So it seems like every year I get asked about filing taxes from a friend, and they want to know, if I have ever used the TurboTax or equivalent software. The next thing out of their mouth is always how much the software costs, and I laugh every year. Do people not realize what is available to them…for FREE?
Several years ago (at least 4-5 years ago) I started using TurboTax online, Free Edition. It is absolutely free for a basic Federal return, and includes free e-file. If you have any special circumstances, such as you sold off some stock in the past year, then you will need to pay to upgrade, but that is only under special circumstances, which the free software will tell you at that point you need to upgrade.
Keep in mind throughout the free version of TurboTax online, they try and get you to pay to upgrade the software to find additional deductions, etc., but you do not need to upgrade unless absolutely necessary based on your tax situation. Last year was the first year I actually had to pay for the software upgrade because I sold off some personal stock. Every other year I have been able to utilize the free online version, including free Federal e-file. The software also calculates the State return, and at the end, TurboTax wants you to pay to file the State portion; however, in my State of residence, it is totally free to go to the State’s website and file my tax return electronically.
To begin your free tax filing process, go to TurboTax’s website. You will need to register for an account, creating a user name and password. The website will then ask you whether you want to use TurboTax Free Edition, or whether you want to upgrade. Choose the free edition to start out; you can always easily upgrade throughout the process. You will then proceed along an easy to understand path towards filing your return.
You will enter in all of your personal information. The one drawback, I have to admit, is that year to year, the free online version of the software does not remember all of your information. So you will need to enter it all in again. I remember when I used to use the TurboTax software my dad would purchase and install on his own computer, the software would import all of the previous year’s information. If you actually pay for one of the TurboTax versions, the advantage is that the program will import the previous years return. After entering in all of your personal information, you will proceed along the path with filing your Federal portion of the tax return.
You will enter in all of your W-2 information, interest and dividends, etc. The software will automatically recommend whether it is better to file jointly or separately (if you are married), as well as tell you whether it is better to itemize or take the standard deduction. As mentioned above, the software will automatically calculate your State return as well, but there is no need to pay for the upgrade if your State allows you to file for free on their website.
The moral of the story is do not pay for tax filing software unless you need to. The free options out there are more than adequate for the normal tax filer. H&R Block, and various other tax companies also offer free versions of their software if you are not partial to TurboTax.
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