Feeling the annual tax season dread creeping in? You're not alone! For many, the question isn't just if they'll file, but how much it will cost, especially when using popular software like TurboTax. Don't worry, we're here to demystify the "how much to file with TurboTax" question with a comprehensive, step-by-step guide. Let's dive in and get you clear on those tax preparation costs!
Your Definitive Guide to TurboTax Filing Costs: A Step-by-Step Breakdown
Understanding TurboTax pricing can feel like navigating a maze, but it's actually quite logical once you know the key factors. The cost primarily depends on the complexity of your tax situation and the level of support you choose.
Step 1: Let's start by figuring out if you can file for free!
Before we talk about any costs, the absolute first thing you should do is see if your tax situation qualifies for TurboTax's Free Edition. Many people actually can file their federal and even state taxes for free, and you might be one of them!
Sub-heading: Do you qualify for TurboTax Free Edition?
TurboTax's Free Edition is designed for taxpayers with simple tax returns. This typically means:
You have W-2 income (from a job).
You are taking the standard deduction.
You might have limited interest and dividend income (Form 1099-INT/1099-DIV), as long as it doesn't require filing Schedule B.
You may be claiming basic credits like the Earned Income Tax Credit (EITC) or the Child Tax Credit (CTC).
You might have the student loan interest deduction.
You may have taxable qualified retirement plan distributions.
What won't qualify you for free filing? Generally, if your tax situation involves:
Itemized deductions (using Schedule A).
Income from self-employment or freelancing (requiring Schedule C or 1099-NEC income).
Income from rental properties or investment sales (including cryptocurrency).
Unemployment income reported on Form 1099-G.
Needing to file additional tax schedules beyond a simple Form 1040.
Pro Tip: Even if you think your taxes are simple, it's always worth starting with the Free Edition. TurboTax will guide you and automatically suggest an upgrade if your tax situation requires forms not supported by the free version. You don't pay until you're ready to file!
Step 2: Understanding the Core TurboTax Products: DIY Editions
If your tax situation isn't simple enough for the Free Edition, you'll likely need to choose one of TurboTax's paid "Do It Yourself" online editions. These are priced based on the features and forms they support.
Sub-heading: TurboTax Deluxe: The Most Popular Choice
This is often the sweet spot for many taxpayers.
Who it's for: Homeowners, those with charitable donations, medical expenses, or other common deductions. It's excellent for maximizing deductions and credits.
What it includes: Everything in the Free Edition, plus support for itemized deductions (Schedule A), and the ability to import mortgage and investment information from participating companies. It helps you look for over 350 deductions and credits.
Typical Cost: Federal fee, plus an additional fee for each state filed. Prices can change throughout the filing season, often increasing closer to the deadline.
Sub-heading: TurboTax Premier: For Investors and Landlords
If your financial life involves investments or rental properties, Premier is your go-to.
Who it's for: Individuals with investment income (stocks, bonds, mutual funds, cryptocurrency), and rental property owners.
What it includes: All Deluxe features, plus accurate and robust investment tax reporting (including Schedule D and Form 8949 for capital gains/losses), employee stock plan support, guidance on rental property expenses and deductions, and an IRA tool. It also allows for automatic import of investment data from many financial institutions.
Typical Cost: Higher federal fee than Deluxe, plus an additional fee for each state filed.
Sub-heading: TurboTax Self-Employed: Tailored for Business Owners and Freelancers
This edition is specifically designed for those earning income outside of a traditional W-2 job.
Who it's for: Freelancers, independent contractors, small business owners, gig workers, and anyone with 1099-NEC income (non-employee compensation) or a Schedule C business.
What it includes: All Premier features, plus guidance on startup deductions, small business and self-employment deductions, and tools to maximize those specific business expenses. It also often includes Quick Employer Forms to create W-2s and 1099s for employees or contractors if needed.
Typical Cost: The highest federal fee among the DIY online options, plus an additional fee for each state filed.
Step 3: Considering Enhanced Support: TurboTax Live Options
If you prefer professional assistance or a full expert review, TurboTax offers "Live" options at a higher price point.
Sub-heading: TurboTax Live Assisted: Expert Help Along the Way
This option gives you access to tax experts for guidance and a final review.
Who it's for: Those who want to do their own taxes but have questions or want the peace of mind of an expert review before filing.
What it includes: All the features of the corresponding DIY edition (Basic, Deluxe, Premier, Self-Employed), plus unlimited access to a tax expert for answers and advice via phone, chat, or one-way video. An expert also performs a final review of your return before you file.
Typical Cost: A significantly higher federal fee than the DIY versions, plus an additional fee for each state filed. The cost varies depending on whether you choose Live Assisted Basic, Deluxe, Premier, or Self-Employed.
Sub-heading: TurboTax Live Full Service: Let an Expert Do It All
This is the most hands-off option, where a tax professional prepares and files your return for you.
Who it's for: Individuals who want a dedicated tax expert to handle their entire tax preparation process from start to finish.
What it includes: You're matched with a dedicated tax expert who will do your taxes, and review them with you before filing. This includes handling all the necessary forms and ensuring accuracy.
Typical Cost: The highest price tier, with the cost varying based on the complexity of your return. This can be comparable to, or sometimes even more than, using a traditional tax preparer.
Step 4: Don't Forget the State Filing Fee!
