TurboTax 2013 Review: Really the Best?

by Reads (47,353)

You might well have heard about TurboTax, the most widely used tax prep software among consumers who are doing their own taxes. Yet how does this set of Windows-based and online solutions, offered by Intuit, compare versus similar offerings from other vendors? In the first of a series of reviews on tax prep software for 2013, we take an in-depth look at this question.

Overview

With 2013 under way, it’s time to start thinking about preparing the tax returns required by the IRS and many state and local tax agencies. For many of us, this will mean “giving” without the warm feelings that came from “giving” during the preceding 2012 holiday season. For others of us, it might mean a nice refund!

Not so long ago, tax preparation was depicted through images of a man or woman surrounded by piles of receipts and bills, a calculator, a pencil, and stacks of tax forms that needed to be filled in.

While there are still people who go through this arduous task exactly as pictured, most of us who prepare our own tax returns — a growing number each year — do so with software designed specifically for this purpose. The most widely used consumer software for tax preparation is TurboTax from Intuit, Inc.

TurboTax is offered in various editions, and it’s available either as in-house software to install and use on your own PC or as an application where the tax prep process is completed in the cloud. The cloud versions are growing more popular each year.

For this review, I tested the Premier Edition of the Windows-based software. This is available on CD or for download at $89.99. In contrast, the Home & Business Edition, which is the top-of-the-line version, is priced at $99.00. Pricing is $29.99 for the lower end Basic Edition, and $59.99 for the Deluxe Edition. On the whole, TurboTax software is somewhat more costly than its rivals.

Which Edition to Choose?

The Premier Edition I tested is targeted towards taxpayers who have a fair amount of investment or real estate income, but it’s also highly usable by those of us who don’t have much (or any) income from those sources. The major difference between the Premier and Home & Business editions can be found in the amount of guidance in areas such as investments and self-employment income. The Basic and Deluxe versions don’t include this specialized guidance.

The Premier and Home & Business editions each allow you to prepare up to five federal returns, with free efiling. One state is also included, and you can download the state you need from within the federal program.

Extra states are available for purchase at $37.95 each. Needing more than the one included state is a common situation. (For example, one member of the household works in the home state and the other in a different state.) If you face this kind of situation, it needs to be factored into the cost regardless of whether you use a PC-based or online edition.

In terms of fees charged by the government, only federal efiling is free. Efiling returns for the state needs to be paid for, with the costs varying depending on how much the particular state charges for this service. (The one exception here is New York State, where there is no charge for efiling a state return.)

The Deluxe Edition offers several capabilities unavailable in the Basic Edition, including state tax return preparation and features for finding deductions and credits and helping you to reduce the risk of audit. 

All four editions are also available in in-the-clouds online versions. The online Free Edition corresponds to the Basic Edition of the CD and downloadable software. Pricing for the other online editions is $29.99 for Deluxe, $49.99 for Premier, and $74.99 for Home & Business. With the paid online versions, you don’t pay Intuit until the return is filed. On the other hand, the disadvantage is that you need to do your tax preparation while hooked up to the Internet.

Intuit also provides special tax preparation deals for those in the military, as well as various packages for small businesses.

Performance

I tested the software on a Lenovo T400s laptop running Windows 7. I installed from a DVD, so if you download the software, your experience might be slightly different. As with most software, if autorun is enabled on your system, the installation automatically launches.

The first screen that comes up is one that informs you that the software is preparing to install. After that, it took several minutes before I was informed the install was complete. Then, I was presented with a screen that informed me that updates were available, and I was asked whether I would like to download and install them.

TurboTax checks for updates every time it starts unless you disable this feature. (Considering how often forms and software actually are updated, it’s a good idea to download and install any available updates every time you use the software.)

Updating took about 10 minutes, after which the software was supposed to restart. It didn’t, for some reason. Instead, I was presented with the Windows desktop. After a few minutes, though, I launched TurboTax again, and I was able to start the preparation process.

Smooth UI

As you can see from the screenshots at right, the user interface (UI) is smooth. (For expanded views, please click on the images.)

When the software is launched, the first screen that appears is a welcome, with an inquiry as to whether you want to amend a prior year (which is form 1040X) or file for an extension (which gives you an additional six months past the April 15th filing deadline).

On all of the screens except for certain explanation guides, the rightmost vertical column provides access to the TurboTax community where you can see relevant questions that others have asked and received answers to, or ask your own and see if some other TurboTax user has an answer for you.

All three of the major tax preparation software products (TurboTax, H&R Block At Home, and TaxACT) revolve around a very similar layout, with a structure that walks you through different sections such as family status, income, different types of deductions, and so on, asking questions along the way and allowing you to enter the pertinent data.

Experienced taxpayers, who know which forms they need to file, can skip the handholding and use the Forms view. This allows you to select only the forms you need rather than going step-by-step through what can be a long list of questions.

Quick Transfer of Last Year’s Returns

In starting the application, TurboTax first looks to see if it can find a return prepared last year. It can transfer last year’s data from H&R Block At Home and TaxACT as well as from TurboTax, which makes it easy to switch if you were using a different vendor’s product last year and were not satisfied.

Transferring data from three of last year’s returns took about two minutes, and all of the demographic data (names, addresses, Social Security numbers, dates of birth and the like) were transferred accurately, as were last year’s W-2 employers and 1099 issuers. This greatly sped up preparation of a current return. Of course, if you’ve made a lot of changes in these areas, this feature will offer less of a benefit.

TurboTax uses a tabbed display screen, with tabs for Personal Info, Federal Taxes, State Taxes (multiple states are all entered under this tab), Review (which checks the return for errors and omissions), and File. There are subsections under each of the tabs, and each subsection guides you through a particular area of the return, such as entering wage and other income, and various types of deductions.

