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Tax-Advantaged Accounts: How They Can Boost Your Savings

Written by Rocky Mengle, Attorney • Reviewed by a TurboTax CPAUpdated for Tax Year 2024 • October 16, 2024 2:31 AM
OVERVIEW

Tax-advantaged accounts provide tax benefits to people saving for certain expenses or goals. There are two basic types of tax-advantaged accounts – tax-deferred and tax-exempt accounts. Tax-deferred accounts come with tax breaks when you put money into the account, while tax-exempt accounts offer them when you take money out. In both cases, earnings aren’t taxed while they remain in the account.

Key Takeaways

  • Tax-advantaged accounts can offer tax benefits – such as deductible contributions, tax-free growth, and tax-free withdrawals – for people saving for specific purposes like retirement, education, or medical expenses.
  • There are primarily two types of tax-advantaged accounts – tax-deferred accounts, which defer taxes until withdrawal, and tax-exempt accounts, where contributions are taxed but withdrawals are tax-free if all the account rules are followed.
  • Common tax-advantaged accounts include 401(k) accounts, IRAs, HSAs, 529 plans, and more, each with specific rules for eligibility, contributions, withdrawals, and the like.
  • While tax-advantaged accounts offer significant tax benefits and can boost savings in the long run, they can also come with certain restrictions, such as limits on contributions, penalties for non-qualified withdrawals, and required minimum distributions.

Why you should consider tax-advantaged accounts

When saving or investing for future expenses, people tend to focus on market conditions, interest rates, diversification, fees, liquidity, and similar factors when choosing where to put their money. But there’s another important consideration that often gets overlooked – taxes.

It’s great to find a savings account with a high interest rate or a mutual fund with a solid history of growth. That can mean more money in your pocket. But you also should be thinking about the income taxes you’ll have to pay on those earnings, which is money coming out of your pocket.

That’s where tax-advantaged accounts come into play. While not without potential drawbacks, they combine savings and investment gains with tax breaks that can help you lower your tax bill and save more money in the long run.

So, if you’re saving for retirement, college, medical expenses, or other purposes, make sure you check out the tax-advantaged accounts available to you. In the end, the total amount of money you have for these future costs may be higher because less tax is being paid on your savings.

What is a tax-advantaged account?

A tax-advantaged account is simply a financial account that comes with tax benefits, such as tax deductible contributions, tax-free growth, and/or tax-free withdrawals. These tax breaks are designed to encourage saving for specific goals or expenses.

There are generally two types of tax-advantaged accounts: tax-deferred and tax-exempt accounts. In both cases, earnings aren’t taxed while they remain in the account (and they’re usually tax-free even after being withdrawn from tax-exempt accounts). However, the two types of accounts differ when it comes to when you get a tax break and when you pay taxes.

With a tax-deferred account (sometimes called a “pre-tax” account), you generally get a tax break when you put money in the account. But you have to include withdrawals from the account in your taxable income. So, in essence, taxes on your contributions and earnings are “deferred” until you use the funds in the account.

On the other hand, there are no tax breaks when you put money in a tax-exempt account (also known as an “after-tax” account). But you're generally rewarded with tax-free withdrawals from the account, assuming you follow all the rules for that particular type of account. So, taxes are paid upfront and your tax benefits come later.

There are even tax-advantaged accounts that provide both tax benefits when you put money into the account and when you take it out.

Tax benefits of tax-advantaged accounts

Let’s dive a little deeper into the different types of tax benefits available with tax-advantaged accounts.

Tax-free contributions with tax-deferred accounts

With taxable accounts – like standard brokerage accounts or savings accounts – there are no tax breaks when you put money into the account. But your contributions typically avoid taxation when you put money in a tax-deferred account. 

If you're making the contribution yourself, your tax break typically comes in the form of a tax deduction. You can claim the deduction when you file your federal income tax return for the year you made the contribution.

Contributions you make through payroll deductions, or employer contributions to a tax-deferred account, aren't included in your taxable income. So, when you receive your W-2 form for the tax year of the contribution, the taxable wages reported in Box 1 won't include the money that went into your tax-deferred account.

Your adjusted gross income (AGI) for the year will also be lower because of the tax deduction or reduced taxable income. This will directly lower your tax bill, and it could also open up other tax breaks that have AGI-based eligibility rules. You might also avoid the reduction of tax deductions or credits that are phased-out for people with an AGI above a certain amount.

