TurboTax Deluxe; at the top of the heap again

TurboTax has been the leader in tax preparation software as well as my personal choice for a number of years. In previous years I have compared it to TaxCut to see how they stack up, and the comparison was no contest in favor of TurboTax. The software has evolved over the years with several offerings from Basic to Home and Business, and depending on your needs you should choose the package that is right for you. In my particular case, the tax year of 2007 saw several changes in my life; we moved from one state to another in response to a change in position, necessitating a move from one house to another, for starters. The interview-style step-by-step process that TurboTax has used for completing the forms is ideal for my situation, and TurboTax Deluxe is the software choice that best fit my needs.

Basic, Deluxe, or Premiere?

TurboTax comes in three iterations for the desktop user. Basic is for those folks who use a straightforward 1040EZ or 1040 form only with little to no outside investment changes or major deductions to worry about. The basic form does not include the state downloads, so for most folks this will not be sufficient if they want to file online for both State and Federal. For a few states (Wyoming and Alaska come to mind) this is probably acceptable, and for those with extremely straight forward returns filling out the State forms in paper is probably easy enough. If you have deductions galore or large medical expenses that require itemizing you will probably want to step up to the Deluxe edition, while those with Schedule C businesses and major outside investment expenses and gains would best benefit by using either the Premiere or Home and Business version.

In past years when my wife and I sold land investments for profit we needed to step up to the Premiere edition to take advantage of the higher-power program; for this year even with selling and buying a house and changing states of residence the Deluxe version was more than enough for me.

System Requirements

Before paying for any software package, you should double-check the system requirements to run the software versus your intended system of operation. In the case of TurboTax Deluxe 2007 the requirements are as follows:

200MHz CPU or higher For PC, PCG3 or greater for Mac
Windows 2000 or greater, Mac OS X (10.2.8) or greater
128MB RAM
265MB Hard disk space
SVGA monitor with 800 X 600 res or higher
Internet connection
IE 6 or higher
Connected Printer

Purchase/Install

While in years past I have downloaded to software, this year I found myself strolling through my local Sam’s Club and noticed the boxed copy sitting on the shelf for 39.99, or five bucks off the online version. Not bad! I bought the boxed set of the Deluxe version, as I had already done my homework and knew that it would be sufficient for all my needs. This was early January, so I hadn’t even received all of my forms yet, but that was of little consequence at the time. No time like to present to get prepared!

Installation of the software (PC version for me) went extremely quickly on my Dell 521C computer system. The software loaded itself, checked for dependencies and then updated itself all in one easy step.

Interface/Use of the software

As mentioned above, TurboTax Deluxe uses the popular interview format for the user-interface, asking applicable questions as you step through the process. The user can choose to either take a step-by-step approach to the interview or choose specific questions to answer. This worked out well for me, as I used the entire interview the first time through and plugged in estimates as I went for the forms I didn’t have. As the forms arrived in the mail (W2’s, 1099-misc, 1099-int, etc.) I would open the program back up, check for updates, and go to specific areas that I now had the appropriate information for. Once I had all the forms and whatnot to complete the process, I again took the step-by-step process through it’s entirety to ensure that I had not skipped over a critical input. All in all a very nice setup!

TurboTax continued the feature allowing the user to choose to view the forms as they enter the data. In this mode the bottom half of the window will exhibit the applicable tax forms with the new data included, and a running tally of either amount owed or amount of refund is updated in the upper left corner. Present on each screen are also context-based help screens where the user can plug in questions to basic tax situations; supposedly on the other end is a live tax professional waiting to answer your question. I can’t comment on the adequacy or accuracy of this help, as I didn’t need it. A testament to the thoroughness of the TurboTax Deluxe program, in my opinion.

