Since tax season is upon us (and dare I say for most tax refund season!), I though it would be helpful to do a quick series on how to use Turbotax.com and all of its features. Certainly there are other ways to file and a few cheaper alternatives. This is especially true if you have a relatively simple return with few exemptions, deductions, or credits (more on the difference between these in a follow-up post to come). For extremely complex returns, or for high net worth individuals, it is definitely best to see an accountant. For most folks though, I think Turbotax hits the sweet spot of functionality and robustness. Even the Treasury Secretary Tim Geithner famously (mis)used Turbotax which got him in a bit of hot water at his confirmation hearing. Still, despite the Treasury Secretary’s problems, I have been using it for years. Here are a few simple steps to take in order to use Turbotax with power and ease:
1. Keep Good Records.
During January and February your mailbox will be flooded with W-2 income statements and all kinds of other tax items from banks, investment accounts, mortgages, and student loans. My system when I get one of these is just to throw them in a big envelope or file folder. I don’t bother to think about them or sort them until I sit down to do my taxes. Nowadays it is important to also double check all of your online accounts, especially if you do not use the account during much of the year. If you opt for paperless billing (as I do on most of my accounts), you may have also opted in for paperless tax records as well. This means you have to find the document or tax statement page of your online account and make sure you have the information. The most common thing to miss with this could be relatively small amounts of interest or dividend earnings in the form of 1099-DIV or 1099-INT. It is very important not to miss income that is taxable.
More lucratively for you, of course make sure you also keep good records of all the tax deductions, exemptions, and credits you are claiming. Records that may qualify you for the $2500 child tax credit, for charitable donations, and for mortgage interest and local property taxes are important not to miss as they could equal money in your pocket. Remember, though, that if you are a wage earner it is likely that the government already has more than enough of your money already so you want to make sure to list all of these tax benefits and keep track of them in order to get the largest return possible. Turbotax can’t peer into your soul and know what you deserve (although it tries its best through its Q&A format), so be sure to keep the paperwork together!
2. Go to Turbotax.com and pick the best package for you.
Turbotax has a pricing system that scales up based on the complexity of your returns. The simplest is slightly misleading in that it is only free for the Federal return, you will have to pay if you file your state return through the software program, as I imagine most would like to do.
Most folks can simply use the deluxe option unless you have some sort of business income either from a rental property or a small business. I used the Home and Business option this year because of this blog and my tutoring business that I run. I have probably used all versions of the program over the years and have found them all to be broadly similar and effective.
Do note that many credit card portals offer points multiplier bonuses when clicking through their portal to turbotax.com. Check out your frequent flyer shopping portals and credit card shopping portals to make sure you don’t leave points on the table as using turbotax can run up to around $100.
3. Get involved in the program
Turbotax uses a Q&A format to guide you through your return. If something confuses you don’t be afraid to ask their online service, but also trust yourself. If you have your documents in order and you answer the questions honestly there is no reason you should make a mistake. For more advanced tax preparers you can skip the Q&A and go right to entering the numbers. I have now used this process mostly, but for a long time I went through every question they asked. Both systems work well. This is what their site looks like “inside”.
There are similar pages asking for all of your deductions, exemptions, and credits; as well as for business income if you use that.
4. Walk through the steps and file
Once you are done answering all the questions Turbotax will transfer the information to your state returns. Sometimes your state will have a few follow up questions, often to confirm your identity. Once done with these, click to e-file and Turbotax sends your return on its way! You can elect to have the refund (hopefully) directly deposited into your checking or savings account when it’s ready, or have a check mailed to you. Turbotax also elects to have you pay for their service by using a credit card or having the money taken out of your refund. I always use a credit card for greater cash back earnings.
Have you used Turbotax? What has your experience been like?