You’ll eventually have to include money contributed to a tax-deferred account and any earnings in your taxable income. But that won’t happen until you withdraw funds from the account.

Tax-free growth with tax-advantaged accounts

Earnings on “regular” savings and investments are often taxed when you receive them. For example, if you open a savings account with a bank, the interest you earn each year is taxed in the year you earn it. The same is generally true for dividends paid into a standard brokerage account.

However, with a tax-advantaged account, there’s no tax on earnings between the time you contribute to the account and withdraw funds from it. This is true for both tax-deferred and tax-exempt accounts.

The earnings are eventually taxed when withdrawn from a tax-deferred account. But they’re generally not taxed at all with tax-exempt accounts (assuming all the account rules are followed).

Tax-free withdrawals with tax-exempt accounts

If you sell stock or other assets held in a standard brokerage account and pocket the proceeds, you typically have to pay capital gains tax on the profit. But if those same assets are held in a tax-exempt account, there typically isn’t any tax on your withdrawal – as long as you satisfy the requirements for the type of tax-exempt account you own.

One common requirement is that you use the withdrawn funds for a specific purpose, such as for qualified education or medical expenses. With retirement accounts, you can be hit with a penalty if you withdraw money before turning 59½ years old. Other rules and restrictions may also apply.

Common tax-advantaged accounts

While tax-advantaged accounts can be used for other purposes, most people open them to save for retirement, education expenses, or medical costs. So, let’s take a quick look at a few of the more common tax-advantaged accounts for these three savings goals.

401(k) accounts

A 401(k) account is a retirement savings account that’s sponsored by many employers. If you sign up for your employer’s 401(k) plan, contributions will be withheld from your paycheck and deposited into your account. Your employer might even match your contributions – up to a point.

Both tax-deferred (“traditional”) and tax-exempt (“Roth”) 401(k) accounts are allowed. With a traditional 401(k) plan, money put in the account isn’t included in your taxable income. Money in the account grows tax-free, but both contributions and earnings are taxed when you withdraw funds from the account.

If you have a Roth 401(k), the money taken out of your paycheck and put into the account is included in your taxable income. But withdrawals are completely tax-free if you’re at least 59½ years old and have held the account for at least five years (otherwise, the earnings portion of your withdrawal is subject to tax and perhaps a penalty).

IRAs

Individual retirement accounts (IRAs) are another popular type of retirement account. As with 401(k) plans, there are both traditional IRAs (tax-deferred) and Roth IRAs (tax-exempt). However, unlike 401(k) accounts, which are run through your employer, you can open and manage an IRA all on your own.

Contributions to a traditional IRA are generally deductible. However, the IRA deduction can be reduced – or even eliminated – if you or your spouse have access to a 401(k) or other employer-sponsored retirement plan and your income is greater than a certain amount. You pay tax on all withdrawals from a traditional IRA.

There’s no tax deduction for contributions to a Roth IRA. However, if you’re 59½ or older and first contributed to a Roth IRA at least five years ago, you can make tax-free withdrawals. If you don’t meet these requirements when you take money out of a Roth IRA, you’ll owe tax on the earnings portion of the withdrawal.

TurboTax Tip:

If you put money into an IRA or 401(k) account, you might also qualify for the Saver’s Credit, which is designed to encourage lower- and middle-income people to save for retirement. The credit is worth up to $1,000 ($2,000 for married couples filing a joint return).

529 plans

Millions of Americans use tax-exempt 529 plans to save for college and other education-related expenses for their child or another beneficiary. States generally sponsor 529 plans, and you might be able to get a state income tax deduction or credit if you contribute to your state’s plan.

There’s no federal tax breaks when you put money into a 529 account – but you won’t pay tax on your contributions or earnings if you use the money in your account to pay for qualified higher education expenses.

A 529 plan isn’t just for college costs, either. Up to $10,000 per year can be used to pay for tuition at an elementary, middle, or high school.

There are also a number of options available if there’s money leftover in a 529 account after the beneficiary is done with school. For instance, it can be transferred to a family member’s 529 account, rolled over to a Roth IRA in the beneficiary’s name (up to $35,000), or used to pay the beneficiary’s student loans (up to $10,000).

