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TurboTax Home and Business Review: Easy last minute tax prep solution

There's only about two weeks left to file your taxes and get your payments in the mail which means that local accountants and tax preparation firms are going to be busy, busy, busy with people like you and me who have waited to file. If you want to file your taxes yourself you can use a tool like TurboTax to file your Federal and State income taxes for a reasonable rate. I just finished using the TurboTax Home and Business online service ($99.99) to file my federal and state taxes and will be sharing the experience in this review.

First off, the thing I like about the TurboTax online tool is that you can use it all the way up to actually filing without paying anything and even log back in if you get interrupted and need to walk away. If you've been leery about trying out a tax preparation tool I recommend checking out the online version as it is risk free. If you feel overwhelmed you can always walk away without losing any money.

The version we are reviewing is aimed at people who have a small business or income that arrives from contract work on 1099 forms. This tool helps bring your W-2 information, 1099s, deductions and other miscellaneous tax information into an understandable package that even a first time do-it-yourself tax filer like myself can understand. If you don't have a small business, you will be better off with a different package like TurboTax Free or TurboTax Deluxe ($49.99); but this review will still give you a good idea of how the tax preparation tool works.

How Long it Takes and Guidance:
If you plan to use TurboTax Home and Business to file your taxes, I would budget one and a half to two hours of time, although if you are familiar with the process and have all of your paperwork and deductions in hand you can finish in an hour.

If this is the first time you are filing your own taxes, you'll appreciate the easy to follow layout of TurboTax. When you first sign in to use the service you will see a map of what you need to do file your taxes, shown below, and each of the sections offers a "Guide Me" option to help you navigate entering your information and finding all the deductions and credits that you qualify for. If you have used TurboTax to file last year you will be able to simply pull over some of your information, saving you additional time.

As part of the "Guide Me" process, TurboTax will ask you many of the same questions a tax preparer would. Did you get a new job? Did you add a family member? Did you buy a home or a new car in 2009? Your answers to each of these will help the program ask you for more information to guide you through the process.

Federal Tax Preparation:
I found the guided process to work extremely well on the federal section of the TurboTax tool and felt very confident that I was entering the correct information thanks to explanations and the straightforward process. As I entered several 1099 forms and then supplied 2 W-2 forms, the software made it easy to know where to enter all of my information. I was impressed that the software identified Health Savings Account and Cancellation of Debt items that I needed to enter more information on to file an accurate income tax return.

The guided process was also very helpful in the business section, helping me correctly identify and deduct business expenses that I hadn't thought to look for. The software also determined that I should pay in estimated income tax quarterly next year so that I could avoid a small penalty and provided a printout at the end with amounts, due dates and where to mail my payments. Overall the entire process is very user friendly and I greatly appreciated that I could move back and forth in the software, as well as flag a specific section, without losing information or encountering any errors.

State Tax Preparation:
While the federal tax section was very simple I found the state tax section to be a more complicated affair, which had me entering city tax information with significantly less guidance than the federal tax segment of the process. If you only have a W-2 to file the state process appears to be very simple, however I specifically had issues identifying the correct area to enter 1099 and other miscellaneous income into the city portion of the state tax return.

To TurboTax's credit, it identified that I had done it incorrectly and sent me back to the section to fix it. Still, the state tax section could use a little more polish. It is worth noting that there is an additional $39.99 fee to file your state taxes.

After completing your taxes you can choose to mail it in or e-file. I chose to efile and TurboTax submitted the information as well as generated extra information I am to mail in with my payment. Later, I was notified that my e-file attempt failed due to an IRS mistake last year and was given directions by TurboTax to clear up the matter, or the option to print and file by mail.

Refund or Payment:
If you are due a refund you can choose to have your payment sent directly to your checking account or ask for it to be mailed to you; and if you owe money you can make a payment electronically through your checking account, credit card or mail in your payment. If you are expecting a refund you can pay for your TurboTax purchase with a portion of it, though it does cost $29.99 so you are better off opting for a traditional refund.

Post Filing Support:
After you file, you'll still have some support options in case things go wrong or you need additional help. In addition to alerting you of any efiling issues, TurboTax offers Audit Support for free which checks your risk for an audit and allows you to purchase Audit Defense for $49.95 which would provide you with defense in case you are audited.

In the end TurboTax is a good product and ff it costs less than hiring a CPA I would recommend it. Living in the Midwest, the CPA I used last year charged almost the same as the cost of TurboTax (well below the national average) so I will probably go back to her just for the simplicity of dropping off a stack of documents and having it all done. If I were looking at a comparison with the average cost around the country and TurboTax was cheaper I would definitely use it again, at least for filing my federal taxes.

If you want to save on your TurboTax purchase, check out our Tax filing coupons, which can cut your cost up to 35%.

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