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TurboTax 2011 Review

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TurboTaxI had the opportunity get a demonstration of the new TurboTax 2011 online tax preparation package and I came away very impressed with the level of automation they included. Last year, the most impressive new additions was the ability to flag certain parts (which would’ve prevented me from having to file an amended return after I put in a placeholder value) and their audit scanning feature (looks for red flag mistakes like mismatching numbers).

This review of TurboTax applies to the software used to handle Tax Year 2010 returns.

EasyImport W-2, 1099

This year, it seems that automation was their top priority because they increased the number of individuals who can now import your W-2 data directly from your employer’s payroll system. They work with many of the payroll providers, like ADP, and now over 250,000 employers are supported. It’s a more than doubling of the number of supported employers.

In addition to importing data from employers, they also have the ability to pull tax information from banks and brokers as well. They can import 1099 information from ninety financial institutions, including A.G. Edwards, E*Trade Securities, Scottrade, USAA, and Vanguard.

Importing this data is one of the most time consuming and error prone parts of tax preparation. We have about a dozen 1099-INTs and after a while you start entering them in on autopilot, which is when you start making mistakes. All it takes is one minor error and you trigger an investigation because your 1099-INT doesn’t match the 1099-INT at the IRS and there’s no way for software to protect you (they don’t have access to your paper 1099-INT!)

So I think the expansion of this feature is the real hallmark of this year’s edition.

Optimizing Your Deductions

Unless you’re a tax accountant, you can’t be confident that the deductions you pick are going to be the best ones for you. There are so many competing deductions out there that every software package should have this next feature – a way to optimize your deductions.

The best example is education credits. They have changed so much in the last few years that it’s hard to remember which is which. Remember the Hope Credit? Yeah, it’s gone. We have the American Opportunity Credit and the Lifetime Learning Credit. If you have no idea what the difference, you’re not alone.

Fortunately, TurboTax does and they’ll ask you a series of questions and give you the best option. They will also calculate the credit of every alternative, so you know which is better and by how much. All too often a software package will rely on you to decide and just do the math, this takes it one step further. When you think about it, that’s what the software should be doing.

Summary

I don’t know how this compares with the advances made by other tax prep packages but they’ve continued to innovate and improve on a good product, one that I started using seven years ago. I think that most people, in picking which package to use, typically follow whatever their parents used or whatever they used in the past. Familiarity breeds a bit of contempt and, honestly, why fix something that’s not broken? If, however, your tax prep package doesn’t import as much data as possible and forces you to enter it in manually, you might want to check the list of supporting financial institutions to see if you can shave some time off the prep process.

Giveaway!

The kind folks at TurboTax also gave me some TurboTax Premier Online codes to giveaway to three lucky Bargaineering.com readers. All I ask is that you leave a comment below stating your favorite tax deduction, I’ll select three winners on March 16th at noon. If you want to leave a comment but don’t want to win (because you’ve already filed or some other reason), please say so in the comments.

Good luck!

{ 44 comments, please add your thoughts now! }

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44 Responses to “TurboTax 2011 Review”

  1. Arvin says:

    By far my favorite is the mileage business deduction! It’s about 50cents/mile and I love it because I drive a cheap, high-mileage car, which costs me far less than 50cents/mile to run, including gas, insurance, maintenance. As a small business owner, this is one deduction that can really keep my tax liability down. Just make sure you keep track of your trips!

  2. Alex says:

    I like the charitable deduction to certain organizations in Idaho. They double as a tax credit on state income taxes.

  3. Mark Simon says:

    My favorite tax deduction is charitable donations because I give away 10% every year. A close second is work expenses not covered by the employer.

  4. msimonkey says:

    my best deduction is for real estate taxes cos lord knows, we pay enough!

  5. Bruce Slater says:

    I like turbo tax even more after not using it! I though it would be easier to have taxes prepared by an accountant. Not so! You still have to do the leg work of getting all the numbers together. And then they chaged me $1000! I would love to go back to it. I really like the the “it’s deductible” program built in.

    Bruce

  6. Andrew says:

    I’m partial to the Standard Deduction; having minimal expenses (I don’t make enough to have a house or give enormous sums to charity), the other deductions are never enough for me to itemize.

