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Incentive Stock Options

Written by a TurboTax Expert • Reviewed by a TurboTax CPAUpdated for Tax Year 2024 • October 16, 2024 03:58 AM
OVERVIEW

Some employers use Incentive Stock Options (ISOs) as a way to attract and retain employees. While ISOs can offer a valuable opportunity to participate in your company's growth and profits, there are tax implications you should be aware of. We'll help you understand ISOs and fill you in on important timetables that affect your tax liability so you can optimize the value of your ISOs.

Key Takeaways

  • You need to know the type of stock options you have and their tax implications.
  • Key dates like the grant, exercise, and sale dates, are important for determining your tax liability.
  • Holding shares for over a year after purchase and two years after the grant date can usually get you favorable tax treatment.
  • Be aware of the Alternative Minimum Tax (AMT) and report the bargain element as income for AMT purposes when you exercise the options.

What are Incentive Stock Options?

A stock option grants you the right to purchase a certain number of shares of stock at an established price. There are two types of stock options—Incentive Stock Options (ISOs) and Non-qualified Stock Options (NSOs)—and they are treated very differently for tax purposes. In most cases, Incentive Stock Options provide more favorable tax treatment than Non-qualified Stock Options.

If you have been granted stock options, make sure you know which type of options you received. If you are not sure, take a look at your option agreement or ask your employer. The type of options should be clearly identified in the agreement.

Why are Incentive Stock Options more favorable tax-wise?

When you exercise Incentive Stock Options, you buy the stock at a pre-established price, which could be well below actual market value. The advantage of an ISO is you do not have to report income when you receive a stock option grant or when you exercise that option.

You report the taxable income only when you sell the stock. And, depending on how long you own the stock, that income could be taxed at capital gain rates ranging from 0% to 23.8% (for sales in 2024)—typically a lot lower than your regular income tax rate.

  • With ISOs, your taxes depend on the dates of the transactions (that is, when you exercise the options to buy the stock and when you sell the stock).
  • The price break between the grant price you pay and the fair market value on the day you exercise the options to buy the stock is known as the bargain element.
  • There is a catch with Incentive Stock Options, however: you do have to report that bargain element as taxable compensation for Alternative Minimum Tax (AMT) purposes in the year you exercise the options (unless you sell the stock in the same year). We'll explain more about the AMT later.

With Non-qualified Stock Options, you must report the price break as taxable compensation in the year you exercise your options, and it's taxed at your regular income tax rate, which in 2024 can range from 10% to 37%.

TurboTax Tip:

Consulting a tax professional can help you understand the full tax implications and optimize your ISOs' value.

How transactions affect your taxes

Incentive Stock Option transactions fall into five possible categories, each of which may get taxed a little differently.

With an ISO, you can:

  1. Exercise your option to purchase the shares and hold them.
  2. Exercise your option to purchase the shares, then sell them any time within the same year.
  3. Exercise your option to purchase the shares and sell them after 12 months or less, but during the following calendar year.
  4. Sell shares at least one year and a day after you purchased them, but less than two years since your original grant date.
  5. Sell shares at least one year and a day after you purchased them, and at least two years since the original grant date.

Each transaction has different tax implications. The first and last are the most favorable. The time at which you sell determines how the proceeds are taxed.

If you can wait at least a year and a day after you purchase the stocks, and at least two years after you were granted the option to sell the stocks (as described in item 5 above), any profit on the sale is treated as a long-term capital gain, so it is taxed at a lower rate than your regular income. (Your profit is the difference between the bargain price you pay for the stock, and the market price that you sell it for.)

  • This is the most favorable tax treatment because long-term capital gains recognized in 2024 are taxed at a maximum 23.8% (or 0 if you're in the 10% or 15% income tax brackets) compared to ordinary income tax rates which may be as high as 37% in 2024.
  • Sales that meet these one- and two-year time limits are called "qualifying dispositions," because they qualify for favorable tax treatment.
  • No compensation is reported to you on your Form W-2, so you do not have to pay taxes on the transaction as ordinary income at your regular tax rate.

Now, if you sell the shares before they meet the criteria for favorable capital gains treatment, the sales are considered "disqualifying dispositions," and you may end up paying taxes on part of the proceeds of the sale at your ordinary income tax rate, which could be as high as 37% in 2024.

  • When you sell the stock two years or less from the offering date, known as the "grant date," the transaction is a disqualifying disposition.
  • Or if you sell the shares one year or less from the "exercise date," which is when you purchase the stock, that is also considered a disqualifying disposition.
  • In both cases, the compensation should be reported on your Form W-2.

