TurboTax Software vs Manual Income Tax Returns
January 22, 2010
TurboTax vice president, Bob Meighan is back again today to talk about the benefits of tax preparation, who TurboTax is and isn’t for, and when people tend to do their income tax return. In the first segment we covered Bob’s role as consumer advocate for TurboTax and what types of tax questions are troubling customers this year. As I mentioned before, I’ll be paraphrasing Bob’s answers since we covered a lot and I couldn’t scribble it all down verbatim.
Is tax preparation software for everyone? My sister doesn’t have a complicated financial situation and does her taxes by hand. Is there any reason she should use software?
Bob’s initial response to my question was to share an IRS statistic; tax forms that are prepared with software and filed electronically are 20 times more accurate then manually prepared tax returns.
One benefit of using a program, whether it’s online tax software or desktop software, is that your information is saved from year to year. Since you don’t have to manually enter your data it cuts down on the chances of errors, plus it saves time as well.
Of course one obvious downside to using tax prep software is that you have to pay for it. However Bob raised the point that people with a simple federal income tax scenario can actually complete and file their taxes for free online, with tools like the TurboTax Free Edition Online.
The last benefit he mentioned is for people who are getting a tax refund. If you’re getting money back and you file electronically and use direct deposit you can get your refund within 10 days, compared to 4-6 weeks when manually filing. I asked Bob if more people use direct deposit or opt for a paper check and he said that more customers go with direct deposit not only so they can get their money back faster, but also because it’s more convenient.
Do customers outgrow TurboTax?
Bob didn’t say that customers outgrow it but he did say that people with extremely complex financial situations who hire CPAs to prepare their taxes aren’t the people that Intuit aims to help with TurboTax.
He did say that they have customers who are currently paying someone to do their taxes who decide to try out TurboTax to see if it meets their federal income tax filing needs. Some of these first time customers are currently using an accountant and others use services like H&R Block or Jackson Hewitt.
Often time they’ll take the completed TurboTax tax return to their accountant to double check and make sure nothing was overlooked. Then after that first year they remain customers and continue to use tax prep software in the future.
When do most people file their taxes?
Bob has seen some people file at the very beginning of January. Typically these early birds are getting a refund and are anxious to get their hands on the money.
The first big wave of people filing their taxes is at the end of January and beginning of February when W-2’s arrive in the mailbox. Then things slow down a little until the middle of April. From April 13 – 15 everyone that’s been putting off their taxes realizes the deadline is near and rushes out to file their taxes.
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