Finance

The Pros, Cons and What You Need to Know

If you’ve had “sit down and do my taxes” on your to-do list for a little while, we’ve been there — tax season is not exactly something to look forward to each year.

If anything, it’s something most of us dread, wondering how to put everything together, how the rules have changed since last year, and perhaps most importantly, which digital DIY tax filing service we should use.

And if your response to that is, “Wait, there are services that could help me online?,” then this article is most definitely for you. DIY tax filing services like TurboTax, H&R Block, Cash App Taxes and TaxSlayer help you figure out what forms you need and guide you through the process—often for free.

In this article, we’re going to review TurboTax’s online filing services and tax software and see how it compares to the competition.

TurboTax: How Does It Work?

Perhaps the best-known of the digital filing options, TurboTax is the tax-focused baby of Intuit, the same company behind Mint and Quickbooks.

TurboTax is a perfect option for the taxpayer who wants everything from a full-service expert doing their taxes to someone who simply wants to use the guided software to input information on their own. The service even offers a free option that means you’ll pay nothing to file state and federal taxes — that is, if you’re filing a simple tax return, meaning one using only the IRS Form 1040.

And if you prefer things a little more low-fi, then you may want to invest instead in the TurboTax CD/download, which allows you to install the software on your computer. The cost of the Deluxe (and more) CD includes the tax preparation fee for one state and five federal e-filings, although you can prepare and print unlimited federal tax returns. (Although who wants to think about unlimited tax fillings?)

As you can see, TurboTax offers much to choose from and has four main pricing tiers, as of December 2022. Here’s a little more about how much they cost and what they offer.

Free Edition

The idea of free tax filing software sounds too good to be true, and that’s because it is — kind of. TurboTax’s free edition is great for those who only need to cover W-2 income, the Earned Income Tax Credit (EIC) and child tax credits. You can also import your hobby, personal property rental or personal item sales income from your Form 1099-K. But if your taxes include other categories, you may want to consider something a little more advanced.

Cost: $0

Deluxe 

The Deluxe edition is the right choice for the person who doesn’t want to shell out that much more but wants help finding all the possible tax credits for them. The Deluxe TurboTax helps you search more than 350 tax deductions and credits to find the ones that fit for you. That includes homeowner tax breaks, charitable donations plus mortgage and property tax deductions. If you have additional education expenses or tax credits for dependents, you might want to go ahead and invest in Deluxe. This is also helpful when it comes to 1099-MISC income — i.e. earnings of an independent contractor like a freelance writer or Uber driver.

But if freelance work is your sole source of income, you’ll be better off using the TurboTax Self-Employed edition, which is described below.

Cost: $39 for federal filing, plus $39 per state

Premier

If you’re someone who has additional income from investments and rental property, then you may want to upgrade to the Premier version of TurboTax. You’ll get everything in Deluxe, as well as the ability to automatically import transactions from financial institutions, including stock and crypto activity, and look for more than 450 relevant tax deductions and credits. The system will also help you to note your gains and losses from crypto, if that’s a concern.

Cost: $69 for federal filing, plus $39 per state

Self-Employed

If the bulk of your income comes from a self-employed post, like online sales or professional services, then you may want to consider TurboTax Self-Employed. It works for industry-specific deductions and offers guidance for freelancers, independent contractors and small business owners.

You’ll also get the ability to upload your 1099-MISC forms with your phone and an audit assessment. TurboTax guarantees your maximum tax refund.

Cost: $89 for federal filing, plus $39 per state

Woman sits a table doing taxes.

Aileen Perilla/ The Penny Hoarder

TurboTax Live

For each of the products above, TurboTax lets you upgrade to TurboTax Live to get on-demand answers and a line-by-line review of your taxes by a tax expert — CPA or EA.

Cost: TurboTax Live comes in tiers similar to its DIY products:

  • Basic costs $0, including free state filing.
  • Deluxe costs $89, plus $49 for state filing.
  • Premier costs $139, plus $49 for state filing.
  • Self-Employed costs $169, plus $49 for state filing.

Features

No matter which tier works best for you — and there’s an easy, clickable questionnaire that helps you figure out the right product based on your tax situation — all TurboTax customers get access to a wide range of tools, guarantees and features.

Audit Support Guarantee

Say you’ve done your taxes through TurboTax and end up receiving an audit letter from the U.S. Internal Revenue Service. Here’s where the system’s Audit Support Guarantee comes in.

TurboTax will offer one-on-one support with a tax professional, through their Audit Support Center. This, however, does not mean that an expert from TurboTax will represent you in front of any tax authority. If the service cannot connect you with a tax professional, you will get refunded the purchase price—and even Free Edition users get a payment of $30.

