Are you ready for tax season? For freelancers, that means gathering receipts, figuring out how to maximize deductions, and ensuring you've set aside enough money from your earnings to keep taxes from wiping out your year-end profits. You'll need to decide on tax software, as self-employed taxes can be complicated. This TurboTax review will help you decide if TurboTax is the best tax software for your tax season needs.
5 Must-Know TurboTax Facts Before Deciding
Whether you're a freelancer, business owner, or filing your taxes as an individual, it's hard to see taxes as anything other than a chore. However, while death and taxes are the only sure things in life, you can make the process easier with TurboTax. Here are five essential things to know before deciding if TurboTax is the best tax software:
- The Money-Back Maximum Refund Guarantee – Much like every other tax service, TurboTax guarantees you'll get the biggest refund possible in 2022. They have a 100% accuracy guarantee and double-check your return to ensure there are no errors. In addition, the guarantee states that if you find a bigger tax refund using a different service or have a lower tax payment, then TurboTax will refund your fees for using their software.
- TurboTax is Mobile-Accessible – Our world is becoming more mobile-friendly. TurboTax provides a mobile version of their software that you can use on the go, whether you're filing taxes as an individual or for your business. The company's software is accessible on Apple or Android devices.
- TurboTax Has a Tier for Everyone – Whether you want a simple e-filing experience or need to dive deep and customize deductions, TurboTax has it all. The company offers various tiers, so you can pick the one that best fits your needs.
- Live Tax Advice – If you're stuck on a tricky question or need help filling everything out correctly, TurboTax offers live advice from CPAs and enrolled agents over the phone or via chat. They also have a helpful searchable database of frequently asked questions that can help when you're stuck.
- Pay-With-My-Refund Options – If you know it's going to be a good year, and you'll be getting something comparable to a small loan back on your tax return, then you can pay your TurboTax fees with part of it. Many users have mentioned that the fee for using this service is usually $39.99.
TurboTax Review of Top Features
People dread tax season, but it would be challenging to find someone that dreads it more than a freelancer. Because freelancers are self-employed, their filing status means they have to handle taxes differently. TurboTax provides tailored features designed to give freelancers everything they need.
Small business owners have taken advantage of TurboTax for years, and now freelancers can too. Let's discuss some features that make TurboTax one of the most popular tax preparation software options.
Question and Answer Guidance
TurboTax's software uses a simple question-and-answer format to guide you through tax filing. For example, freelancers might be asked questions about their income, deductions, expenses, etc.
The software will then use those answers to guide you through the filing process and ensure you don't miss any deductions that may apply to your tax situation. Furthermore, if you don't understand some of the questions, you can click on the information pop-up and get an explanation from the TurboTax digital assistant.
Expert Tax Assistance
As mentioned, freelancer taxes are different than the average person's. Therefore, there may be some tax situations where only tax professionals can help; fortunately, users who upgrade their package with TurboTax Live will get expert advice on what they should do. With TurboTax's expert tax assistance, you can get help from CPAs or enrolled Agents to answer any questions.
They can answer your most complicated questions and help guide you through the process to ensure nothing is overlooked. Furthermore, they offer a one-on-one review of your return to ensure it's complete and that you take advantage of any tax deductions or credits. If you start your return intending to DIY it but change your mind, you can upgrade to TurboTax live anytime.
Related Post: Freelance Taxes – How to Ensure Your End of Year Profit Doesn't Disappear
Tax Form Integrations
If you're a freelancer, chances are you have several different tax forms associated with your income. For example, if you report income from rental properties or investments, you'll be dealing with several forms that need to be submitted along with your federal and state return. Fortunately, TurboTax integrates the 1040 Schedule C form into its online software and other popular schedules.
Additionally, they also offer integrations with self-employment forms like 1099-MISC and 1099-K. TurboTax online can connect and download your information from your employer or financial institution, no matter which tax form you need. Furthermore, some integrations can speed up the process considerably and prevent any errors that would hold up your tax refund.
TurboTax is one of the internet's most flexible tax services online today; the company has worked hard to provide freelancers with the same level of tax filing ease and accuracy as everyone else. With more integrations like Mailchimp, Uber, Square, and Lyft, filing your self-employed tax return should be a breeze. In addition, you can do your federal and state returns by integrating these apps' information into the TurboTax website.
There are several changes to TurboTax; some might attribute them to the ever-changing landscape of the financial world. This includes the addition of cryptocurrency support. This year, in 2022, TurboTax users will have to report any digital currency investments they made over the past year.