The amount reported on your Form W-2 is the bargain element, which is the difference between what you paid for the stock and its fair market value on the day you bought it. But if your bargain element is more than your actual gain from the sale of the stock, then you report as compensation the amount of the actual gain. The reported compensation is taxed as ordinary income.

1. Exercise your option to purchase the shares and hold them

 

Grant date

12/31/2023

Exercise date

6/30/2024

Exercise price

$25

Sale date

Not sold yet

Market price on 6/30/2024

$45

Number of shares

100

Bargain element

$2,000

You do not report anything on your 2024 Schedule D (Capital Gains and Losses) because you have not yet sold the stock. Your employer will not include any compensation related to your options on your 2024 Form W-2 either.

You will have to make an adjustment for the Alternative Minimum Tax (AMT) that equals the bargain element, which is $2,000:

  • $45 Market Price - $25 Exercise Price = $20
  • $20 x 100 shares = $2,000 Bargain Element
  • Report this amount on your 2024 Form 6251.

2. Exercise your option to purchase the shares, and then sell those shares within the same calendar year

 

Grant date

12/31/2023

Exercise date

06/30/2024

Exercise price

$20

Sale date

06/30/2024

Sale price

$45

Number of shares

100

Bargain element

$2,500

The bargain element is the difference between the exercise price and the market price on the day you exercised the options and purchased the stock.

  • $45 Market Price - $20 Exercise Price = $25
  • $25 x 100 shares = $2,500 Bargain Element

This amount should already be included in the total wages reported in Box 1 of your 2024 Form W-2 because this is a "disqualifying sale." This means you are disqualified from taking it as a capital gain and being taxed at the lower capital gains rate because you sold the shares within a year or less after exercising the option. If this amount is not included in Box 1 of Form W-2, add it as "Other Income" on your Form 1040.

Report the sale on your 2024 Schedule D, Part I as a short-term sale. The sale is short-term because not more than one year passed between the date you acquired the actual stock and the date you sold it.

For reporting purposes on Schedule D:

  • The date acquired is 6/30/2024.
  • The date sold is also 6/30/2024.
  • The cost basis is $4,500. This is the actual price paid per share times the number of shares ($20 x 100 = $2,000), plus any amounts reported as compensation income on your 2024 tax return ($2,500).
  • The sales price is $4,500 ($45 x 100 shares). This should match the gross amount shown on your 2024 Form 1099-B you receive from your broker after the end of the year.

You end up reporting no gain or loss on the stock sale transaction itself, but the $2,500 overall profit will be taxed at your ordinary tax rate. Because you exercised the options and sold the stock in the same year, you do not need to make an adjustment for Alternative Minimum Tax purposes.

3. Sell shares in the next calendar year, but within 12 months or less after you purchased them

 

Grant date

12/31/2021

Exercise date

12/31/2023

Exercise price

$20

Market price on 12/31/2022

$45

Sale date

06/15/2024

Sale price

$30

Number of shares

100

Bargain element

$2,500

Actual gain from sale

$1,000

Unlike example 2, the compensation is calculated as either the bargain element or the actual gain from the sale of the stock - whichever is lower. This is because the market price on the day of the sale is less than that on the day you exercised your option.

The bargain element, that is, the difference between the exercise price and the market price on the day you exercised the options and purchased the stock is $2,500.

  • $45 Market Price - $20 Exercise Price = $25
  • $25 x 100 shares = $2,500 Bargain Element

The actual gain on the sale of the stock is $1,000

  • $30 Sale Price - $20 Exercise Price = $10
  • $10 x 100 shares = $1,000 Actual Gain From Sale

In this example, the amount that is considered compensation is limited to $1,000, your actual gain when you sell the shares, even though your bargain element ($2,500) is higher.

  • The $1,000 may be included in the total wages shown in Box 1 of your 2024 Form W-2 from your employer because this is a disqualifying sale, meaning that it does not qualify for treatment as a capital gain (at the lower capital gains rates).
  • If the $1,000 amount is not included in Box 1 of your 2024 Form W-2, you must still add it to the amount you're reporting as compensation as "Other Income" on your Form 1040.

In order to be taxed only on the lesser of the two calculations, ($2,500 vs. $1,000 in our example), the sale cannot be any of the following:

  1. A wash sale: if you repurchase shares in the same company (such as through an employee stock purchase plan) within 30 days before or after the sale of the shares obtained from the exercise of the option, some or all of the sale will be considered a wash sale. You will not be allowed to report the lesser calculation as income for shares sold in a wash sale. You must report the full $2,500 as income.
  2. A sale to a related party: If you sell the shares to a related party (a member of your family, or a partnership or corporation in which you have more than a 50 percent interest), you must report the full $2,500 as income.
  3. A gift: If you gave the stock to an individual or a charity, rather than selling the shares, you must report the full $2,500 as income.