Coverdell ESAs

There’s another tax-exempt account you can use to save for education costs – a Coverdell education savings account (ESA). They’re similar to 529 plans in that there’s no deduction for contributions to the account, while withdrawals are tax-free if the money is used for qualified education expenses.

However, there are some notable differences between Coverdell ESAs and 529 plans. For instance, with a Coverdell ESA:

  • Funds can be used for more than just tuition at an elementary or secondary school, and there’s no limit on how much you can withdraw for these expenses.
  • The amount you can contribute each year is reduced (or even eliminated) if your income is above a certain amount.
  • You generally have to put money in the account before the beneficiary turns 18.
  • When the beneficiary turns 30, you generally have to take out all the money in the account within 30 days.

HSAs

Health savings accounts (HSAs) are used to save for future medical expenses. But they’re a bit unique in that they provide tax benefits both when you put money in the account and when you take it out.

Contributions you make to an HSA are generally tax deductible. Some employers will make contributions to your HSA, too. In that case, the contributions aren’t included in the taxable income reported on your W-2 form.

There’s also no tax on withdrawals as long as the money is used to pay qualified medical expenses, which are basically the same as expenses that qualify for the medical and dental expenses deduction (but you can’t use the same expense for both an HSA distribution and the medical expense deduction).

Health FSAs

Health flexible spending accounts (FSAs) allow employees to set aside money to pay for eligible health care expenses. Like HSAs, they’re both tax-deferred and tax-exempt accounts. However, FSAs are only available if your employer sets it up, so you can’t open one by yourself.

FSAs are typically funded through payroll deductions, with the employee choosing how much to contribute from each paycheck (up to an annual limit). But your employer can contribute to your FSA, too. Contributions to an FSA aren’t included in your taxable income.

Money in your FSA can be used to pay for medical expenses (or be reimbursed for them). As long as they’re used to pay qualified expenses, there’s no tax on withdrawals from your FSA.

However, FSAs are generally "use-it-or-lose-it" accounts. This means any amount left in the account at the end of the year generally can’t be carried over to the next year (although your employer can offer a limited grace period or carryover amount).

Other tax-advantaged accounts

While the accounts listed above may be the most common types of tax-advantaged accounts, they aren’t the only ones. Here are some other accounts that can help savers cut their tax bill.

  • Solo 401(k) - A 401(k) retirement account for a business owner with no employees, or only one employee who is a spouse.
  • 457 accounts - Similar to 401(k) retirement accounts, but for government workers and employees of certain tax-exempt organizations.
  • 403(b) accounts - Similar to 401(k) retirement accounts, but for employees at public schools and certain charities.
  • Simplified Employee Pension (SEP) IRAs - Special type of IRA set up by employers. Only the employer contributes to an employee’s retirement account.
  • Savings Incentive Match Plan for Employees (SIMPLE) IRAs - Special type of IRA set up by small businesses. The employer must contribute to each eligible employee’s retirement account, while employees have the option to contribute.
  • Achieving a Better Life Experience (ABLE) accounts - Similar to a 529 account, but for costs to maintain health, independence, and quality of life for people with disabilities or who are blind.
  • Dependent care FSAs - Similar to a health FSA, except funds are used to pay for eligible child and dependent care expenses.

Drawbacks of tax-advantaged accounts

While tax-advantaged accounts can offer great tax benefits, they aren’t without certain downsides. For example, when compared to taxable accounts, you might lose some flexibility with tax-advantaged accounts. You can also lose the very tax benefits that make these accounts unique.

Here’s a quick look at a few of the drawbacks of tax-advantaged accounts that you want to keep in mind.

Restrictions on use of funds

As already mentioned, tax-advantaged accounts are designed to encourage saving for specific expenses or goals – like retirement, higher education, or medical costs.

If you don’t use funds from a tax-advantage account for the intended purpose, you can be penalized. For example, if you don’t use money from a 529 plan or Coverdell ESA for qualified education expenses, you’ll lose the tax exemption normally allowed for withdrawals and might have to pay a penalty.

Likewise, since IRAs and 401(k) accounts are used to save for retirement, you can be hit with a 10% early withdrawal penalty if you pull money out of these accounts before you reach age 59½ (although there are several exceptions to the penalty). If you have a Roth account, you can also lose the tax exemption on earnings if you withdraw funds from your retirement account early (your contributions to a Roth account can be taken out at any time without penalty).

