"How much money does TurboTax take?" This is a question many people ask when tax season rolls around, and the answer, like taxes themselves, can be a little complex. It's not a straightforward flat fee for everyone. Instead, TurboTax offers a range of products and services, each with its own cost, designed to cater to different tax situations.
Are you ready to unravel the mystery of TurboTax's pricing and find the perfect fit for your tax filing needs? Let's dive in!
Step 1: Understanding the Core TurboTax Offerings
TurboTax typically offers several tiers of service, both online and via downloadable software, each designed for increasing levels of tax complexity. The prices can also fluctuate throughout the tax season, often increasing as the filing deadline approaches.
Sub-heading: The "Free" Tier - Is It Really Free?
TurboTax Free Edition: Yes, there is a free option, but it's crucial to understand its limitations. This version is generally designed for taxpayers with simple tax returns.
Who qualifies? Typically, this means individuals who are filing a simple Form 1040, taking the standard deduction, and whose income primarily comes from W-2 wages. It also covers common credits like the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), as well as student loan interest deductions.
What it doesn't cover: If you have itemized deductions, investment income (stocks, crypto, bonds), rental property income, self-employment income (Schedule C), or other more complex tax situations, the Free Edition won't be sufficient. You'll likely be prompted to upgrade.
Important Note: TurboTax previously participated in the IRS Free File program, but has since withdrawn. While they still offer a free edition, it's distinct from the IRS Free File program. There have been some controversies regarding how "free" their free offering truly is, with past accusations of hiding the free option from search engines. Intuit (the parent company of TurboTax) has been prohibited from advertising anything as "free" unless it's free for all consumers or clearly discloses the percentage of taxpayers who qualify.
Sub-heading: Paid Tiers for More Complex Filers
Beyond the Free Edition, TurboTax offers several paid tiers, with prices generally increasing based on the complexity of your tax situation and the level of assistance you require.
TurboTax Deluxe: This is often the most popular paid option.
Who is it for? Ideal for individuals who want to maximize their deductions and credits, especially if they have itemized deductions like mortgage interest, charitable contributions, or medical expenses.
Typical Cost (Federal): Expect to pay around $69-$89 for the federal return.
TurboTax Premier (or Premium): This tier is for those with investments and rental properties.
Who is it for? Individuals with income from investments (stocks, bonds, ESPPs, cryptocurrency) or rental properties (Schedule E).
Typical Cost (Federal): The federal return for Premier/Premium can range from $115-$149.
TurboTax Self-Employed: Designed specifically for freelancers, independent contractors, and small business owners.
Who is it for? Anyone with self-employment income, business expenses, or who needs to file a Schedule C. It helps identify industry-specific deductions and maximize your tax savings.
Typical Cost (Federal): This is usually the most expensive DIY option, often around $129-$169 for the federal return.
TurboTax Business (Desktop Only): For multi-member LLCs, partnerships, or S-Corps.
Who is it for? This is a desktop-only software designed for more complex business structures, requiring forms like Form 1065 (for partnerships) or 1120S (for S-Corps).
Typical Cost (Federal): This can cost around $180 (one-time purchase). Note that this version often doesn't offer the same "Live Assisted" options as the personal online versions.
Step 2: Factoring in State Filing Fees
This is where many users get surprised. The federal filing fee is almost always separate from the state filing fee.
Online Editions: For most TurboTax online paid editions (Deluxe, Premier, Self-Employed), expect an additional fee per state return. This can range from $39 to $64 per state. So, if you live in a state with income tax, you'll need to factor this into your total cost.
Desktop Software: If you purchase the downloadable desktop software, it often includes one free state program download. However, if you need to file in additional states, there will be an extra charge per state program. Furthermore, while printing and mailing a state return is usually free with desktop software, e-filing a state return often incurs a separate e-file fee, typically around $25.
Step 3: Considering Add-on Services: Where Costs Can Skyrocket
TurboTax offers several optional add-on services that can significantly increase your total cost. While some can provide peace of mind or convenience, they are not always necessary for every filer.
Sub-heading: TurboTax Live Assisted & Full Service
This is a major cost driver, offering varying levels of expert help.
TurboTax Live Assisted: With this option, you prepare your taxes yourself, but you have unlimited access to a tax expert (CPA or Enrolled Agent) who can answer your questions, provide guidance, and even review your return before you file.
Cost: This can add a significant amount to your bill, often doubling or tripling the cost of the DIY version. For example, a Deluxe Live Assisted might be $89-$119 (federal), while a Self-Employed Live Assisted could be $219-$260 (federal). State fees are additional.
TurboTax Live Full Service: For those who want to hand off their taxes entirely. With this service, you upload your documents, and a dedicated tax expert prepares and files your return for you, start to finish.
Cost: This is the most expensive option, as you're essentially hiring a tax preparer. Prices can range from $179 up to $389 or more for the federal return, depending on complexity, plus additional state fees.
Sub-heading: Audit Defense
Cost: Offered through a third-party company called TaxAudit (the exclusive provider for TurboTax), this service typically costs around $49.99 - $60 annually.
What it provides: If you're audited by the IRS or a state taxing authority, TaxAudit will provide professional representation to handle communications and guide you through the audit process.
Is it worth it? While it offers peace of mind, IRS audits are relatively rare, especially for simple returns. Fewer than 0.3% of taxpayers are audited. Consider your personal audit risk before opting for this. It also doesn't include court representation or help with fraud cases.
