Let's do Taxes

HideIMPORTANT NEWS: The IRS has officially pushed out this year’s tax filing and payment deadlines from April 15 to July 15, 2020 due to the ongoing COVID-19 Coronavirus pandemic. Learn more on how this will affect your tax return.

TurboTax 2020 – Which Version to Choose?

Posted by
/

This year’s TurboTax Online product selection is relatively narrow, and that is a good thing. In prior years, TurboTax may have experimented by expending or shrinking the available options. It appears the experience has yielded the optimal portfolio that is easy to understand and not overwhelming. Even a quick glance at it will give you a pretty good idea which version will most likely be suitable for you.

Even though TurboTax has expended number of ways to prepare tax returns, it is still mainly associated with the online self-preparation of taxes. This category is offering the following four versions this year: Free Edition, Deluxe, Premier, and Self-Employed.

TurboTax Free Edition

Free Edition is designed to handle the straight forward tax returns. Many working taxpayers with families and house payments will probably not qualify to use it, but there are millions of young workers joining the labor force who will certainly benefit from this free product. If you have a job that issues a W-2 form summarizing your income and taxes withheld by the employer, this product is for you. It simply translates the information from the W-2 to the tax return. Additionally, it allows to claim the Earned Income Tax Credit. Once you answer questions about your life situation, it searches for and applies all the pertinent credits and deductions. TurboTax stands by its Maximum Refund guarantee. The free version is really helpful to many – by not having to pay the filing fee and state and federal filing, you get to keep most of what you earned.

TurboTax Deluxe

Deluxe is the most popular online version of TurboTax as it applies to the most common tax scenarios. Although it’s geared towards optimizing tax credits and deductions, it’s much more than that. For once, you can get a jump start on taxes by importing last year’s returns. This automatically populates fields about your personal information saving significant amount of time. You still have to review these questions to verify that the same information still applies to you or indicate any major changes, such as having a baby or purchasing a house. And if you happened to buy a property, Deluxe version analyzes all aspects of mortgage and property tax deductions. Once you complete this section, you can see the real impact these deductions have on your taxes as the amount of your refund (or tax liability) changes. Additional features included in this version are: reporting education expenses including student loans management, tracking and reporting charitable donations, and reporting miscellaneous income from side jobs.

TurboTax Premier

Premier expands on the features of Deluxe version by accounting for income and expenditures related to rental property and investments. Reporting investing activities used to be a cumbersome project that has been streamlined and all that information can now be easily imported. Regardless of number of trades you make, TurboTax will import it all in one fell swoop. It also takes care of calculating cost basis of your investments when reporting income or losses. Besides facilitating reports of investing in the stock and bond markets, it lets you report the investments in cryptocurrencies. The IRS has been very clear on its intent in collecting taxes on crypto investing income. This issue became very prominent during the meteoric increase in the price of most of cryptocurrencies and the IRS wants to ensure it collects its portion of the profits.
If you invested in rental property or generated rental income, Premier has a step-by-step guidance on how to set up your rental business, report incomes, calculate and report rental depreciation, and help identify all the related expenditures.

TurboTax Self-Employed

Last but not least is the Self-Employed version. This is your go-to choice to properly report your business income. This version isn’t only limited to contractors and freelancers, but it also applies to taxpayers with a mix source of revenue. In short, it’s best for those who report income from W-2 and 1099-MISC. TurboTax will search for credits and deductions depending on your life situation, but equally important, it will identify types of expenditures applicable to your line of business, covering tens of industries, and ensuring the maximum refund or minimal tax liability. Self-Employed version tries to automate the process of entering data as much as possible. To achieve that, it can import your prior year returns from TurboTax or other tax preparation software. You can upload your W-2 by taking a picture with your phone and now that feature has expanded to include Forms 1099-MISC. Finally, you can track mileage and other job expenditures with the help of QuickBooks Self-Employed. QuickBooks is a separate software that is very automated and integrated with TurboTax. It helps business owners track income and expenditures; by being integrated with TurboTax it helps save time and maximize credits and deductions by capturing all of the business-related costs.

Leave a comment