There’s one notable exception to the penalty rules for seniors with an HSA. If you’re at least 65 years old, you can withdraw money from an HSA and use it for any purpose without having to pay a penalty - although you’ll still have to pay tax on the withdrawal.

Contribution limits

You can stuff as much money in a regular taxable account as you want. But there are limits to how much you can put in tax-advantaged accounts. Exceeding the contribution limit can result in the loss of tax benefits and penalties.

In most cases, there are annual contribution limits for tax-advantaged accounts. In some cases, the limit is increased if you’re at least a certain age (the extra amount is called a “catch-up” contribution). For instance, you generally can’t put more than $7,000 in one or more IRAs for the 2024 tax year if you’re under 50 years old, or $8,000 if you’re 50 or older. The limits are updated each year to account for inflation.

In some cases, the annual contribution limit can also be reduced – potentially to $0 – if your income is above a certain amount. This is the case with Roth IRAs and Coverdell ESAs.

Your IRA contributions for the year also can’t exceed your taxable compensation for the year.

When it comes to 529 plans, the contribution limits apply to your overall contributions, rather than annual contributions. The limits, which are set by the states that authorize 529 plans, are also based on the amount typically needed to cover the plan beneficiary’s qualified education expenses in that state. 

As a result of these limits, tax-advantaged accounts might not fulfill your needs if you’re trying to save a large amount of money each year.

Required minimum distributions (RMDs)

Since money in a tax-deferred account isn’t taxed until you withdraw it, the IRS forces you to start withdrawing funds from traditional IRAs and 401(k) accounts once you reach a certain age. These mandatory withdrawals are called “required minimum distributions” (or RMDs for short).

Right now, you don’t have to start taking RMDs until you’re 73 years old. However, RMDs won’t be required until you turn 75 starting in 2033.

RMDs aren’t required for Roth IRAs or, starting in 2024, Roth 401(k) accounts. They aren’t required for taxable accounts, either. So, if you want to keep all your retirement savings in your account past the age when RMDs kick in, consider opening a Roth account or even a taxable account.

Eligibility requirements

Even if you want to save with a tax-advantaged account, you might not meet the eligibility requirements for opening or contributing to the account. For instance:

  • You might not be able to participate in your employer’s 401(k) plan if you’re a part-time worker.
  • You must have earned income for the year to contribute to an IRA.
  • Contributions to a Roth IRA or Coverdell ESA aren’t allowed if your income is too high.
  • You can’t contribute to an HSA unless you’re covered under a high-deductible health plan.
  • You generally can’t open a Coverdell ESA for a beneficiary who is 18 or older (unless the beneficiary has special needs).

The point is to make sure you check out the rules for the type of account you’re interested in before mapping out your savings plan.

Limited investment options

Investment options can be limited with certain tax-advantaged accounts. For instance, 401(k) plans and 529 accounts typically offer a limited number of mutual funds or other investment options to choose from.

While IRAs typically offer a wider selection of investment choices, you generally can’t use them to invest in collectibles, such as art, stamps, coins, gems, precious metals, and the like.

How to choose the right tax-advantaged account

After weighing the pros and cons, you decide to move forward and open a tax-advantaged account. How can you pick the right account for you?

Assess your financial situation and goals

A good place to start is with an assessment of your current financial situation and financial goals for the future. Ask yourself a few questions about your goals and tax expectations, such as:

  • What are you saving for?
  • How much do you need to save?
  • What’s your timeline?
  • If you have multiple goals, what are your priorities?
  • Do you need a tax break now more than you will in the future?
  • Will a tax break be more valuable now or in the future?

Once you’ve gone through these and similar other questions, it will be easier to evaluate the different types of tax-advantaged accounts and pick the right one(s) for you.

Tax break now vs. tax break later

When deciding whether to put money in a traditional or Roth retirement account, one thing to consider is the comparative value of the tax benefits available. Will the tax break you get when you contribute to a traditional account be worth more than the tax break you get when you withdraw funds from a Roth account?

Generally speaking, if you expect to be in a lower tax bracket when you retire, getting an immediate tax break when you contribute to a traditional account will be more valuable than a tax break later when you withdraw money out of a Roth account.

