When filing your taxes, you are most likely looking to save money on both the return and the filing fee.
Nobody is excited about getting money back on their taxes only to pay hundreds of dollars just to file the taxes.
It feels as though filing taxes is getting more and more expensive each year.
One of those companies that seem to be continually raising their prices is TurboTax.
TurboTax gives people the ability to file their taxes quite easily, but the process costs a lot of money and continues to get more expensive.
Let’s take a look at why TurboTax is so expensive and what you can do about it.
Why Is TurboTax So Expensive (Top 10 Reasons)
In case you haven’t noticed, the competition in this world of tax preparation fees is continuing to grow.
The more companies that come to market, the more competition there is going to be between them.
People typically only need a service like TurboTax one time per year.
This is why it is essential for a company to grab as many customers as possible and hold on to them for years to come.
The competition means that there is increased marketing and expense to try and lock in a customer.
The pricing is going to increase because of marketing fees and enhancements to the product to make it stand out.
In addition, if a competitor decides to raise pricing on their product, most of the other companies will raise their product pricing slightly as well.
This helps everyone involved to still be able to make money from the work that they are doing.
These companies all have some great benefits and functionality, and therefore, it can be challenging to keep up from a competition standpoint.
Overall, the more you see TurboTax advertised and pushed to you, the more expensive it is going to continue to get.
As long as TurboTax is fighting so hard for your business, they are going to be raising their prices.
2. Skill People Don’t Have
Do you know how to file your own taxes without the help of a company like TurboTax?
Most people would say that they have no idea where to start.
It’s hard to believe, but filing taxes used to be one process that many people could do on their own without the use of an online service.
In today’s world, this is no longer a skill that people have.
This is understandable considering the rules, systems, and a number of adjustments that need to be made when filing taxes.
The time commitment for most ordinary people would not be worth the money that you would save going with a company like TurboTax.
As time goes on, we are not seeing people move towards filing their own tax returns.
In fact, more and more people are losing this ability and skill every year.
Accountants are in high demand because they know how to bridge that gap between the government and the taxpayers.
They can explain things that may seem overly complicated, and they can work out complex issues that an average person would not be able to figure out.
Since taxes are something that we all are subject to, you can imagine that there are many rules and regulations in place.
To follow all of these and ensure that things are done correctly, you would have to study and practice for a long time.
TurboTax knows you don’t have time for this.
They know that you need a simple, quick, and easy solution for filing your taxes, and that is exactly what they provide.
3. Deluxe Edition
TurboTax offers a few different editions to choose from.
One of the things that makes them more expensive is the option to choose from any of their Deluxe or Premier products.
When compared to other companies, TurboTax seems to be the highest with the pricing of their higher-end products.
The reasoning behind this is that their product is usually superior.
With the Deluxe Edition of TurboTax, you can file something beyond a typical return and ensure that you are getting the proper return.
For some people, a tax return is just a standard document with hardly any write-offs or changes to the normal paperwork.
However, for others, there is much more to this process.
If there were special accommodations for health or disability, if there were large donations, or a home purchase, etc., then the Deluxe Edition is going to make more sense.
Even though the Deluxe Edition comes at a higher cost, the functionality is more impressive as well.
This is one of those areas where you will find that it takes money to make money.
Sometimes if you want to give yourself the best chance at a higher tax refund, you will need to ensure that you are investing a higher amount, to begin with.
TurboTax Deluxe Edition is expensive because it almost works like an accountant without you having to hire an accountant.
Even though this pricing is, without a doubt, higher than other companies, it is usually cheaper than hiring an accountant to spend time looking at your paperwork.
The way the Deluxe Edition keeps you organized and prepared is going to make the entire project of filing taxes quite a bit easier.
The best way to save money on something like TurboTax Deluxe Edition is to ensure that this is truly what you need to file your taxes.
If you are undecided, then don’t make the upgrade, as it will very likely not pay off in the long run.
4. Potential To Find Discounts And Write-Offs
Most people choose a tax filing provider because they want help to make sure they get as much of their tax refund as they are entitled to.
All year long, we pay taxes out of our paychecks in hopes that at the end of the year, some of that money will come back to us.
For many people, a tax refund is almost like a forced savings account.
Each week, money will be pulled without you having to think about it.
If the year turns out in your favor and there are more write-offs, you can get a significant amount of money back.
The problem is that you only get one shot at recovering this money.
If you file the tax return incorrectly or forget about certain deductions and write-offs, there could be a lot of money being held on your behalf with no way to recover it.
One of the reasons that people pay more money for TurboTax is that they advertise the ability to find deductions and write-offs.
They essentially get people worried about the prospect of not going with TurboTax as a tax provider.
When you choose a free or cheap service, you may not realize how much money you are missing out on.
When you see any kind of advertisement for TurboTax, it will almost always say that they are there to help you save money.
Of course, that is after you pay for all of their fees.
Those things are not usually discussed in the commercials.
In the end, people find that, most of the time, the TurboTax fees are going to be covered by a great tax refund.
Try to do a bit of research yourself to see if you are going to be eligible for any extra deductions or write-offs.
If you know that there are some things that could help you save money, then it makes sense to go with a company like TurboTax.
If your return is relatively simple and won’t take much expert review, then you should choose a much cheaper option than TurboTax.
5. Cheaper Than An Accountant
Speaking of cheaper versions of TurboTax, one of those that will likely not be on the list is an actual accountant.
Do you have a local accounting firm in your hometown?
Most towns have several accounting firms in addition to the big-name places like HR Block.
Most of the time, these accountants are going to be priced quite a bit higher than the big-name or chain accounting stores and programs.
The reasons behind this are twofold.
For starters, the single accounting firm has a high overhead that they must cover all within their own offices.