While there was limited interest in Cryptocurrency early on, the company worked on its tax tools to better incorporate this increasingly popular trend. Crypto investors can now integrate their wallet information into the software and download it directly from exchanges like Coinbase, Gemini, or Kraken. TurboTax is one of the first leading tax service providers to partner with the cryptocurrency exchange.
Cryptocurrency is seen as being highly volatile, and its newness has helped it avoid any regulation. As a result, it is essential to report any cryptocurrency investments accurately to avoid any penalties or auditing.
The benefit of using TurboTax is that it can provide tax support and guidance to freelancers who may not understand the implications of cryptocurrency investments. The IRS treats Cryptocurrency like property, even though it's a virtual currency; therefore, capital gains and losses would apply.
TurboTax online also includes easily explained tax guidance, which is great for freelancers who may not have experience dealing with their taxes. However, depending on your tax situation, there could be more complicated terms that you will have to know.
Luckily, the company makes tax filing easy and breaks each step down into more manageable terms. Without a professional, most people would be lost, unable to navigate their tax documents to find the correct information.
The TurboTax approach takes the complexity out of the equation by offering comprehensive explanations about each line item on your tax returns. If you play your cards right, then it's likely that you won't need a tax professional at all.
TurboTax's calculators for retirement contributions prevent you from accidentally over-contributing to your account and can also be used to calculate depreciation expenses. Depreciation is a common concern for self-employed individuals. The tax service's calculators can help you determine how much depreciation to claim on your taxes and estimate any potential savings from claiming it.
Hiring a tax expert isn't necessary, but it's always helpful. Many users leverage the online version to tackle their taxes but don't get the same level of advice and guidance as those who work with a tax expert. Some TurboTax products are also more expensive than similar services, and they can be confusing to navigate if you're not familiar with filing your own taxes.
Overall, TurboTax is an excellent tool for freelancers and small businesses who don't have time to go through their own taxes line-by-line; however, it's important to remember that if you're looking for expert advice and one-on-one guidance, you may want to consider a professional.
TurboTax has made taxes easier for many freelancers and small business owners, but with any significant, full-service tax software, there will be some shortcomings. Most of these issues will relate to the cost of using the software. Let's dive into these issues a bit further.
Paid Tiers are Expensive
If they can get away with it, most people choose the free edition of TurboTax and move on, but there's a reason why TurboTax is one of the most well-known services for tax prep. The service may have a free version, but its premium services, like the TurboTax Deluxe, and Premier packages, make the cost a hard pill to swallow.
Limited Free Filing
TurboTax is free for state and federal taxes, but it's misleading if you ignore the details. In addition, the free filing only applies to simple tax forms and 1040EZs, meaning that if you have more complicated taxes, you will need to upgrade to a paid tier to go with it.
Nowadays, most tax situations force users to consider things like a student loan interest deduction. Unfortunately, this means that free filing is only appropriate for W2 and Social Security Income users. So, in addition to being a freelancer, if you have an HSA, deductible child care expenses, and the like, you won't qualify.
So, if you think your tax situation could let you file your tax return for free, but you're unsure, remember that the question-and-answer guide can help you. Furthermore, if you start your taxes in the free portal, you can't upgrade to a paid version afterward, so know your station before starting your taxes.
Added Fees for Audit Support
H&R Block also offers Audit Support, but users generally have to pay for the service in addition to the other fees regarding the filing service. This can be an additional cost that many users don't anticipate until it's too late. Unfortunately, free audit support is a thing of the past when using a full service like TurboTax.
Users can order higher-tiered plans like the TurboTax Live Assisted Business package and receive one-on-one support involving a Q&A with a tax expert. The company makes it clear that this service is information-based only, and they will not represent you in an instance where the IRS decides to audit you.
TurboTax Pricing and Plans
With TurboTax's versatile tax software, freelancers use online tools to file their paperwork on their own and hopefully get a tax refund, or they can enlist the help of a seasoned tax expert and have them take care of everything.
When users visit the website, there is a DIY category and a category that specifies using real live experts to assist you. In reality, it's all based on your preference, but each class is split into various free, paid, and self-employed versions.
TurboTax Review of Free Edition
The TurboTax free version is one of the most basic tax editions and is only ideal for straightforward tax situations. The free edition deals with unemployment income, limited 1099 interest and dividend income, regular W-2 income from your job, any retirement distributions, the Earned Income Tax Credit (EITC), and the Child Tax Credit (CTC). However, the free version isn't for you if you like to itemize your deductions instead of the standard deduction.
You should also avoid using the free edition if you're trying to take advantage of the deductions or credits involved with student loads. However, audit support is available with the free edition if you need it, and you can import your W-2 instead of manually entering it from scratch. Otherwise, if there's more to your federal taxes than we've already discussed, you'll want to move on to the paid plans.