Report the sale on your 2024 Schedule D, Part I, as a short-term sale. It's considered short-term because one year or less had passed between the date you acquired the stock and the date you sold it.

For reporting purposes on Schedule D:

  • The date acquired is 12/31/2023.
  • The date sold is 6/15/2024.
  • The sales price is $3,000. This is the price at the date of sale ($30) times the number of shares sold (100). This amount should be reported as the gross amount on the 2024 Form 1099-B that you'll receive from the broker that handled the sale.
  • The cost basis is $3,000. This is the actual price paid per share times the number of shares ($20 x 100 = $2,000) plus the compensation amount reported on your 2024 Form 1040 ($1,000).
  • The resulting gain is zero.

Because this sale did not occur in the same year as the year you exercised the options, you have to make an adjustment for AMT. When you originally purchased the stock, you should have reported an income adjustment for AMT purposes in that year.

4. Sell shares at least one year and a day after you purchase, but less than two years after the grant date

 

Grant date

08/01/2022

Exercise date

02/01/2023

Grant price

$20

Market price on 02/01/2023

$45

Sale date

06/15/2024

Sale price

$85

Commissions paid at sale

$10

Number of shares

100

Bargain element

$2,500

Net gain

$3,990

The bargain element is calculated as the difference between the exercise price and the market price on the day you exercised the options and purchased the stock.

  • $45 Market Price - $20 Exercise Price = $25
  • $25 x 100 shares = $2,500 Bargain Element

This amount should be included in the total wages shown in Box 1 of the 2024 Form W-2 from your employer because this is a disqualifying sale (meaning that your gain does not qualify for capital gains treatment for which the rates are lower than for ordinary income in 2024). If this amount is not included in Box 1 of Form W-2, you still must add it to the amount of compensation income that you report on your 2024 Form 1040, line 7.

You also must report the sale of the stock on your 2024 Schedule D, Part II as a long-term sale. It is long term because more than one year passed between the date you acquired the stock and the date you sold it.

For reporting purposes on Schedule D:

  • The date acquired is 02/01/2023.
  • The date sold is 6/15/2024.
  • The sales price is $8,490. This is the price at the date of sale ($85) times the number of shares sold (100), or $8,500. We then subtract the commissions paid on the sale (in this example $10), resulting in $8,490. This amount should be reported as the gross amount on the 2024 Form 1099-B that you'll receive from the broker that handled the sale.
  • The cost basis is $4,500. This is the actual price paid per share times the number of shares ($20 x 100 = $2,000) plus the compensation income reported on your 2024 Form 1040 ($2,500).
  • The resulting gain is $3,990 ($8,490 - $4,500 = $3,990).

Because this sale did not occur in the same year as the year you exercised the options, you have to make an adjustment for AMT. When you originally purchased the stock, you should have reported an income adjustment for AMT purposes in that year.

  • Find out if this was the case by looking at Form 6251 (Alternative Minimum Tax) for the year that you purchased the shares.
  • In our example, the amount that should have been reported on your 2024 Form 6251 was the bargain element ($45 - $20 = $25) times the number of shares (100), which equals $2,500.
  • So what do you do this year? You will have to report another adjustment on your 2024 Form 6251. We explain how you calculate your AMT adjustment in the section called Reporting an Incentive Stock Option Adjustment for the Alternative Minimum Tax below.

5. Sell shares at least one year and a day after you purchase and at least two years after the grant date

 

Grant date

01/01/2021

Exercise date

02/01/2022

Grant price

$20

Market price on 02/01/2022

$45

Sale date

06/15/2024

Sale price

$85

Commissions paid at sale

$10

Number of shares

100

This sale is a qualifying sale, because:

  • more than two years passed between the grant date and the sale date, and
  • more than one year passed between the exercise date and the sales date.

Because this is a qualifying sale, the 2024 Form W-2 you receive from your employer will not report any compensation amount for this sale.

Report the sale on your 2024 Schedule D, Part II as a long-term sale. It is long-term because more than one year passed between the date you acquired the stock and the date you sold it.

