Selecting Tax Software Version: Basic, Deluxe or Premium?
Online tax programs such as TurboTax offer multiple versions for different users: basic, deluxe, premium, and even home and business versions. Each type, which is priced according to complexity, is best for a different type of taxpayer. It can be difficult to determine which version will work best for preparing your income tax return. Here's help for deciding on the right tax software version for your needs.
Basic Tax Software
Basic tax software will walk you through preparing a simple return. These programs will generally check for errors and will e-file the return for you. Use a basic version only if you do not itemize deductions. It is the best program to use if you file the federal 1040EZ or 1040A form. Basic programs, such as TurboTax Federal Free Edition, don't cost a penny.
Deluxe Tax Software
The next step up is a deluxe version, which offers help with preparing taxes that include itemized deductions related to mortgages, charitable contributions or other expenses you can write off. Some deluxe versions also cover self-employment taxes and deductions as well. Deluxe versions generally provide more documentation on specific tax topics, both in written and video formats. TurboTax's Deluxe version costs $54.99.
Premier or Premium Tax Software
Taxpayers with multiple investments and rental properties, in addition to multiple deductions, will want to upgrade to a premier or premium level package. This level of tax software offers even more documentation and research resources on all personal income tax topics in written and video format. TurboTax's Premier tax software package is $79.99.
Home & Business Tax Software
If you run your own business, either out of your home or at another location, it will be necessary to use a tax program that accounts for your various sources of income, payouts, investments, and deductions. The program will cover self-employment and help maximize business tax deductions and asset depreciation. Although TurboTax's version costs $104.99, it will likely save you money in the long run.
Note About State Tax Returns and Electronic Filing
State returns aren't always included with tax software for federal returns. Before you buy tax software, verify whether the price includes a state return, or find out if your state offers free online returns. Also, be sure to check on prices for electronic filing if you plan to e-file. The price of tax software does not always include e-filing fees.
Still Aren't Sure?
Once you start your taxes with a given version of an online tax software application, it's usually very easy to upgrade to a higher version if you need to down the line. So if you're deciding between two tiers, start with the lower level one.
Given the relative ease of doing your taxes using TurboTax or another software application, it's no surprise that more taxpayers are going this route. Just be sure to select the right program tier to meet your needs.