Sub-heading: Refund Processing Service (Pay with Refund)
Cost: This convenience fee allows you to pay your TurboTax fees directly from your federal tax refund instead of upfront with a credit card. It usually costs around $40-$45.
Consideration: While it seems convenient, it's an extra charge for a service that simply defers payment. If you have a credit card, paying upfront will save you this fee.
Step 4: Understanding Price Fluctuations and Discounts
TurboTax pricing is dynamic and can change throughout the tax season.
Early Bird Discounts: You'll often find the lowest prices at the beginning of the tax season (typically December to January).
Price Increases: Prices tend to increase as the April tax deadline approaches. Filing early can save you money.
Promotional Offers: Keep an eye out for special promotions, especially if you didn't use TurboTax in the previous year. For example, sometimes there are limited-time offers to file federal and state taxes for free via their mobile app for new users, regardless of complexity.
Desktop vs. Online: Sometimes, the desktop software can be a more cost-effective option if you plan to file multiple returns (e.g., for family members) or if you need to file multiple state returns, as it often includes one state program and cheaper e-file fees for additional states.
Step 5: Calculating Your Estimated Total Cost
To get a clearer picture of how much TurboTax will "take" from you, consider these questions:
What is the complexity of your tax situation? (Simple W-2, itemized deductions, investments, self-employment, etc.)
Do you need to file a state return? (Most people do if their state has income tax.)
Do you want expert assistance (Live Assisted or Full Service)?
Are you interested in add-on services like Audit Defense or paying with your refund?
Example Scenarios:
Scenario 1: Simple Filer (Qualifies for Free Edition)
Federal: $0 (Free Edition)
State: $0 (Free Edition)
Add-ons: $0
Total: $0
Scenario 2: Itemized Deductions (Deluxe Online)
Federal Deluxe: ~$69 - $89
State (1): ~$39 - $64
Add-ons: $0
Total: ~$108 - $153
Scenario 3: Self-Employed with Expert Help (Self-Employed Live Assisted)
Federal Self-Employed Live Assisted: ~$219 - $260
State (1): ~$59 - $69
Add-ons (e.g., Audit Defense): ~$60
Total: ~$338 - $389
As you can see, the cost varies wildly depending on your choices.
Step 6: Reviewing Your Fees Before Filing
TurboTax is transparent about fees before you file. You won't be charged until you're ready to submit your return.
Always check the "My Fees" or "Review Fees" section within the TurboTax program before finalizing your purchase. This will show you a detailed breakdown of all federal, state, and add-on charges.
Don't hit "File" until you're satisfied with the breakdown!
By following these steps and considering your individual tax situation, you can accurately estimate how much money TurboTax will "take" and make an informed decision about the best filing option for you.
10 Related FAQ Questions
Here are some frequently asked questions about TurboTax costs, with quick answers:
How to reduce TurboTax fees?
Choose the lowest-tier product that fits your tax situation, avoid unnecessary add-ons like "pay with refund" if you can pay upfront, and file earlier in the tax season to take advantage of potential lower prices.
How to know if I qualify for TurboTax Free Edition?
You generally qualify if you're filing a simple Form 1040, taking the standard deduction, and only have W-2 income, limited interest/dividend income, and common credits like EITC or CTC. If you have itemized deductions, investments, or self-employment income, you likely won't qualify.
How to find out the exact TurboTax cost before starting?
While TurboTax doesn't typically show you the final cost before you start entering data (as it depends on your inputs), you can visit their pricing page on their website to see the current listed prices for each tier (Free, Deluxe, Premier, Self-Employed, Live Assisted, Full Service).
How to switch TurboTax editions if I realize I need a higher/lower tier?
As you enter your tax information, TurboTax will generally prompt you to upgrade if your tax situation requires forms or features not included in your current edition. You can usually upgrade seamlessly within the program. Downgrading is generally not possible once you've entered data that requires a higher tier.
How to avoid state filing fees with TurboTax?
The only way to avoid state filing fees with TurboTax (for paid online editions) is if your state doesn't have an income tax or if you qualify for the free state filing within their Free Edition. For desktop software, you can avoid the e-file fee by printing and mailing your state return, but you'll still need to pay for the state program if it's not included or if you need additional states.
How to cancel TurboTax add-ons if I accidentally selected them?
Before you pay and file, you can typically go back to the "Review Fees" or "My Fees" section within TurboTax and uncheck any add-on services you don't want. If you've already paid, it becomes more difficult, and you'd need to contact TurboTax support.
How to get a refund for TurboTax fees if I'm not satisfied?
TurboTax offers a "Maximum Refund Guarantee" and a "100% Accurate Calculations Guarantee." If you get a larger refund or smaller tax due from another tax preparation method by filing an amended return, they'll refund the applicable TurboTax federal and/or state purchase price. Refer to their guarantees page for specific terms and conditions.
How to pay for TurboTax without a credit card?
You can typically pay for TurboTax fees directly from your federal tax refund using their "Refund Processing Service," though this incurs an additional fee (usually $40-$45).
How to know if TurboTax Live Assisted is worth the extra cost?
It's worth it if you have complex tax questions, are unsure about certain deductions or credits, or want a tax expert to review your return for accuracy and missed opportunities before filing. If you're confident in your tax knowledge, you might not need it.
How to check the status of my tax refund after filing with TurboTax?
Once you've filed, TurboTax doesn't control your refund. You can check the status of your federal refund directly with the IRS using their "Where's My Refund?" tool (irs.gov/refunds) or by calling their hotline. For state refunds, check your state's tax agency website.