For reporting purposes on Schedule D:

  • The date acquired is 02/01/2023.
  • The date sold is 06/15/2024.
  • The sale price is $8,490. This is the price at the date of sale ($85) times the number of shares sold (100), or $8,500. We then subtract any commissions paid on the sale (in this example $10), resulting in $8,490. This amount should be reported as the gross amount on the 2024 Form 1099-B that you'll receive from the broker that handled the sale.
  • The cost basis is $2,000. This is the actual price paid per share times the number of shares ($20 x 100 = $2,000).
  • The long-term gain is the difference of $6,490 ($8,490 - $2,000 = $6,490).

Because this sale and the exercise of the options didn't occur in the same year, you must make an adjustment for AMT. When you originally purchased the stock, you should have reported an income adjustment for AMT purposes in that year.

  • Find out if this was the case by looking at Form 6251 (Alternative Minimum Tax) for the year that you purchased the shares.
  • In our example, the amount that should have been reported on your 2024 Form 6251 was the bargain element ($45 - $20 = $25) times the number of shares (100), which equals $2,500.
  • So what do you do this year? We'll explain how you calculate your AMT adjustment in the section below.

Reporting an Incentive Stock Option adjustment for the Alternative Minimum Tax

If you buy and hold, you will report the bargain element as income for Alternative Minimum Tax purposes.

  • Report this amount on Form 6251: Alternative Minimum Tax for the year you exercise the ISOs.
  • When you sell the stock in a later year, you must report another adjustment on your Form 6251 for the year of sale.

But what is the adjustment you should report? The year-of-sale Form 6251 adjustment is added to the stock's cost basis for Alternative Minimum Tax purposes (but not for regular tax purposes).

  • So, in example 5, rather than using a cost basis of $2,000 for AMT, a cost basis of $4,500 ($2,000 plus $2,500 of the AMT adjustment from the year of exercise) should be used.
  • This results in a $3,990 gain for AMT purposes from the sale, which differs from the regular tax gain of $6,490 by exactly $2,500.

Unused AMT credits

In the year that you exercise an Incentive Stock Option, the difference between the market value of the stock on the exercise date and the exercise price counts as income under the AMT rules, which can trigger an AMT liability. However, you will also generally earn an AMT credit in that year. You can use the credit to lower your tax bill in later years. However, there are limitations on when you can use an AMT credit.

Consider the entire picture

It's important to take a look at the whole picture of your capital gains and losses for AMT purposes when you sell stock that you purchased by exercising Incentive Stock Options. If the market turns on you after you have exercised your options and the current value of your stock is now less than what you paid, you could still be subject to the Alternative Minimum Tax.

One way around that is to sell the stock in the same year that you bought it, creating a "disqualifying" disposition. That way you won't be subject to the AMT, but you would be subject to regular tax on the difference between your option exercise price and the sales price.

For example, assume you exercised options at $3 a share on a day when the stock was selling for $33, and the stock value later dropped to $25.

  • If you sell the stock at $25 before the end of the year, you would be taxed at ordinary income tax rates on $22 per share ($25-$3) and not be subject to any AMT concerns.
  • But if you hold onto the stock, you would be taxed for AMT purposes in the year you exercised the option on the phantom profit of $30 a share—the difference between your option exercise price and market price on the day you bought the shares—even if the actual market price of your shares fell after that date.
  • It may be advisable to consult with a tax professional prior to making any transactions that involve ISO shares.

Taxes and Incentive Stock Options

Your employer isn't required to withhold income tax when you exercise an Incentive Stock Option since there is no tax due (under the regular tax system) until you sell the stock. Although no tax is withheld when you exercise an ISO, tax may be due later when you sell the stock, as illustrated by the examples in this article. Be sure to plan for the tax consequences when you consider the consequences of selling the stock.

For additional information, see IRS Publication 550: Investment Income and Expenses (Including Capital Gains and Losses) and Stock Options in IRS Publication 525: Taxable and Nontaxable Income.

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  • Fastest refund possible: Get your tax refund from the IRS as fast as possible by e-filing and choosing to receive your refund by direct deposit. Tax refund time frames will vary. Last tax year, the IRS issued more than 9 out of 10 refunds in less than 21 days.

  • Get your tax refund 5 days early in your bank account: If you choose this paid add-on feature, your federal tax refund will be deposited to your selected bank account 5 days before the refund settlement date provided by the IRS (the date your refund would have arrived if sent from the IRS directly). The receipt of your refund 5 Days Early is subject to IRS submitting refund information to us at least 5 days before the refund settlement date. IRS does not always provide refund settlement information 5 days early. You will not be eligible to receive your refund 5 Days Early if (1) you take a Refund Advance loan, (2) IRS delays payment of your refund, or (3) your bank's policies do not allow for same-day payment processing. 5 Days Early fee will be deducted directly from your refund prior to being deposited to your bank account. If your refund cannot be delivered 5 Days Early, you will not be charged the 5 Days Early fee. Excludes business tax returns. 5 Days Early program may change or be discontinued at any time without notice.

