TurboTax Home & Business for a small business or Business Federal for corporations and LLCs.
The "Home & Business" version is what you need if you are self-employed. This version also does taxes for single-owner LLCs and includes State Tax preparation.
However, if you have an LLC with more than one person or a corporation, then you need "TurboTax Business Federal" described next.
This is different from the Home & Business version. TurboTax Business Federal is for Corporations and LLCs with more than one person.
State tax preparation is not included but can be added for an additional fee. You will be given the option to download your state software when you run TurboTax Business Federal.
My business was a corporation until I retired, so I used this one for my corporate taxes.
If you are self-employed with a sole proprietorship, you must include Schedule C and Schedule SE with your 1040 form. "TurboTax Premier" handles those forms. However, if you hire anyone besides yourself, you will need to use the "Home & Business version."
You can file Schedule C for business income and expenses with all the CD and Downloaded TurboTax products (Basic, Deluxe, Premier, and Home & Business). However, only "Home & Business" will create Schedule C if you use the online version.
This section only applies to you if you have a corporation and you file for a fiscal year that is not January through December.
If your fiscal year differs from a calendar year, you might find the Business TurboTax at a significantly reduced price on Amazon since you can wait to purchase it later when you need to file.
My case is a good example:
I incorporated in June, and my fiscal year went from June 1st to May 31st. Since my fiscal year ended in May, my deadline for filing my business tax report was September rather than April. Therefore, I always waited until August to buy TurboTax for Business.
Since it was considered obsolete by then, I had the advantage of a considerable discount from Amazon for that year. If you have a company that files under a different fiscal year, you may also save on purchasing Business TurboTax later in the year. Take advantage of that if you can.
Question: Can I do eFiles for other family members? How many can I do?
Answer: You can do up to five eFiles when you buy the software version. However, the online version only lets you do one return.
Question: Can I share TurboTax with a friend or family member? How many tax returns can I file with one purchase?
Answer: The software version is unlimited as long as you do the returns on a single computer where you installed your copy of TurboTax. However, remember that you can only eFile up to five returns. Beyond that, you need to print the forms for your family members or friends to mail in.
Question: Can I use TurboTax for all family members?
Answer: Yes, the same as the last question. You can eFile, as well, for up to five individual family members' returns.
Question: Can I delete my information from TurboTax when I'm done?
Answer: Yes, but you wouldn't want to because TurboTax makes it easier to do your taxes each of the following years by carrying forward all pertinent information.
I don't like the online version since your data is saved on their servers. I am sure your information is safe, but I feel more comfortable having it on my own computer. Therefore, I always use the downloaded software rather than the online version on their site.
Using it on my computer gives me complete control for safekeeping since none of my data resides on their server. Just remember to back up your files if you do the same thing. You can also password-protect the data file.
Question: Can I use TurboTax to file a return for a deceased parent?
Answer: Yes, I had done this for my aunt's estate. It works very well. If you are the executor, TurboTax will guide you in properly filing the final return for a deceased parent or other relatives.
Question: Can I use TurboTax for business with a fiscal year?
Answer: Yes. I do that. See my complete explanation in the section above: "How to File for a Corporate Non-Calendar Fiscal Year."
Question: Can I do my personal taxes with TurboTax Business?
Answer: "TurboTax Business Federal" is for Corporations and not for personal 1040. However, "TurboTax Home & Business" is the one you'll want to use for both cases if you own a small business with no other employees.
Question: Can I download a different "state" return for other family members?
Answer: You can purchase and download as many states as you need. The first one you download is included for free. However, TurboTax Basic and TurboTax Business do not include the state return, so it has to be purchased.
Question: Can I use TurboTax for more than one year?
Answer: No. Tax laws change every year, and TurboTax continually keeps up with the changes. That's why you need to purchase a new one every year. Your personal information and tax data are automatically carried forward, so doing your taxes becomes easier with each additional year.
Question: Will TurboTax suggest if itemizing or taking the standard deduction is better?
Answer: Yes, it will walk you through the details and help you decide which way to go. All versions will automatically determine the result with the standard deduction and itemizing. Then, it will recommend the best method. You can still override that and choose the other strategy, but why would you?
Question: I have not used TurboTax before. Do I need the earlier versions to produce the reference files for prior years?
Answer: You don't need earlier versions. You can start anytime simply by beginning with the current year. However, the first time you use TurboTax, it will ask you many questions about your finances and history that you should try to answer.
For example, if you had been putting money into an IRA, knowing the details of your individual donations would be helpful. Also, if you own a home, it may ask you when you bought it.
It will be much easier to continue using TurboTax in future years because it will carry forward all that data.
Question: Which TurboTax version covers the sale of a home?
Answer: TurboTax Premier and "Home & Business" include the entry of all the details required for the sale of your home.