For example, if you’re in the 22% tax bracket right now, you’ll cut your tax bill by $2,200 if you contribute $10,000 to a traditional retirement account ($10,000 x .22 = $2,200). But if you expect to be in the 12% bracket when you retire, you’ll only save $1,200 when you pull $10,000 out of a Roth account in retirement ($10,000 x .12 = $1,200).

Of course, if the script is flipped and you expect to be in a higher tax bracket in retirement, then a Roth account might be the way to go. Plus, if one of your primary goals is to minimize taxes in retirement as much as possible, then a Roth account is the better option – even if the value of the tax benefit is lower.

But keep in mind that income tax rates can change – especially if you’re trying to predict which tax bracket you’ll be in decades from now. Future tax rate changes can impact the effectiveness of your retirement saving strategy.

And, of course, you can always save for retirement with both traditional and Roth accounts. Having a mix of both tax-deferred and tax-exempt accounts can offer more flexibility now and in the future.

Evaluating eligibility and contribution limits

As noted earlier, tax-advantaged accounts can have specific eligibility requirements. So, naturally, you want to make sure you qualify before opening a specific type of account.

You also want to make sure you’ll be eligible for the available tax break before opening a tax-advantaged account. For instance, you might think twice before opening a traditional IRA if you have a 401(k) at work and your income is above the point at which the tax deduction for contributions to a traditional IRA are completely phased out. 

Pay attention to a tax-advantaged account’s contribution limits, too. If the limit is too low to accommodate your savings goals, then you might want to look for a different option. Also remember that annual contribution limits for certain types of accounts – such as Roth IRAs and Coverdell ESAs – can be phased-out for people with higher incomes.

Consult a financial advisor

You can always bring in an expert to help if you’re not sure which accounts are right for you. Working with a tax professional or other financial advisor can also result in greater tax savings and a saving strategy that’s designed specifically for you.

Tips for optimizing tax-advantaged accounts

Making the most of your tax-advantaged accounts can significantly impact your long-term financial well-being. Here are a few quick tips to help you grow your tax-advantaged accounts while keeping them in line with your financial goals.

Regularly contribute to your accounts

Make regular contributions to your tax-advantaged accounts a priority. If possible, set up automatic contributions to your accounts to make sure you’re constantly funding them. That way, you won’t even have to think about it.

Take advantage of employer matching

If your employer offers a matching contribution to your 401(k) or other retirement plan, make sure you contribute at least enough to get the full match. This is essentially free money and can significantly boost your retirement savings.

Utilize catch-up contributions

If you’re at least 50 years old, you can make catch-up contributions to retirement accounts like IRAs and 401(k) accounts. Use this opportunity to boost your retirement savings, especially if you started saving later in life or have additional income to put towards retirement.

Catch-up contributions to HSAs are also allowed if you’re 55 or older.

Strategically plan withdrawals

Since money taken out of a tax-deferred account is included in your taxable income, it can potentially push you into a higher tax bracket. In this situation, delaying the withdrawal to the following year – if possible – might result in an overall tax savings (assuming you won’t run into the same problem next year).

If you’re retired and have both traditional and Roth accounts, you can withdraw money tax-free from your Roth accounts – instead of from your traditional accounts – to avoid being bumped into a higher tax bracket and potentially increase the amount of your Social Security benefits that are subject to tax.

Regularly review your accounts

It’s a good idea to periodically review your tax-advantaged (and other) accounts. An annual review is generally recommended to make sure your investments continue to align with your long-term goals and risk tolerance.

Also check to see if your investments are diversified, which can help protect your savings against market volatility.

Periodically rebalancing your investments is also wise. This involves buying or selling assets to bring your portfolio back to its original risk level.

Stay up-to-date on tax law changes

Tax laws can change. Contribution limits and phase-out thresholds are also updated annually to account for inflation. That’s why it’s important to stay informed about any changes that can impact your contributions, withdrawals, RMDs, and other aspects of your tax-advantaged accounts.

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  • Start for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. For most paid TurboTax online and mobile offerings, you may start using the tax preparation features without paying upfront, and pay only when you are ready to file or purchase add-on products or services. Actual prices for paid versions are determined based on the version you use and the time of print or e-file and are subject to change without notice. Special discount offers may not be valid for mobile in-app purchases. Strikethrough prices reflect anticipated final prices for tax year 2023.