TurboTax Review of Paid Editions
If you do what many people do, you try to get by with a free version of the tax software. With the question-and-answer format, most people can complete it with relatively no issues. However, having business income can complicate things, so you may consider using a full-service version. Let's discuss these options a bit more to help you decide. The online version is divided into three types of paid services: DIY, TurboTax Live-Assisted, and TurboTax Live Full Service.
The DIY Version
The Deluxe version is the most popular of the three and can help with deductions, retirement contributions, and student loans; itemize your deductions and even enter your mortgage interest or any charitable donations you've made during the year. You'll get step-by-step guidance from tax experts to help you make sure that your return is accurate.
TurboTax Premier will offer the most bang for your buck outside of the TurboTaxLive or Live Full-Service options. Investors, rental property owners, cryptocurrency investors, and the like will have access to over 450 tax deductions and credits, plus product specialists who can answer any questions you might have.
All listed pricing does not include any discounted rates at the time of publication. For the current discounted rates, please visit Intuit's website.
- TurboTax Deluxe – $59
- TurboTax Premier – $89
TurboTax Live Assisted
With this version, you get access to one-on-one support from a tax expert. You can ask questions directly and get real-time answers. This is helpful when trying to ensure you've completed everything correctly. Of course, it's more expensive than DIY and includes a Basic, Deluxe, and Premier, but this is the best option if you're not comfortable doing taxes on your own.
- Live Basic – $89 – this version includes state filing options
- Live Deluxe – $129 – this version requires an additional state filing fee
- Live Premier – $179 – this version also requires an additional state filing fee
TurboTax Live Full Service
You can go for the Full-Service package if you're not confident in your DIY abilities. With Live Full Service, you get a dedicated tax pro with years of experience to help you. TurboTax Live Full Service is instant, secure, available on demand, and thoroughly covers all your bases.
In addition, having a certified tax preparer at your side is quite comforting for first-time filers. If you need to file your state taxes, there is an extra fee, as TurboTax only gives you pricing estimates to file your federal taxes.
- Live Full Service Basic – $209
- Live Full Service Deluxe – $259
- Live Full Service Premier – $369
As you can see, the TurboTax cost goes up as you tack on additional services, but sometimes when you're dealing with things like dividend income on your tax return, you don't have a choice. Unfortunately, the free edition won't be able to help you with those complexities.
TurboTax Review of Self-Employed
The path to a hassle-free federal refund isn't always easy, but TurboTax has a self-employed package, so be ready to pay a hefty price. You get all the features of the other versions plus additional self-employment tax guidance, so you don't forget anything. The self-employed version includes everything the previous versions get, plus many more benefits that are perfect for your average freelancer.
TurboTax Self-Employed Features
This is the right product if you're self-employed, own a side hustle, or are running a small business. Taking care of credits and deductions related to industries like rideshare driving and freelancing makes expenses easy to track with a free subscription to QuickBooks or an integration.
Freelancers could also track the depreciation of equipment, track mileage and vehicle deductions, deduct new business expenses, receive specialized deductions for their business (Home Office expenses or Qualified Business Income), and more. Of course, if you don't want to go the self-employed route alone, you could always use the service TurboTax Live Assisted or Live Full-Service options.
- Self-Employed – $119
- Self-Employed (Live Assistance) – $209
- Self-Employed (Live Full Service) – $399
Who Should Use TurboTax?
TurboTax is a great tool for individuals who want to do their taxes on their own, are comfortable using resources like the IRS website, and understand basic tax principles. It's also useful for those with simple tax situations that don't require extra services.
Those with somewhat complicated taxes
TurboTax can be very useful if you have a somewhat complicated tax situation. It helps by making daunting tasks easier to understand and navigate. As we mentioned, it can help with itemized deductions, filing your state return, understanding the impact of the new tax laws imposed by the IRS, and help you maximize your tax return. The TurboTax Live Assisted tax preparation service is excellent for those needing extra help.
Those looking to find the most deductions
If you want to know about all the possible deductions you qualify for, TurboTax online can help with that. Its expansive database can help you find any deductions or credits you may be eligible for; it simplifies the process.
Those looking to work with professionals while still filing online
The Live Assisted and Full Service versions are for those who want the security of working with a licensed professional but prefer the convenience and comfort of filing online. It helps you stay organized since your professional has the knowledge and experience to help you and can access your information anytime.