    Money movement services are provided by Intuit Payments Inc., licensed as a Money Transmitter by the New York State Department of Financial Services. For more information about Intuit Payments' money transmission licenses, please visit https://www.intuit.com/legal/licenses/payment-licenses/.

  • Get your tax refund up to 5 days early with Credit Karma Money™: When it's time to file, have your tax refund direct deposited to a Credit Karma Money™ checking or savings account, and you could receive your funds up to 5 days early. If you choose to pay your tax preparation fee with TurboTax using your federal tax refund or if you choose to take the Refund Advance loan, you will not be eligible to receive your refund up to 5 days early with Credit Karma. 5-day early program may change or discontinue at any time. Up to 5 days early access to your federal tax refund is compared to standard tax refund electronic deposit and is dependent on and subject to IRS submitting refund information to the bank before release date. IRS may not submit refund information early. Excludes business tax returns. Banking services for Credit Karma Money accounts are provided by MVB Bank, Inc., Member FDIC. Maximum balance and transfer limits apply per account. For more information, please visit https://turbotax.intuit.com/credit-karma-money/.

  • Loan details and disclosures for the Refund Advance program: If you expect to receive a federal refund of $500 or more, you could be eligible for a Refund Advance loan. Refund Advance loans may be issued by First Century Bank, N.A. or WebBank, neither of which are affiliated with MVB Bank, Inc., Member FDIC. Refund Advance is a loan based upon your anticipated refund and is not the refund itself. 0% APR and $0 loan fees. Availability of the Refund Advance is subject to satisfaction of identity verification, certain security requirements, eligibility criteria, and underwriting standards. This Refund Advance offer expires on February 28, 2025, or the date that available funds have been exhausted, whichever comes first. Offer, eligibility, and availability subject to change without further notice.

    Refund Advance loans issued by First Century Bank, N.A. are facilitated by Intuit TT Offerings Inc. (NMLS # 1889291), a subsidiary of Intuit Inc. Refund Advance loans issued by WebBank are facilitated by Intuit Financing Inc. (NMLS # 1136148), a subsidiary of Intuit Inc. Although there are no loan fees associated with the Refund Advance loan, separate fees may apply if you choose to pay for TurboTax with your federal refund. Paying with your federal refund is not required for the Refund Advance loan. Additional fees may apply for other products and services that you choose.

    You will not be eligible for the loan if: (1) your physical address is not included on your federal tax return, (2) your physical address is located outside of the United States or a US territory, is a PO box or is a prison address, (3) your physical address is in one of the following states: IL, CT, or NC, (4) you are less than 18 years old, (5) the tax return filed is on behalf of a deceased person, (6) you are filing certain IRS Forms (1310, 4852, 4684, 4868, 1040SS, 1040PR, 1040X, 8888, or 8862), (7) your expected refund amount is less than $500, or (8) you did not receive Forms W-2 or 1099-R or you are not reporting income on Sched C. Additional requirements: You must (a) e-file your federal tax return with TurboTax and (b) currently have or open a Credit Karma Money™ Spend (checking) account with MVB Bank, Inc., Member FDIC. Maximum balance and transfer limits apply. Opening a Credit Karma Money™ Spend (checking) account is subject to eligibility. Please see Credit Karma Money Spend Account Terms and Disclosures for details.

    Not all consumers will qualify for a loan or for the maximum loan amount. If approved, your loan will be for one of ten amounts: $250, $500, $750, $1,000, $1,500, $2,000, $2,500, $3,000, $3,500, or $4,000. Your loan amount will be based on your anticipated federal refund to a maximum of 50% of that refund amount. You will not receive a final decision of whether you are approved for the loan until after the IRS accepts your e-filed federal tax return. Loan repayment is deducted from your federal tax refund and reduces the subsequent refund amount paid directly to you.

    If approved, your Refund Advance will be deposited into your Credit Karma Money™ Spend (checking) account typically within 15 minutes after the IRS accepts your e-filed federal tax return and you may access your funds online through a virtual card. Your physical Credit Karma Visa® Debit Card* should arrive in 7 - 14 days. *Card issued by MVB Bank, Inc., Member FDIC pursuant to a license from Visa U.S.A. Inc.; Visa terms and conditions apply. Other fees may apply. For more information, please visit: https://support.creditkarma.com/s/article/Are-there-fees-with-a-Credit-Karma-Money-Spend-account.