    • Strebkr says:

      Yea, you can’t go wrong with the standard deduction. Owning a house doesn’t offer all the huge benefits considering you can rent and still get a HUGE standard deduction.

  7. Julie says:

    My favorite has always been the education ones but I also love the educator expense where I claim up to $250 a year. That’s a pretty easy number to reach especially in the beginning of the year — unfortunately, it looks like this may be the last year of that also!

  8. Clark Gross says:

    Considering the recent news about a movement to eliminate the mortgage interest deduction, this is hands down my favorite and most beneficial. Considering the precarious position the housing market is in, why would you remove this valuable incentive to buy a house? Remove it and this country’s economy stays on thin ice.

  9. Andrew says:

    My favorite tax deduction is the mortgage interest deduction.

  10. ron says:

    Fav is property taxes followed by volunteer mileage.

  11. skylog says:

    for me, i have to go with student loan interest deduction. it feels good to at least get some of that money back.

    • Strebkr says:

      The extra nice thing about this deduction is that it is on page 1 of your 1040. This means it reduced you AGI (Adjusted gross income) this is the magic number that determines if you can take some of the other valuable deductions and credits. If you keep your AGI down, you get more perks!

  12. elliott says:

    Student loan interest deduction is my favorite, though I’m already watching it slip away

    • Strebkr says:

      Slip away because they are phasing it out (I haven’t heard anything about this) or slipping away because you have less debt to pay interest on (Always a good thing!)

  13. Janet says:

    still love the deductions for bank lock boxes. love to have a copy of turbotax. thanks

  14. govenar says:

    I guess the deduction for state income tax is my favorite, since it’s my biggest.

    I don’t really see the logic behind the standard deduction; is it just a way of providing welfare benefits?

    • Strebkr says:

      For me it was a way to get a significant deduction when I didn’t own a house. For example I used to rent and would get the deduction. Now I have interest and property taxes and I’m just barely over the standard deduction so I’ll itemize this year. The tax difference is very very comparable for me this year since the two are so close. The real big difference is that I have spent 12,000 out of my pocket to pay the interest and taxes. Thats a big difference with very little tax benefits.

  15. Bobg says:

    Now that I’m miserably unemployed, EVERY deduction I can eke out is the best. But The mortgage interest deduction is going to especially needed this year. :-) .

  16. zapeta says:

    My favorite deductions are for student loan interest and the lifetime learning credit.

  17. Ryan says:

    Already filed, so don’t need the software. I used TT and everything went well until they screwed up my direct deposit. I ended up having to get my refund mailed to me (showed up a week after direct deposit was supposed to happen). The did refund me both the TT cost and direct deposit fee, so that was nice of them.

  18. Heather says:

    My favorite deduction by far is the Medical deductions. I have learned way to much about them in the past 10 years, and always get a significant return bacd because of my health issues. My second is the mortgage deductions. If I could just get my payroll deductions simplified so I’d have more money in my pocket..I’d be set. :)

  19. Aaron says:

    I like being able to deduct the cost of Turbo Tax! I personally think it is a little ironic.

  20. marc baltuch says:

    didnt do taxes yet. Like to try premium Turbo

    state taxes used to be favorite deduction, now AMT takes it back

    I give cash and items to worthy causes and AMT lets it stand

    My wife, as a teacher, still gets some credit for the out of pocket expenses she incurs in performing her teaching activities.

    Of course mortgage interest helps carry the house which lately has been a diminishing asset class.

  21. Wendy says:

    I love the home office deduction.

  22. Janette says:

    I love the “head of household” deduction for
    single parents bcuz it allows a larger deduction
    than the filing single status with a dependent
    or two. I also deduct the cost of my uniforms (nurse),
    shoes, stethoscopes and other equipment. As well as
    deducting nursing/medical magazines and books, attending
    programs on med documentation, safeguards for dementia
    patients,etc. Janette

  23. Standard deduction! I don’t own property or have enough of other deductible expenses.

  24. Melissa says:

    Student loan interest works for me. I sure appreciate it.

  25. thunderthighs says:

    I’m a student, claimed as a dependent, so deductions don’t really help me out at the moment. :(


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