(Mostly) Simple to Use

The process is pretty much self-explanatory in most areas, and the right-hand Community panel is very helpful where there might be a bit of confusion over what is actually being requested.

For the most part, I found going through the return process to be simple. I have self-employment income, home office expense, and auto expense, and these were handled correctly.

TurboTax has more complex tax explanations in certain areas, such as the new Healthcare Coverage Tax Credit.

I think the average taxpayer may find some of these difficult to understand, though most of the areas with complex explanations and help are areas which the average taxpayer won’t encounter.

Conclusion

There’s a reason why Intuit’s TurboTax has the largest number of users year after year. Intuit has earned its chops in both the consumer and professional tax software markets, and the company invests a lot of money every year into making sure it provides a quality product.

There’s also a wide variety of editions in retail, download, and in-the-cloud formats, so it won’t be difficult for you to find one that suits your needs. I tested one of the Windows editions, but if you are unsure that a particular edition will be a good fit, you’re probably going to be better off using an online version, since you don’t pay for the return until it’s actually filed.

If, somewhere in the process of preparing your return online, you find that you need capabilities different from those available in the edition currently being used, you can always stop and start again with a different version without incurring an extra cost.

At the bottom line, TurboTax, H&R Block At Home, and TaxACT — the three most popular tax preparation applications — are pretty similar in terms of what they offer across various editions. They are all solid products, and each has both a consumer component and a professional component to its business. (Intuit sells ProSeries and Lacerte to professional preparers. TaxACT also has an edition for professional preparers, and H&R Block provides software to the preparers in the H&R Block tax preparation store sites.)

TaxACT’s and H&R Block’s online and Windows software are priced a bit less than Intuit’s. However, if you used TurboTax last year, and were you pleased with it, you should probably stick with it again this year.

Pros:

  • Generally easy to use
  • Can handle complex returns
  • Different editions available for taxpayers with different needs

Cons:

  • Costlier than competitors (except for online Free Edition)
  • Some explanations will be over the heads of most taxpayers

LEAVE A COMMENT

8 Comments

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  1. raurod

    not an honorable company – I received via email message from their Marketing department offering a $125.00 gift card If I filled out their survey, I understand fully I need to pre-qualify, other surveys I have done only have 2 – 3 questions for pre-qualification, but Intuit had me answer over 30 questions that took almost 45 minutes of my time and then they disqualified me. I answered many personal and business related questions including how turbo tax could be improved etc etc. I wrote the marketing director as well as the President of Intuit and they personally refused my payment

  2. stapphouse

    Turbo Tax made a huge mistake on my last 4 returns putting my pension income on the earned income line. I am mortified and terrified now I’ll have to pay back those refunds, and it is DEFINITELY their screwup, I simply followed the prompts, entering from my 1099 which they put down as earned income. So much for the free accurate return service… and for duping folks into paying for stuff they can do for free!

    • Ted Needleman

      In many cases, pension income IS earned income. Check on the IRS web site to see if you can clarify where your pension income falls (IRS Tax Topic 410, Pensions and Annuities).

  3. sbinsted

    I’ve used TurboTax for many years at this point. Over the past few years it’s been harder and harder to navigate while the zippy cutesy visuals that I have no need for have gotten much better! I was considering not using it this year but gave it one more try. It imported my HSA dollars incorrectly to the point that had I not caught it, it would have cost me 1400 dollars. 1400! and now that it’s an “amended” return I can’t even efile. It needs to be printed and sent via mail. And I admit I’m assuming this but I’ll have to wait for a check in the mail too? The person I spoke to was extremely helpful in getting this corrected. The people at Intuit I’ve always found helpful when you can get to them. But this error importing my W2 information leaves me mistrustful of the software. Next year I’m headed for H&R.

  4. PMLUTZE

    turbo tax definitely has a big glitch! It showed pension monies as earned income in NC, we live in Mi and have business in NC, which we just started and took a loss, now it says we owe NC $3,000! Crazy now we have to have someone else do the amendment it just not possible on turbo tax, every time we go through the program it gives us a different amount owed??!!! What a waste of 149.00

    • Ted Needleman

      Said this before, but I’m not sure it’s showing up. Pension income, in most cases is TAXABLE income. Unless the taxes are paid when the pension account is funded, taxes have to be paid when the money is withdrawn (i.e.-paid to you).

      There are exceptions which are discussed in an IRS publication. If part of the pension payments are NOT taxable, they are reported in a separate box on Form 1099-R.

      Regardless of where on the return these payments to you appear, if they are taxable (and they probably are), they get folded into the AGI (adjusted gross income) and are taxed at the same rate as other taxable income.

      If the software made a computational error, TurboTax has always claimed that they will refund interest and penalties. But if they screwed up and you actually DO owe more taxes, unfortunately, that’s in your lap (and wallet).

      Intuit has had some years where there have been computational errors, especially at the start of the filing season. So have other vendors. But the ultimate responsibility for filing an accurate return is yours, not the software’s. Even if you’re using a paid perparer, if there’s a mistake and you owe tax, you are responsible for those taxes, not the preparer.

      Sorry, but that’s the way it is.

  5. pspdale

    Turbo Tax is the worst. Customer service is the worst. I have used it for years and this year they have really fallen behind. No one a customer service has a clue when asked a question. I will not use them again. I am now waiting for a refund, but they probably don’t even know how to do that. !!!!!!!!!!!!!!!

  6. mainiac5

    I’ve used turbotax for many years. It was a ritual, buy turbotax deluxe, then when the dust of the new year settled around the end of March, do my taxes and efile the Fed and mail in the state. This year, with computer (satellite connection), printer etc problems I was a little late and also upset that my turbotax deluxe did not have include, and I was forced to cough up another $44.99 +tax. Maybe HR block next year