    If you are approved for a loan, your tax refund after deducting the amount of your loan and agreed-upon fees (if applicable) will be placed in your Credit Karma Money™ Spend (checking) account. Tax refund funds are disbursed by the IRS typically within 21 days of e-file acceptance. If you apply for a loan and are not approved after the IRS accepts your e-filed federal tax return, your tax refund minus any agreed-upon fees (if applicable) will be placed in your Credit Karma Money™ Spend (checking) account.

    If your tax refund amounts are insufficient to pay what you owe on your loan, you will not be required to repay any remaining balance. However, you may be contacted to remind you of the remaining balance and provide payment instructions to you if you choose to repay that balance. If your loan is not paid in full, you will not be eligible to receive a Refund Advance loan in the future.

  • Pay for TurboTax out of your federal refund or state refund: Individual taxes only. Subject to eligibility requirements. Additional terms apply. A $40 service fee may apply to this payment method. Prices are subject to change without notice.

  • TurboTax Help and Support: Access to a TurboTax product specialist is included with TurboTax Deluxe, Premium, TurboTax Live Assisted and TurboTax Live Full Service; not included with Free Edition (but is available as a paid upgrade). TurboTax specialists are available to provide general customer help and support using the TurboTax product. Services, areas of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice. Limitations apply. See Terms of Service for details.

  • TurboTax Live - Tax Advice and Expert Review: Access to an expert for tax questions and Expert Review (the ability to have a tax expert review) is included with TurboTax Live Assisted or as an upgrade from another TurboTax product, and available through December 31, 2025. Access to an expert for tax questions is also included with TurboTax Live Full Service and available through December 31, 2025. If you use TurboTax Live, Intuit will assign you a tax expert based on availability. Tax expert availability may be limited. Some tax topics or situations may not be included as part of this service, which shall be determined at the tax expert's sole discretion. The ability to retain the same expert preparer in subsequent years will be based on an expert’s choice to continue employment with Intuit and their availability at the times you decide to prepare your return(s). Administrative services may be provided by assistants to the tax expert. On-screen help is available on a desktop, laptop or the TurboTax mobile app. For the TurboTax Live Assisted product: If your return requires a significant level of tax advice or actual preparation, the tax expert may be required to sign as the preparer at which point they will assume primary responsibility for the preparation of your return. For the TurboTax Live Full Service product: Hand off tax preparation by uploading your tax documents, getting matched with an expert, and meeting with an expert in real time. The tax expert will sign your return as a preparer.

  • TurboTax Live - Unlimited Expert Support: Unlimited access to TurboTax Live experts refers to an unlimited quantity of contacts available to each customer, but does not refer to hours of operation or service coverage. Service, area of expertise, experience levels, wait times, hours of operation and availability vary, and are subject to restriction and change without notice.

  • TurboTax Experts - Years of Experience: Based on experts' self-reported years of tax experience.

  • TurboTax Live - Expert Availability: TurboTax Live experts are available on nights and weekends for certain expanded hours during tax season (from January to April) and in the weeks leading up to tax extension deadlines. Outside of tax season, regular hours are Monday through Friday 5am to 5pm PT. Service, area of expertise, experience levels, and wait times vary, and are subject to restriction and change without notice. Unlimited access to TurboTax Live experts is included with all TurboTax Live products.

  • TurboTax Live Full Service - File your taxes as soon as today: TurboTax Full Service experts are available to prepare 2024 tax returns starting January 6, 2025. One-day preparation and filing availability depends on start time, the complexity of your return, is based on completion time for the majority of customers, and may vary based on expert availability. A tax preparation assistant will validate the customer's tax situation during the welcome call and review uploaded documents to assess readiness and ability to file same-day. All tax forms and documents must be ready and uploaded by the customer for the tax preparation assistant to refer the customer to an available expert for live tax preparation.

  • TurboTax Live Full Service - “Local”: For purposes of virtual meetings, “Local" experts are defined as being located within the same state as the consumer's zip code. Not available in all states.

  • Smart Insights: Individual taxes only. Included with TurboTax Deluxe, Premium, TurboTax Live, TurboTax Live Full Service, or with PLUS benefits, and is available through November 1, 2025. Terms and conditions may vary and are subject to change without notice.

  • My Docs: Included with TurboTax Deluxe, Premium TurboTax Live, TurboTax Live Full Service, or with PLUS benefits and is available through December 31, 2025. Terms and conditions may vary and are subject to change without notice.

  • Tax Return Access: Included with all TurboTax Free Edition, Deluxe, Premium, TurboTax Live, and TurboTax Live Full Service products. Access to up to seven years of tax returns we have on file for you is available through December 31, 2025. Terms and conditions may vary and are subject to change without notice.