This year TurboTax has added a few graphics and video walkthroughs for those who like the eye-candy; considering that the system requirements haven’t changed much in comparison to past years, this hasn’t added much to the horsepower needed to run the program. While the application could run well without the eye-candy, I suppose that the average consumer finds this flashy stuff important…

Federal Return

Upon creation of a new return, the user will be prompted with a screen asking if you would like to upload the past year’s TurboTax return, if it is on your PC. As I have used TurboTax for a number of years, I will do this. The program then loads last year’s return for comparison and also loads all pertinent information (address, title, place of employment, names of dependents, and so on) into this year’s return so the manual entry is reduced. One niggling matter for me is that this has and hasn’t worked in the past years. While it is nice for the carryover of the information from the previous year to the new return, for the past few years I have found that the numbers carried over are not correct. The AGI from last year was incorrect, as well as the fact that I itemized as opposed to taking the standard deduction. While this hasn’t bit me yet, it is something to watch out for in your own situation.

TurboTax Deluxe walks you through the information needed in a methodical way beginning with income from W-2 forms, investments, business income and the like. For some folks the W2 information may be accessible by download, but my employer doesn’t partake in this. The next step is to add any miscellaneous income such as business or hobby income, and as I had entered this information last year it was easy to simply update the appropriate forms. Once this was all completed I was ready to move on to the deductions side of things.

For deductions, TurboTax will walk you through the typical deductions such as interest on a home mortgage, property tax, student loan interest and the like. The Deduction Maximizer tutorial will walk you through finding more and more deductions that you might not think of, although in my situation I found that there weren’t any for me that were not already in the form. TurboTax imports all of my medical expenses and charitable donations directly from Quicken for my situation. With good health insurance, however, I found that I wasn’t paying enough in medical out-of-pocket to make it worth my while to mess with. Charitable donations include many things that most folks wouldn’t think of, and the maximizer certainly can help some in this situation. If you fit the requirements for Alternative Minimum Tax or Earned Income Credit the program will take care of this as well, although neither scenario applies to my tax situation.

Having input all the information needed to determine a refund or payment, you are now ready to move onto the State return.

State Return

For most the state return section will be relatively quick and easy. The lion’s share of the work was completed in the Federal return portion, with only those questions specific to each state remaining. In my case I had moved between states in the past year, so I had to download an additional state return (Deluxe comes with one free) and go through the process of splitting out the earnings per state and answering the questions. In all cases my answers were no, as most of the additional questions related to alternative fuel exemptions, Native American status and farm/ranch ownership. Being the Caucasian, gas guzzling, working-for-the-man person that I am, I found that all of the special situations didn’t apply… That being said, the program has the help and running tally just as with the Federal portion of the program, giving the user a real-time check on how each data entry affects the return.

Filing

As I said earlier, I ran the program from front to back the first time I sat down, entering estimates for the forms I didn’t have yet for placeholders. As the forms came in, I would open the return to the appropriate place and plug in the new data, save and close. Once I was certain I had all appropriate information I ran through the checks again from front to back, chose to file and ran through the auto-checking process. TurboTax deluxe will review your return and let you know of any flags, of which there were three for me. For some reason during the data transfer a social security number for one of my kids didn’t transfer across and the program flagged that. Other than that it was simple checking of boxes that hadn’t been checked, etc. Next the program will check for audit health, giving a visual indication of your chances of an audit (aside from a random). My visual came up in the extreme green section, indicating two things; 1. I am not at very much risk of an audit and 2. I should probably look into other ways of tax avoidance!

TurboTax has given away the filing fees in the form of rebates in the past, although for this year I didn’t see that option. I chose to file electronically for Federal and both states, paying for the service via a credit card. I chose to have my Federal and state returns direct deposited into my checking account. The process was easy, painless and resulted in a very nice return for my family.

Overall

I have used TurboTax for a number of years, and this year’s experience didn’t dissuade me from recommending the product yet again. For those like me who will be itemizing deductions and do not own a business or lots of other investments, Deluxe is the package to go with. I will use it again next year and recommend you to do the same.