This is a crucial point that often catches people by surprise. Almost all paid TurboTax federal products require an additional fee for each state tax return you file.
State Fees: Whether you're using Deluxe, Premier, Self-Employed, or any of the Live options, expect a separate charge for your state return.
Desktop vs. Online: For desktop software versions, there might be a lower e-file fee for state returns (sometimes you can even avoid it by printing and mailing your state return), whereas online versions almost always charge a separate fee for e-filing your state return.
Multiple States: If you lived or worked in more than one state during the tax year, you will incur a state filing fee for each state you need to file in.
Step 5: Watch Out for Add-ons and Optional Services
TurboTax offers various optional add-ons that can increase your total cost. Be mindful of these as you go through the filing process:
MAX Defend & Restore / Audit Defense: This service, provided by TaxAudit, offers professional representation if you receive an audit letter from the IRS or a state taxing authority. It's an additional fee (often around $50-$60). While it provides peace of mind, consider if you truly need it.
Refund Processing Service: This allows you to pay your TurboTax fees directly from your federal tax refund. While convenient, it typically comes with an additional processing fee (e.g., $40). If you can pay upfront with a credit card, you'll save this fee.
Premium Services / PLUS Help & Support: These might offer enhanced support options, though many features are now integrated into the Live products. Always review what's included before opting in.
Step 6: Final Price Considerations and Ways to Save
The "final price" is dynamic with TurboTax.
Early Bird Discounts: TurboTax often offers promotional pricing early in the tax season. The closer you get to the tax deadline (typically April 15th), the higher the prices usually become.
Downgrading: If you start in a higher-tier product and realize you don't need its features, you can often downgrade to a lower-priced version before you file, and your already-entered data will transfer. Check the "My Fees" section in TurboTax Online to review your charges and see if a downgrade is possible.
Don't Pay Until You File: For most paid TurboTax online products, you can start your return and enter all your information without paying upfront. You only pay when you're ready to e-file, print, or mail your return. This allows you to explore different options and see the final cost before committing.
Consider Desktop Software: While many prefer the online versions, TurboTax also offers desktop software (CD/download). These often include a certain number of federal e-files and usually one state download, which can sometimes be more cost-effective if you have multiple federal returns to file (e.g., for family members) or prefer a one-time purchase.
In summary, the key to "how much to file with TurboTax" is directly tied to the complexity of your tax situation. Simple means potentially free, while investments, self-employment, and professional assistance will increase your cost.
10 Related FAQ Questions: Quick Answers
Here are some common questions about TurboTax filing costs:
How to determine which TurboTax version I need?
You determine the version you need based on your tax situation. If you have simple W-2 income and take the standard deduction, the Free Edition may suffice. If you itemize, own a home, or have significant deductions, Deluxe is likely needed. For investments or rental properties, Premier is appropriate, and for self-employment or small businesses, Self-Employed is the one. TurboTax will guide you to the correct version as you input your information.
How to file a state tax return with TurboTax?
To file a state tax return with TurboTax, you'll typically select your state after completing your federal return. The software will then guide you through the state-specific questions and forms. Be aware that a separate fee usually applies for each state return filed.
How to get TurboTax for free?
You can get TurboTax for free if your tax situation qualifies for the TurboTax Free Edition (simple Form 1040, standard deduction, basic credits). Additionally, active-duty and reserve military members may qualify for free filing through any TurboTax Online product.
How to lower my TurboTax fees?
To lower your TurboTax fees, first ensure you're using the lowest-tier product that supports your tax situation. Avoid unnecessary add-ons like Audit Defense or the Refund Processing Service. File early in the tax season for potential discounts, and consider if a desktop version might be more cost-effective for your needs.
How to pay for TurboTax?
You can typically pay for TurboTax using a credit or debit card directly through the software when you are ready to file. Alternatively, for an additional fee, you may be able to opt for their "Refund Processing Service" which allows you to deduct the TurboTax fees from your federal tax refund.
How to get a maximum refund with TurboTax?
TurboTax guarantees a maximum refund by guiding you through all eligible deductions and credits. Their software is designed to ask questions that uncover every potential tax saving. While no software can guarantee your maximum possible refund without knowing your specific situation, TurboTax aims to maximize it through accurate calculations and comprehensive deduction/credit searching.
How to get audit support with TurboTax?
TurboTax offers an optional add-on service called "Audit Defense" (provided by TaxAudit) for an additional fee. If purchased, this service provides professional representation and assistance from a tax expert in the event of an IRS or state audit.
How to switch from one TurboTax product to another?
If you've started in one TurboTax product and realize you need a different one (either higher or lower), you can usually switch within the online platform before filing. TurboTax will prompt you to upgrade if your situation requires more complex forms. If you want to downgrade, look for the "My Fees" section or contact TurboTax support for guidance.
How to know if my income level affects TurboTax cost?
Your income level doesn't directly dictate the price of TurboTax, but it often correlates with tax complexity. Higher income often means more investments, self-employment, or other complex scenarios that push you into higher-tier (and thus more expensive) TurboTax products. Simple W-2 income, regardless of the amount, could qualify for a less expensive or free option.
How to use TurboTax for multiple years?
TurboTax retains your previous year's tax data, which can be easily imported into the current year's software, saving you time and effort. While you pay for each tax year's filing separately, having your historical data with TurboTax makes the process smoother year after year.