Therefore, the salaries, electricity, computer programs, internet, etc. all need to be covered by one small office.
This can be a bit of a burden to take on, and many of these companies need to charge more to help recover those costs.
The other reason that the accounting firms tend to charge more money is that they are a bit more specialized in what they do.
There is no question that an accountant is going to be able to give your return a personalized review before it is sent in.
They have an idea in their mind about ways that you can save money and keep your interests focused on the task of earning back as much of your return as possible.
This type of knowledge and interest in your return takes time and dedication through the years.
If you are someone who feels as though personal attention to your tax return is necessary, then you will enjoy the services of the accountant.
What a company like TurboTax does is use those higher accounting fees against you.
They will look at what the going rate is for the accountant for an hour or two, and then they will compare that to their product and the ability to get your taxes done quickly and efficiently.
TurboTax is careful to set their pricing just a little lower than an accountant so that they appear to be a better deal.
However, the problem with this is that they are not necessarily providing the same service.
Even though you are saving money when going with TurboTax as opposed to an accountant, do you get the same level of attention to your tax return?
Most would say the answer is no.
6. Depreciation Calculators
One of the more important things to look at when you choose a tax filing company like this is the tools that they offer customers.
You are going to need these tools when it comes to filing your return and doing the proper calculations.
One of the things that TurboTax has that makes it stand out from the others on the market is a depreciation calculator.
This way, if you are a landlord or small business owner, you can properly calculate for depreciation.
This is not something you are going to want to try and figure out without the use of a calculator.
Therefore, it makes sense to consider these depreciation calculators as an asset to the TurboTax brand.
Of course, developing a calculator like this and keeping it up to date is going to be very tricky.
TurboTax has to hire advanced-level engineers who know how to program this information and keep it up to date.
As you can very likely imagine, the money that is spent handling the back end of a company like TurboTax is quite high.
Ensuring that these formulas and tools are up to date is no easy task, and it costs a lot of money.
This is especially the case when a change in the tax laws is released.
Overall, you pay more for TurboTax because it offers tools and resources that are difficult to find.
7. User Experience
User experience for TurboTax is consistently rated among the best on the market.
If you want to be able to navigate the software or website quickly and easily, you are going to be able to do so.
TurboTax spends a lot of time and money making sure that people can easily navigate their website.
From the moment you sign in to the moment you submit your return, all of the setup and ease of use make this one of the best user experiences on the market.
People like the layout and ease of use, and they genuinely don’t even mind having to file their taxes.
Ensuring that these products are appealing to people and that they know how to use them makes TurboTax a bit more expensive.
The time spent and money invested in the user experience is quite a lot and must be recovered by those users who are paying for the service.
8. Integration With QuickBooks
If you use QuickBooks for your home office needs, then TurboTax is a very good option for your tax filing.
The integrations between TurboTax and QuickBooks are seamless.
You will quickly find that TurboTax and QuickBooks will work together to help make this process even easier for you.
QuickBooks is a very valuable program that keeps people organized in their day-to-day or week-to-week bookkeeping.
Knowing that all you need to do is import your QuickBooks information into your TurboTax account is going to help you save a lot of money.
The integration with QuickBooks is a valuable resource for many business owners, and it is a huge time saver.
As with many of the other advanced features of TurboTax, the original programming and work that was done to put this together have increased the pricing.
Although it is well worth it, integrating their products with QuickBooks has raised the price of TurboTax.
9. Enhanced Security With Downloadable Products
In addition to your ability to file taxes online, there is also an option for a downloadable program.
This is something that not all companies offer.
Having the ability to download the tax program and do everything offline gives many people a much better feeling about security when they are working on their tax returns.
As you can imagine, the information on the tax return is going to be very sensitive, and if it got in the hands of the wrong people, it would be a major problem.
Therefore, the fact that you can download your TurboTax and do it from your desktop is appealing to people.
Of course, having the ability to offer these types of extra features and advanced security is going to cost the user as well.
In addition, the online versions of TurboTax are going to feature advanced security procedures.
The last thing that TurboTax will want is to have your information end up in the wrong hands.
In order to properly block hackers and keep their customer information safe, TurboTax has to be very careful about what they do on the back end of their website.
Information protection is a major part of this business.
How does TurboTax keep your information safe?
They use high-end software developers and expensive coding to ensure that people are not able to use the information and take what isn’t theirs improperly.
Although this is a great thing for the user, it will cost quite a bit of money.
10. Cryptocurrency Functionality
Last but certainly not least is the fact that TurboTax does a good job of keeping up with the times.
The fact is that the world of finance is changing, and much of it has begun to involve cryptocurrency.
What was once an investment that only the most knowledgeable or cutting-edge investors were getting involved in is now something that is open to anyone.
TurboTax has integrations to help you manage your cryptocurrency when it comes time to file your tax return.
Think about all those Bitcoin purchases that you made this year.
Those are going to need to be included in your tax return.
Many of the competitors of TurboTax does not have this type of integration.
Therefore, people are stuck trying to figure this out on their own or go to a local accountant who may understand.
One thing that you can almost always say about TurboTax is that they stay ahead of the times.
If something is starting to change in the financial world, you can bet that TurboTax saw it coming and started to make the necessary adjustments on their end.
Having cutting-edge features and technology is going to cost the user more money.
Hopefully, you now feel as though you understand why TurboTax is more expensive.
There is no questioning the fact that this service offers users some great functionality.
However, it is something that you must account for and save up for when it comes time to file your taxes each year.
If you like the service that TurboTax offers, it’s a good idea to stick with them.
With other companies out there continuing to pop up, find something you are comfortable with and stick with it.
The TurboTax brand will be around for a long time, and they do a great job, but you do need to be prepared to pay slightly higher fees.