TurboTax 2012 Tax Software Review

If you've worked with TurboTax in last couple of years, you won't see a lot of changes in this year's tax software, although it has a clean, modern look. Like I said last year in my TurboTax 2011 review, changes aren't really necessary because TurboTax continues to have a very comprehensive tax interview that easily guides you through your return with additional help being just a click away if you need it. The help resources are easy to understand, and TurboTax is the easiest tax software that I know of to navigate. TurboTax includes tax help by phone or chat with tax experts.

As for what's new, the TurboTax Military Edition has been introduced this year, and it's free for junior enlisted military personnel and at a discount to those in the higher ranks until February 14, 2013. This version includes one-on-one answers to tax questions from CPAs who understand the special tax concerns of military members, all year round.

TurboTax is available for Windows and Mac, and there are five online versions. If you prefer to go mobile with your tax prep, there are apps for Android, iPhone and iPad, and you can start a return on a mobile app and finish it online if you want to.

If you only need to file a 1040 EZ, you can try TurboTax Free Edition, which will prompt you along the way to upgrade to a paid version. There is also a free version available through the IRS FreeFile program. TurboTax Basic costs $19.99 to $29.99, depending on whether you use online or desktop software. Unlike the Free Edition, Basic includes features to import W-2 and 1099 data and last year's tax return and skips interview questions that don't pertain to your return.

TurboTax Deluxe, Premier and Home & Business work well if you have a lot of itemized deductions, investment or rental property income, or are self employed. Costs run from $29.99 to $99.99 (online versions are less expensive than Windows and Mac, but you can file multiple returns with the desktop versions). See TurboTax 2012 Versions, Features and Prices for more details.

All TurboTax software and mobile apps come with an accuracy guarantee and maximum refund guarantee. Basic help with a tax audit is included, but you'll have to pay $59.99 for the Audit Defense service to get the same level of audit support as is offered by H&R Block At Home tax software.

Prices quoted in this article are subject to change, particularly toward the end of income tax season.

If you used TurboTax last year, you will be comfortable with this year's interface, which is once again very easy to use. TurboTax starts by asking you questions about income and events that are related to tax deductions in the past year. This is how the software tailors the rest of the tax interview to your needs while avoiding questions that have nothing to do with your return.

While TurboTax Online and desktop versions are very similar, there are some differences. The online version has navigation on the left while the desktop versions have the old familiar top tab navigation for getting to different parts of the tax return. The Forms view is found in desktop versions but not in the in online versions. Forms view is used for directly filling tax forms in and you probably won't need to use this feature since you'll be following the tax interview.

There are a few ways to go through your income tax return in TurboTax:

1. Just the Interview: You can simply follow the tax interview from start to finish. You don't have to complete your entire return at one time, just log out of the online version or close a desktop version and your data will be saved. When you want to work on your return again, you'll start from where you were at when you last left the software.
2. Skip Around: TurboTax is the only tax software that I'm aware of that lets you skip ahead in your return so you can enter information as it comes in. Click on Tools, Topic List and then click on the part of the return you want to get to. If topics have a small arrow head next to them, you can click on it to expand to more detailed subtopics.
3. EasyGuide or Explore: Throughout the tax interview in TurboTax, you'll be given the option to use EasyGuide to see every question or Explore on My Own with tax topics you choose to go through.
4. Use Flags: Use this feature to bookmark parts of the return you need to come back to later. A flag is set by clicking on the Flags button, giving the flag a title and entering a note to yourself. Once one or more flags are created they can be viewed by clicking on the Flag button.

Getting Help

The TurboTax Help Center is no longer accessed directly from the software. Click on Help Center and the TurboTax Support web page opens in a browser from desktop versions and in a separate browser window for TurboTax Online. The Support page offers major areas with subtopics for income tax help, technical support for using the software and information relevant to purchasing and installing the software.

TurboTax Live Community is another way to get help from other users. The Live Community is found at the bottom of the page if you're using an online version while desktop versions have a View TurboTax Community button that opens the feature right in the software on the far right. You can ask your own questions in the Live Community, but first use the search feature to see if it's not already been asked and answered. You can also browse through topics and messages by clicking on View All Messages or View All, depending on whether you're using the online or desktop software.

Assistance with Tax Deductions

TurboTax Deluxe and higher versions offer guided help with all tax deductions, explained in plain English in the tax interview. If you made non-cash donations to charity, use TurboTax ItsDeductible Online to find an accurate value for those donations. ItsDeductible uses IRS-approved sources such as eBay to determine the value of donated items, and chances are good that this feature will find a higher value than you would assign. This means you get a higher deduction for donations. Miles traveled while doing volunteer work for charitable causes are also tax deductible, and ItsDeductible helps you with this deduction, too.

I found a security issue when I tested and review TurboTax last year, and that same flaw still exists with the online version. I duplicated it using both Firefox and Chrome browsers. When you don't enter any information or move around in TurboTax Online for 20 minutes, it will automatically log you out so no one can get into your return. Unfortunately, rather than logging me out and changing the screen to a "you've been logged out message", the last screen I was on in TurboTax Online remains until I touch my mouse or keyboard. Then TurboTax Online informs me that I've been logged out.

It would be best (and would make more sense) if the last screen being worked on was replaced by the "you've been logged out" message when, in fact, the account has been automatically logged out.

While TurboTax isn't outrageously priced, it typically costs more than other income tax software. But, it is the easiest to use. The tax interview is very comprehensive and all of the wording is easy to understand. Each topic includes links to more information if you don't understand what is being asked in the tax interview. The interview moves along as quickly as it possibly can because the tax interview is customized according to tax-related life events that happened throughout the year. It's easy to find the Help Center, Flags, Tax Topic List and TurboTax Community and each is accessible at all times with just one click. It's also easy to move around your tax return using the Topic List, and being able to skip ahead is a time-saving advantage if you want to enter numbers as W-2s, 1099s and other forms come in. This ease of use makes TurboTax worth the price.

TurboTax 2012 still can't match H&R Block At Home's audit support, which includes assistance from an enrolled agent if you are audited (which is unlikely). Audit support offered by TurboTax includes two tools: Audit Risk Meter and Audit Support Center. The Audit Risk Meter is included in Deluxe and higher versions, and it analyzes your return and reports on how high your risk is of being audited by the IRS, but all decent tax software does the same. The Audit Support Center is available with all TurboTax versions so you can understand and respond to letters from the IRS, most of which are not an indication of a full audit. This is helpful, but if you want one-on-one audit help, you'll need to shell out an additional $60 for the Audit Defense service.

My assessment of TurboTax for tax year 2012 can be condensed to one sentence: While the audit support could be beefed up so customers don't need to pay extra for it, TurboTax is worth the cost because it's easy to use and understand, and it will almost certainly get you a higher refund or lower your tax liability than if you did your taxes on your own, especially for more complex personal tax returns.

• TurboTax Details by version
• TurboTax Mobile Apps
• TurboTax website

TurboTax Home & Business desktop and TurboTax Premier Online 2012 tax software was used for this review, with Firefox and Chrome browsers.