Have you ever wondered if you need Turbotax Audit Defense? Let’s take a look and see. The word audit is enough to scare anyone away. The mere thought of having to face an audit is what keeps Americans up at night.
In fact, the Internal Revenue Service’s Oversight Board conducted a survey back in 2013. It showed that fear is the second most widespread reason for which Americans all over pay their taxes. The first reason was the sense of personal integrity. Taxpayers elect to do their duty and pay their taxes because they are so scared of being the subject of an audit.
Therefore, to put them at ease to some extent, particular insurance companies offer insurance products against review procedures. One of them is Turbotax Audit Defense. Let’s take a look at what it really is, how to use it, and if you need it, in the end.
What Is Turbotax?
Turbotax belongs to Intuit and it is a piece of software which millions of people use to do their taxes and prepare all their returns every year. It’s very easy to use as all you need to do is answer some questions it has prepared for you. Most of these issues concern different aspects of your life which might affect your tax returns. For example – do you have any kids? Are you married? And so on.
You also need to fill in the tax forms which they require from you. These answers, along with the data you provide help the people from Turbotax which are the deductions and credits they need to search for and what questions to ask you next. Evidently, if you don’t know or are in doubt about any of these matters, they will help you.
How Much Does Turbotax cost?
As a piece of online software, Turbotax comes in four distinct versions, as follows.
- The Federal Free Edition, which calculates simple tax returns and, as the name suggest, is free of charge.
- The Deluxe. You can use this one to maximize your tax deductions. The price is $54.99, according to their official website.
- The Premier, useful for investments and rental property, comes at the cost of $79.99.
- The Home and Business is the package which aims towards self-employed people as well as individuals who own small startups. It retails for $104.99.
Apart from the online version, you can also buy Turbotax in CD or download format. In fact, the good people over at Intuit recommend you purchase this version if you want to fill in more than one tax return.
What Is Turbotax Audit Defense?
Now that we have cleared up the basics on what is Turbotax, how you are supposed to use it and how much it costs, we can start detailing Turbotax Audit Defense.
The fellows at Turbotax have teamed up with Tax Resources and are now able to offer us a program for audit insurance which they call Turbotax Audit Defense. The company which produces it, Intuit, states that the program in itself can guard your returns in the face of the IRS and their pesky audits. They also claim they can do that for up to seven years. The reason is that they benefit from the highest level of appeal available.
Turbotax Audit Defense is also the program which can schedule all appointments for auditing. It can handle the correspondence and review documents for the IRS.
The program doesn’t have a fixed price, as it all depends on the options you choose for yourself, based on your current situation and your needs. For example, if you are interested in the return for a single year, the service can cost you an average of $39.99. However, you can also choose to pay the full amount of $195 per annum.
For this money, Turbotax Audit Defense in collaboration with TaxResources can provide you with audit defense for all the remaining years in which the IRS could still audit you. They also offer a bonus hotline for you to use and pose questions or ask for help. Another bonus is an assessment of your federal return on a per annum basis.
As mentioned in the exposition, all of these details about Turbotax Audit Defense bring us to one question. Is it worth it? Evidently, it depends on how elaborate your return is and how much you are, in fact, willing to invest in getting help should the suits from the IRS come to pay you a visit. But let’s delve deeper into this matter.
Should You Invest in Turbotax Audit Defense?
The primary thing which you must understand before even considering buying a piece of this software is this fact. Turbotax Audit Defense does not stop or thwart an audit from occurring. Its purpose is to make matters easier for you should it happen. It hopes that, by giving you full access to professionals in the business, you can pass the audit on a positive note.
Therefore, looking at things in this light shows you if you should or not, in fact, get some Audit Defense. What you need to do is weigh the amount of money you were willing to invest in it in the first place against your likelihood of getting an audit. Add to that the additional taxes such an audit always implies.
If you don’t know just how likely you are to be on the receiving end of an assessment from the IRS, let us give you some figures to help you out. For example, it might be useful for you to know that the average number of individual taxpayers whom the IRS questions is somewhere between 1% and 2% every year.
The numbers are even smaller than that if we were to take a look at individuals from the middle class. They earn between $25, 000 to $75, 000 every year. The chance of getting an audit increases significantly when you start making approximately $200, 000 or above. And even then it would be a long shot. 10 percent of all the people who earn between $1 and $5 million every year receive an audit.
If you happen to have a fairly basic return which comprises your wage and a standard deduction, then you should know that it is highly unlikely you will ever get an audit. Still, even if you did, you can manage the number justifications on your own.
However, if you know that you have taken a wide variety of irregular deductions, that you have quite some extensive investments or even your personal business, then that is a whole different story. It means you have now reached a new complexity level. Therefore, it will be very easy get something wrong. You know that any mistake you make might attract an audit. Should this be your case, you need the Turbotax Audit Defense.
Image source: 1