Those looking to take advantage of the Child Tax Credit and Earned Income Tax Credit
The CTC and EITC are two of the most beneficial tax credits available to qualifying taxpayers. TurboTax helps you take advantage of these credits; plus, it lets you stay on top of any changes made to either credit throughout the year.
Who Should Not Use TurboTax?
TurboTax is not the right tool for everyone, and there are many alternatives out there that people swear by; usually, people are deterred by the TurboTax cost.
Those looking for the cheapest software
In all honesty, the tax software isn't the cheapest out there. It's great at what it does, but if you're looking to save money, it might be best to look elsewhere. Often freelancers, especially those just starting, use cheaper options like TaxSlayer, Credit Karma Tax, or TaxAct. Most freelancers seek the best-looking tax return possible with the least effort.
TurboTax Review of Customer Service
If you're using TurboTax online, it's relatively easy to reach a customer service representative online or via chat. Their customer service team is available year-round and can help with any issues you may have and answer any questions about filing your taxes.
Additionally, if you're using the Live Assisted or Full Service version, your tax professional can provide answers and advice whenever necessary. Users can also speak to a TurboTax Expert or a CPA; however, free editions would need to add the benefit to their plan.
TurboTax isn't the only option for freelancers; companies like H&R Block, Liberty Tax, and FreeTaxUSA can save you a lot of money if you shop around. Alternatively, there are also newer players in the game, like TaxAct. All of these options offer similar features, but each has its own unique strengths and weaknesses. Let's dive into several of them.
H&R Block is one of the oldest and most well-known tax preparation companies. It offers software that can prepare and file taxes online if you're comfortable doing so; however, they also have a network of retail locations where you can have your taxes prepared by an H&R Block representative in-person.
Many users enjoy using H&R block because it offers more free features, and the expert help is top-notch. Some of the free features include Audit Support and Earned Income Credits.
H&R Block has many attractive features, but it seems that people enjoy a huge tax return about as much as they enjoy Refund Advance Loans. While both TurboTax and H&R Block offer this option, each does it differently. H&R Block loads the funds onto their Emerald Prepaid Mastercard while TurboTax utilizes Credit Karma Money.
If you're looking for a live full service, you'll undoubtedly pay less than you would for the TurboTax Live Full Service package. The service's plan prices include the following:
- Free – $0
- Deluxe – $49.99
- Premium – $69.99
- Self-Employed – $109.99
TaxSlayer is another excellent option for those looking to file their taxes online. It offers a free version of its software that can be used to prepare and file simple federal and state tax returns, as well as several tiers of paid services with more features.
TaxSlayer also has a network of professionals you can work with if you want to utilize their help; everyone can enjoy unlimited guidance from said experts. If you used the service from a previous year, you could import those taxes into the software. Its classic plan is great for a comprehensive tax service without spending a fortune to get things like the child tax credit or the EITC.
The highly structured service could be a more affordable replacement for H&R Block or TurboTax. Freelancers will get some great use out of the software while receiving helpful tax tips along the way.
The available TaxSlayer plans are:
- Simply Free – $0
- Classic – $19.95
- Premium – $39.95
- Self-Employed – $49.95
TaxAct is a great option for those looking for a low-cost alternative to TurboTax. The software is available online, although the cost of their service varies depending on which one you choose.
TaxAct allows freelancers to prepare and file their taxes easily; however, if you require more help, they offer an online customer service center. There are also some helpful resources, such as a tax calculator and free email support. Everyone using TaxAct's service also gets access to TaxAct's Xpert Assist service, which is free; there's no catch.
The available TaxAct plans are:
- Free – $0 + State add-on
- Deluxe – $24.95
- Premier – $34.95
- Self-Employed – $64.95
Each plan has an additional fee for filing your State tax; it's $39.95 for the Free program, and every other plan has a $44.95 state filing fee. So TaxAct is best for freelancers looking for some of the lowest rates.
If you need a package dealing with self-employment income, you might need to use something different. In addition, if you're a freelancer or a business owner and your business is expanding, you may need to take a different approach to tax preparation and consider TaxAct's Business and Professional tax bundles.
TurboTax Review Wrap-up
TurboTax is the industry standard for user-friendly tax software. It's easy to use, but more importantly, it has partnerships and integrations that automate most of the tax filing process. As a result, TurboTax would be the top choice for nearly all freelancers if it weren't for the cost.
However, lower-priced options like TaxSlayer Classic and FreeTaxUSA may be better alternatives for those on a budget. As a solid alternative for side hustlers, we recommend H&R Block Premium.
Overall, we believe that TurboTax is the best pick for landlords, cryptocurrency investors, traders, and stock investors. The time saved is usually valuable enough to offset the slightly increased cost for people with complex taxes.