  • Easy Online Amend: Individual taxes only. With TurboTax Deluxe, Premium, TurboTax Live, TurboTax Live Full Service, or with PLUS benefits, you can make changes to your 2024 tax return online through October 31, 2027. For TurboTax Live Full Service, your tax expert will amend your 2024 tax return for you through November 15, 2025; after that date, TurboTax Live Full Service customers will be able to amend their 2024 tax return themselves using the Easy Online Amend process described above. TurboTax Free Edition customers may amend 2024 tax returns online through October 31, 2025. Terms and conditions may vary and are subject to change without notice.

  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2023 TurboTax products.

  • #1 online tax filing solution for self-employed: Based upon IRS Sole Proprietor data as of calendar year 2024, for tax year 2023. Self-Employed defined as a return with a Schedule C/C-EZ tax form. Online competitor data is extrapolated from press releases and SEC filings. “Online” is defined as an individual income tax DIY return (non-preparer signed) that was prepared online and either e-filed or printed, not including returns prepared through desktop software.

  • 1099-Ks: Those filing in TurboTax Free Edition, TurboTax Live Assisted Basic or TurboTax Live Full Service Basic will be able to file a limited IRS Schedule 1 if they have hobby income or personal property rental income reported on a Form 1099-K, and/or a limited IRS Schedule D if they have personal item sales with no gain reported on Form 1099-K. Those filing in TurboTax Deluxe, TurboTax Live Assisted Deluxe or TurboTax Live Full Service Deluxe will be able to file a limited IRS Schedule D if they have personal item sales income reported on Form 1099-K. If you add other schedules or forms, or need to report other types of income on Schedules 1, D, E, F, or Form 4835 you may be required to upgrade to another TurboTax product.

  • 1099-K Snap and Autofill: Available in mobile app and mobile web only.

  • 1099-NEC Snap and Autofill: Available in TurboTax Premium (formerly Self-Employed) and TurboTax Live Assisted Premium (formerly Self-Employed). Available in mobile app only. Feature available within Schedule C tax form for TurboTax filers with 1099-NEC income.

  • Year-Round Tax Estimator: Available in TurboTax Premium (formerly Self-Employed) and TurboTax Live Assisted Premium (formerly Self-Employed). This product feature is only available after you finish and file in a self-employed TurboTax product.

  • Refer a Friend: Maximum of $500 in total rewards for 20 referrals. See official terms and conditions for more details.

  • Refer your Expert (Intuit's own experts): Maximum of $500 in total rewards for 20 referrals. See official terms and conditions for more details.

  • Refer your Expert (TurboTax Verified Pro): Maximum of $500 in total rewards for 20 referrals. See official terms and conditions for more details.

  • Average Refund Amount: $3,207 is the average refund amount American taxpayers received in the 2024 filing season based upon IRS data as of February 16, 2024 and may not reflect actual refund amount received. Each taxpayer's refund will vary based on their tax situation.

  • More self-employed deductions: based on the median amount of expenses found by TurboTax Premium (formerly Self Employed) customers who synced accounts, imported and categorized transactions compared to manual entry. Individual results may vary.

  • TurboTax Online Business Products: For TurboTax Live Assisted Business and TurboTax Full Service Business, we currently don't support the following tax situations: C-Corps (Form 1120) and entities electing to be treated as a C-Corp, Trust/Estates (Form 1041), Tax Exempt Entities/Non-Profits, returns that require more than 5 state filings, and other issues unrelated to the preparation of a tax return or unrelated to business income/franchise taxes. TurboTax Live Assisted Business is currently available only in AK, AZ, CA, CO, CT, DE, FL, GA, ID, IL, KS, MA, MD, ME, MI, MN, MO, NC, NJ, NV, NY, OH, PA, RI, SD, TN, TX, UT, VA, WA, WV, and WY.

  • Audit Defense: Audit Defense is a third-party add-on service provided, for an additional fee, by TaxResources, Inc., dba Tax Audit. Audit Defense is included at no added cost with business returns filed with TurboTax Live Business (excluding Sole Proprietor). See Membership Agreements at https://www.intuit.com/legal/terms/ for service terms and conditions.

TURBOTAX DESKTOP GUARANTEES

TurboTax Desktop Individual Returns:

  • 100% Accurate Calculations Guarantee - Individual Returns: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we'll pay you the penalty and interest. Excludes payment plans. This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax Desktop. Excludes TurboTax Desktop Business returns. Additional terms and limitations apply. See License Agreement for details.