Question: I had a loss due to flooding. Does TurboTax help with the appropriate forms to file for a casualty loss?
Answer: You need to use IRS Form 4684 to report a casualty deduction for property losses. You can do that with "TurboTax Premier" or higher.
Question: I need to use Premier this year due to additional tax situations, but I used the Basic version before. Do I need to reenter all my history?
Answer: If you were using TurboTax Basic and you switch to Premier this year, it will read its data file saved from last year, so you won't have to start from scratch.
Question: Which version of TurboTax do I need for income from railroad retirement?
Answer: Railroad workers contribute to the retirement program administered by the Railroad Retirement Board (RRB) instead of contributing to Social Security. Railroad retirement benefits paid are reported on forms RRB-1099 (Payments by the RRB) and RRB-1099-R (Annuities and Pensions by the RRB). All versions handle both of these forms. See here for details.
Question: I sold stock, so what version do I need?
Answer: The Premier version of TurboTax handles stock trades. It can even download information on your stock sales from your broker if you let it access your account. For safety reasons, you may need to enable that option with your broker account and then disable it again after the download.
Of course, you can always enter the data yourself. TurboTax makes that easy, too. It asks you for everything it needs for proper reporting: Date of purchase, date of sale, cost of the investment, and the amount received on the sale. It then figures if it's a long-term or short-term investment to calculate the correct tax due.
Question: Can I import 1099 tax form data from participating financial institutions with any version?
Answer: Yes, all versions of TurboTax can import 1099 data from your financial institution. Note, however, that investments such as stocks or bonds are reported on 1099-B. You need TurboTax Premier or higher to complete the forms related to investments.
Contact your bank or broker to find out if they participate in the download feature. You may need to enable it before TurboTax can access your account since it might be blocked by default so hackers can't download your personal financial information. However, after downloading the data to TurboTax, you should disable the feature again with your bank or broker for your protection.
Question: I have a K-1 from an S corporation. Which version do I need?
Answer: You need the Premier version to walk you through the entry of the many fields on a K-1. I've done it, and the Premier version made it easy. I just entered the data values for each field as TurboTax walked me through it.
You need to tell it to go to the schedule to file the K-1. You do that by searching for K-1 in Premier's search box, then selecting the "Jump to" link it gives you in the search results. That will take you to the section that guides you in entering the data from your K1.
Question: Can I ask a tax expert questions if I purchase TurboTax?
Answer: That service is available at an additional fee, with an option to include that at the end of entering your data. Then, you can have a CPA review your return for accuracy.
Question: I have a 401K pension plan and a cash balance plan. Where do I input the cash balance plan in TurboTax?
Answer: A Cash Balance Plan is another type of pension plan, and it used to be under "less common business deductions" in TurboTax in prior years. But now, you need to get to the proper location by manually searching for the correct term. You need either "Home and Business" or "Business Federal" for this.
It's different because an employee can expect a predetermined benefit, unlike a standard 401(k), which is dependent on the fund's performance. That makes a cash balance plan a "Defined Benefit Plan." So that's where you need to enter the data.
To get to the location manually, select the "Income & Expenses" tab and check the option for more tax breaks. Then scroll down to the "Other Business Situations" section and click the link given there. That will put you in the proper place. Click "Start/Revisit" next to "Self-Employed Retirement Plans" and answer all the questions to enter your data.
Question: Does the Canadian Version of TurboTax Premier log into my brokerage account and capture all my stock purchases and sales for CRA Schedule 3 just as the U.S. version does for Form 1099 data?
Answer: The Canadian version of the Premier Turbotax has a feature called "Auto-fill My Return." It does not download stock transactions from your broker, but it downloads this information from your CRA Account portal.
Your stockbroker sends all the T5008 slips, with trading information, to the CRA. That information is kept in your "CRA My Account," and TurboTax can import all that data from there.
Besides importing automatically, TurboTax provides interview questions to help you complete CRA Schedule 3 (Capital Gains or Losses) and Schedule 4 (Statement of Investment Income).
Values from buying and selling securities are reported on the T5008 slip (Statement of Securities). You can manually enter these stock transactions if you don't import them from your CRA account. You can enter the data from the T5008 slips or fill in the Schedule 3 form directly by going to the forms entry option on TurboTax.
Back in the days when I had an accountant do my tax reports, I had to remind her about the information she missed. It wasn't her fault since I didn't know everything I needed to give her. However, TurboTax is better at suggesting what I might have missed because it asks for the required information.
Since I began using TurboTax over 20 years ago, I found that I had more control over my finances. In addition, it carries all the data forward to the following year, such as stock losses that can be deducted in future years. That makes it easy to do my taxes year after year.
I also like how TurboTax suggests ways to save money, such as how much can be added to my IRA each year.
All these features help improve my financial situation, and I'm sure it will also be a game-changer for you.
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