How Does TurboTax Work?
Instead of trying to find an accountant to handle all of your taxes — and potentially paying a high fee for the privilege — you can use TurboTax to cheaply and efficiently file federal and state taxes. TurboTax is available both online and as a CD or downloadable product, making it accessible to virtually anyone. To get started, you’ll answer basic questions about your income and life to determine which credits and deductions you may be eligible for. Once your taxes are complete and the returns have been accepted by the IRS, you just need to wait for your return or make a payment through the TurboTax site as needed.
Choosing a Plan
To begin using TurboTax, go to the TurboTax website and create an account. Once in, you’ll answer basic questions about your income, whether you have kids, if you own or rent and whether you’ve made any charitable donations over the past year. You’ll be guided through each interview question as you go.
You have a choice of two different forms of TurboTax to use for filing purposes. The first is TurboTax Online, which requires a computer or mobile device with Internet access. You won’t need to download any software to get started, making TurboTax Online an efficient choice for preparing and electronically filing your tax returns. Once you give TurboTax your information, it’s securely stored on the company’s servers. This is the company’s most popular option for tax preparation.
TurboTax Online helps you prepare and e-file your federal tax return for free, although preparing a state return does have a cost. There may also be a fee if your taxes are more complex (for example, if you own a business) or if you use one of the more advanced versions of TurboTax. These include Deluxe, Premier and Self-Employed, which can help you maximize tax deductions or manage more complex finances.
You can also use TurboTax CD/Download, which lets you download TurboTax onto your computer. Since this method doesn’t require an internet connection, you can work on your taxes without Internet access, and your information will be saved on your hard drive. The basic plan still requires a fee for state income taxes, but all other plans come with one state free. Another advantage of the TurboTax CD/Download package is that it allows you to prepare and print as many federal tax returns as you’d like, making it a better value overall to prepare tax returns for several people.
With the exception of a computer or a mobile device to do your tax preparation and filing, you don’t need much else to get started using TurboTax beyond your email address. The information is saved as you progress through the interview, so you can stop and resume the questions at your convenience.
The process begins with various questions about your life, such as your marital status, income, if you have children and whether you’ve experienced a life change in the last year, such as divorce. There’s a good chance you won’t need your W-2 or 1099, as TurboTax imports that information from over one million participating financial institutions and employers. If your tax situation isn’t as straightforward, however, you may need other documents, such as a mortgage statement, charitable contributions, medical expenses and business data if you own a small business.
Questions to Expect
Every TurboTax session begins with some basic questions about your life, including your job, income and whether you have children. Depending on your answers, TurboTax may ask for additional information or skip to the next question. For example, if you have children, TurboTax will ask for information about them to determine whether you can receive applicable deductions and credits, including the child tax care credit.
While the tax code often changes from year to year, TurboTax’s certified public accountants (CPAs) update the company’s products as needed to ensure you’re getting the most relevant credits and deductions each year.
Getting Your Tax Refund
You can start tracking your refund once you’ve been notified that your refund has been accepted. You can generally expect to wait between 24 and 48 hours from the time you e-file your taxes for your return to be accepted by the IRS. From there, the average wait time to have your refund approved by the IRS is two days. The average wait time for your refund to be sent or deposited after that is 19 days.
If it’s been over 21 days since your return was accepted but you have yet to receive your refund, it’s time to contact the IRS. As long as you have Internet access, you can track your refund using the IRS “Where’s My Refund?” website.