Money-Back Maximum Refund Guarantee

TurboTax promises you the maximum tax refund — guaranteed. That means that if you find a bigger refund or smaller overall tax payment from another method, they will refund you the price you paid for access to their programs. (Again, free users can get up to $30.)

Mobile Apps for Apple and Android

If you’re someone who likes to do things on the go, you can even file your taxes through an app. TurboTax has options for both Apple and Android users. (Keep in mind—you may want to file them online so you can sit down and really go through your taxes.)

Refund Advance

One of TurboTax’s most unusual features may be the refund advance option of up to $4,000 with no loan fees, no credit impact and 0% APR. A few eligibility barriers apply: you’ll have to have a refund of at least $500 and can’t live in North Carolina, Connecticut or Illinois, for example.

But if you can apply, you could get the funds in as fast as a minute after the IRS accepts your tax return. You’ll have to get them by opening a checking account with Credit Karma Money and can, once accepted, almost immediately use your Credit Karma Money virtual debit card loaded up with the funds from your return. If you prefer to get your funds in direct deposit or a paper check, that will take 21 days or 28 to 42 days, respectively. It’s important to note that you’ll get about half of the actual refund you’re entitled to — for example, if your refund falls between $500 and $999, you’ll get $250.

Once the IRS distributes the rest of your return, you’ll receive the rest of the money into the Credit Karma Money checking account you’ve already opened.

Pay-With-My-Refund Options

If you anticipate having a high refund and want to pay for TurboTax with your refund instead of your bank account, that can be done. This service often comes with a charge—generally, users say they’ve paid $39.99. To do this, you’ll have to e-file your return and direct deposit your refund into a single account. It can only be used once.

Woman sits a table doing taxes.
Aileen Perilla/ The Penny Hoarder

Fees

To prepare and file your tax returns through TurboTax, you’ll pay a fee for the filing program or software, plus additional fees to file your state return. Here’s how that looks:

  • DIY online filing: Free to $89, depending on tier.
  • State filing fees: Additional $0 for free filing, $39 per state for paid DIY tiers, $49 per state for paid Live tiers.
  • TurboTax Live: Free to $169, depending on tier.

If you owe taxes after you file, you can pay with credit card or debit card through payment processors recommended by TurboTax. This generally comes with a fee between $2 and $4 per transaction for a debit card.

You can also use an electronic funds withdrawal to pay directly from your bank account—that is, if you’re e-filing your taxes. This is an option not all competitors offer; with other tax services, you’d have to go directly to the IRS to pay this way.

TurboTax: Pros and Cons

Now that we’ve laid out the basics of TurboTax’s features, what’s the verdict on its performance? Like all financial products and services, there are both pros and cons to using TurboTax.


Pros

  • Affordable: TurboTax’s tiers clock in at a lower price than similar tiers from competitors — though its free DIY service doesn’t cover as many filers as other options.
  • Ease of use: Filing with TurboTax is pretty comprehensive and user-friendly, according to user reviews. Its technology simplifies the process.
  • Comprehensive: The company has a product available for just about every filer, no matter your income or tax situation, or how hands-on or hands-off you want to be.
  • Customer service: TurboTax offers lots of support, including links to extensive support topics, as well as a community forum that lets you interact with other filers and tax experts.


Cons

  • Overwhelming user experience: TurboTax is super customizable, but sifting through its many product options can feel kind of overwhelming.
  • Lack of transparency: Your total TurboTax fees aren’t totally clear until you go through the tax prep process. That could mean wasted time if you end up wanting to look for a cheaper option.
  • No physical locations: TurboTax doesn’t offer in-person, brick-and-mortar offices like H&R Block. If face-to-face, personalized service is important to you, this isn’t your best option.

Who Is TurboTax Best For?

When it comes right down to it, most online tax preparation services are more alike than they are different.

TurboTax may be best for someone who wants custom tax help without going into an office and dealing with a live person. It’s also a good option if you’re looking for a truly fee-free line of advance tax credit so you can access your money ASAP.

Remember, you can always file for free, if you’re eligible, through the IRS portal. This service is available to filers who earned $73,000 or less in 2022, and the page also links to free fillable forms for earners at all levels.

Still comparison shopping? Check out our reviews of H&R Block and TaxAct before you make a decision.

Writer Elizabeth Djinis is a contributor to The Penny Hoarder, often writing about selling goods online through social platforms. Her work has appeared in Teen Vogue, Smithsonian Magazine and the Tampa Bay Times.




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