Turbotax Online Vs. Software

TurboTax is tax preparation software that allows you to file your tax returns without using a tax professional. TurboTax has several editions: Free Edition (free federal return only) for simple returns; Deluxe for more complicated returns to maximize your deductions; Premier for real estate and investors; Business for business owners; and Home and Business for both individual and business tax returns. Use TurboTax in two ways: file your returns online through its website, or buy a CD-ROM version -- alternatively, you can download the package from the website to your desktop computer. Note that the online version differs slightly from the CD-ROM and downloaded versions.

Computer Use

Online versions of TurboTax allow you to do all of your taxes online after you create an account. Your personal information stores on TurboTax servers, and the website applies software updates to your account every time you log in.

Desktop TurboTax, whether from the CD-ROM or the downloaded package, installs directly onto your computer's hard drive; all of your tax information is stored on your hard drive, which can be dangerous if spyware infects your computer. Software updates are installed directly on your computer.

TurboTax and Other Software

If you have used TurboTax for your previous year's tax returns, both the desktop and online software versions use that information again so you don't have to re-enter it. The desktop version can also import information from other tax preparation software, such as TaxAct or TaxCut, if this is your first year using TurboTax. The desktop version is more versatile when importing financial information from different personal and business finance software, such as Quicken or QuickBooks. The online version is limited to Quicken 2007 or later, and ItsDeductible only.


If you are ready to try e-filing, TurboTax can help you. The online version offers free unlimited federal return e-filing, and up to three state return e-filings. The desktop version allows you to prepare five free federal e-file returns and charges $19.95 (as of January 2011) for each state e-file return.

Paying for the Software

The online and desktop versions of TurboTax have different pay methods. With TurboTax online, complete your entire return, decide if the results are what you need and then pay before your proceed to e-filing. In addition, you pay nothing for the federal portion of your return if using the Free online edition for the easy return (1040EZ). Pay first for the CD-ROM or the downloadable package.


Not everyone should file their own tax returns, especially anyone who has never done it before and has always relied on a professional. TurboTax online offers a straightforward way to try using tax preparation software, because you don't pay for it until you are ready to e-file. Although the desktop downloadable and CD versions do not offer this luxury, both editions cost you much less than paying an accountant.