  • Maximum Refund Guarantee / Maximum Tax Savings Guarantee - or Your Money Back - Individual Returns: If you get a larger refund or smaller tax due from another tax preparation method by filing an amended return, we'll refund the applicable TurboTax federal and/or state software license purchase price you paid. This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax Desktop. Excludes TurboTax Desktop Business returns. Additional terms and limitations apply. See License Agreement for details.

  • Audit Support Guarantee - Individual Returns: If you receive an audit letter from the IRS or State Department of Revenue based on your 2024 TurboTax individual tax return, we will provide one-on-one question-and-answer support with a tax professional, if requested through our Audit Support Center, for audited individual returns filed with TurboTax Desktop for the current 2024 tax year and, for individual, non-business returns, for the past two tax years (2022, 2023). Audit support is informational only. We will not represent you before the IRS or state tax authority or provide legal advice. If we are not able to connect you to one of our tax professionals, we will refund the applicable TurboTax federal and/or state license purchase price you paid. This guarantee is good for the lifetime of your personal, individual tax return, which Intuit defines as seven years from the date you filed it with TurboTax Desktop. Excludes TurboTax Desktop Business returns. Additional terms and limitations apply. See License Agreement  for details.

  • Satisfaction Guarantee/ 60-Day Money Back Guarantee: If you're not completely satisfied with TurboTax Desktop software, go to refundrequest.intuit.com within 60 days of purchase and follow the process listed to submit a refund request. You must return this product using your license code or order number and dated receipt. Desktop add-on products and services purchased are non-refundable.

TurboTax Desktop Business Returns:

  • 100% Accurate Calculations Guarantee - Business Returns: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we'll pay you the penalty and interest. Excludes payment plans. You are responsible for paying any additional tax liability you may owe. Additional terms and limitations apply. See License Agreement  for details.

  • Maximum Tax Savings Guarantee - Business Returns: If you get a smaller tax due (or larger business tax refund) from another tax preparation method using the same data, TurboTax will refund the applicable TurboTax Business Desktop license purchase price you paid. Additional terms and limitations apply. See License Agreement  for details.

  • Satisfaction Guarantee/ 60-Day Money Back Guarantee: If you're not completely satisfied with TurboTax Desktop software, go to refundrequest.intuit.com within 60 days of purchase and follow the process listed to submit a refund request. You must return this product using your license code or order number and dated receipt. Desktop add-on products and services purchased are non-refundable.

TURBOTAX DESKTOP DISCLAIMERS

  • Installation Requirements: Product download, installation and activation requires an Intuit Account and internet connection. Product limited to one account per license code. You must accept the TurboTax License Agreement to use this product. Not for use by paid preparers.

  • TurboTax Desktop Products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for e-filing state returns. E-file fees may not apply in certain states, check here for details. Savings and price comparison based on anticipated price increase. Software updates and optional online features require internet connection. Desktop add-on products and services purchased are non-refundable.

  • Fastest Refund Possible: Get your tax refund from the IRS as fast as possible by e-filing and choosing to receive your refund by direct deposit. Tax refund time frames will vary. The IRS issues more than 9 out of 10 refunds in less than 21 days.

  • Average Refund Amount: $3,207 is the average refund amount American taxpayers received in the 2024 filing season based upon IRS data as of February 16, 2024 and may not reflect actual refund amount received.

  • TurboTax Technical Support: Customer service and technical support hours and options vary by time of year.

  • Deduct From Your Federal Refund: Individual taxes only. Subject to eligibility requirements. Additional terms apply. A $40 Refund Processing Service fee applies to this payment. method. Prices are subject to change without notice.

  • Data Import: Imports financial data from participating companies; Requires Intuit Account. Quicken and QuickBooks import not available with TurboTax installed on a Mac. Imports from Quicken (2022 and higher) and QuickBooks Desktop (2023 and higher); both Windows only. Quicken import not available for TurboTax Desktop Business. Quicken products provided by Quicken Inc., Quicken import subject to change.

  • Live Tax Advice: Access to tax experts to obtain answers to tax questions and to assist with tax year 2024 return(s) prepared with TurboTax Desktop software. Additional fees apply. Must be purchased and used by October 31, 2025. Excludes TurboTax Desktop Business. See License Agreement for details.

  • Audit Defense: Audit Defense is a third-party add-on service provided, for a fee, by TaxResources, Inc., dba Tax Audit. See Membership Agreements at https://turbotax.intuit.com/corp/softwarelicense/ for service terms and conditions.

All features, services, support, prices, offers, terms and conditions are subject to change without notice.

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