Should I Use TurboTax Freedom Edition?

Written by James Hirby and Fact Checked by The Law Dictionary Staff  

These days, most American taxpayers choose to file their taxes online or with the help of professionally-designed computer software products. There are dozens of tax-filing programs that exist both in the cloud and in "hard" form. These programs can be purchased on their issuers' websites or in stores that sell common software products. They tend to be less expensive and potentially less time-consuming than most tax preparation specialists.

However, they may not be ideal for high-income filers. Taxpayers who earn the bulk of their income from investment vehicles that bear interest or produce capital gains prefer to hire tax specialists to ensure that their filings comply with IRS regulations. Some even choose to hire tax attorneys to tease out the tax implications of certain activities. These professionals specialize in minimizing their clients' overall tax liabilities.

Nevertheless, cloud-based tax filing software is sufficient for most middle-income filers. If you're looking for a filing program that fits your needs, you may wish to consider TurboTax Freedom Edition.

Don't confuse Freedom Edition with TurboTax's similarly-named "Free Edition." These products are clearly distinct from one another. As its name suggests, TurboTax Free Edition provides free federal tax filing services for users with relatively simple tax burdens.

If you're a single-income earner with few credits or deductions to claim and little in the way of investments or property, Free Edition might be adequate for your purposes. The program allows you to file IRS Form 1040-EZ quickly and immediately calculates your estimated refund or liability. If you're entitled to a refund, it sets up a direct-deposit arrangement with the IRS and notifies you when your refund is on its way. Unfortunately, Free Edition doesn't provide free state tax filing services. TurboTax charges $25 to $30 for every state tax return filed using this program.

Free Edition also isn't equipped to handle tax situations that can't be described using Form 1040-EZ. If you own your own home or maintain a sizable investment portfolio, you should use Freedom Edition. In most cases, this product costs less than $50 per use and offers many of the services that an in-person tax specialist typically provides.

However, it does have some drawbacks. If you're a returning TurboTax customer, Freedom Edition won't allow you to "import" the income and tax information that you entered in prior years. It may also be inadequate for complex tax circumstances. If you own your own business, you should consult an experienced tax professional.

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