  • TurboTax Free Edition:TurboTax Free Edition ($0 Federal + $0 State + $0 To File) is available for those filing Simple Form 1040 returns only (no forms or schedules except for the Earned Income Tax Credit, Child Tax Credit and student loan interest), as detailed in the TurboTax Free Edition disclosures. Roughly 37% of taxpayers qualify. Offer may change or end at any time without notice.

  • TurboTax Live Assisted Basic Offer: Offer only available with TurboTax Live Assisted Basic and for those filing Form 1040 and limited credits only. Roughly 37% of taxpayers qualify. Must file between November 29, 2023 and March 31, 2024 to be eligible for the offer. Includes state(s) and one (1) federal tax filing. Intuit reserves the right to modify or terminate this TurboTax Live Assisted Basic Offer at any time for any reason in its sole and absolute discretion. If you add services, your service fees will be adjusted accordingly. If you file after 11:59pm EST, March 31, 2024, you will be charged the then-current list price for TurboTax Live Assisted Basic and state tax filing is an additional fee. See current prices here.

  • Full Service $100 Back Offer: Credit applies only to federal filing fees for TurboTax Full Service and not returns filed using other TurboTax products or returns filed by Intuit TurboTax Verified Pros. Excludes TurboTax Live Full Service Business and TurboTax Canada products. Credit does not apply to state tax filing fees or other additional services. If federal filing fees are less than $100, the remaining credit will be provided via electronic gift card. Intuit reserves the right to modify or terminate this offer at any time for any reason in its sole discretion. Must file by April 15, 2024 11:59 PM ET.

  • TurboTax Full Service - Forms-Based Pricing: “Starting at” pricing represents the base price for one federal return (includes one W-2 and one Form 1040). Final price may vary based on your actual tax situation and forms used or included with your return. Price estimates are provided prior to a tax expert starting work on your taxes. Estimates are based on initial information you provide about your tax situation, including forms you upload to assist your expert in preparing your tax return and forms or schedules we think you’ll need to file based on what you tell us about your tax situation. Final price is determined at the time of print or electronic filing and may vary based on your actual tax situation, forms used to prepare your return, and forms or schedules included in your individual return. Prices are subject to change without notice and may impact your final price. If you decide to leave Full Service and work with an independent Intuit TurboTax Verified Pro, your Pro will provide information about their individual pricing and a separate estimate when you connect with them.

  • Pays for itself (TurboTax Premium, formerly Self-Employed): Estimates based on deductible business expenses calculated at the self-employment tax income rate (15.3%) for tax year 2022. Actual results will vary based on your tax situation.

TURBOTAX ONLINE/MOBILE

  • Anytime, anywhere: Internet access required; standard data rates apply to download and use mobile app.

  • Fastest refund possible: Fastest tax refund with e-file and direct deposit; tax refund time frames will vary. The IRS issues more than 9 out of 10 refunds in less than 21 days.

  • Get your tax refund up to 5 days early: Individual taxes only. When it’s time to file, have your tax refund direct deposited with Credit Karma Money™, 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. 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.

  • For Credit Karma Money (checking account): Banking services provided by MVB Bank, Inc., Member FDIC. Maximum balance and transfer limits apply per account.
  • Fees: Third-party fees may apply. Please see Credit Karma Money Account Terms & Disclosures for more information.

  • Pay for TurboTax out of your federal refund or state refund (if applicable): Individual taxes only. Subject to eligibility requirements. Additional terms apply. A $40 Refund Processing 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 an 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.
  • Tax Advice, Expert Review and TurboTax Live: Access to tax advice and Expert Review (the ability to have a Tax Expert review and/or sign your tax return) is included with TurboTax Live Assisted or as an upgrade from another version, and available through December 31, 2024. Intuit will assign you a tax expert based on availability. Tax expert and CPA availability may be limited. Some tax topics or situations may not be included as part of this service, which shall be determined in the tax expert’s sole discretion. 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: Handoff 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. The ability to retain the same expert preparer in subsequent years will be based on an expert’s choice to continue employment with Intuit. 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. Unlimited access to TurboTax Live tax 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 Live Full Service – Qualification for Offer: Depending on your tax situation, you may be asked to answer additional questions to determine your qualification for the Full Service offer. Certain complicated tax situations will require an additional fee, and some will not qualify for the Full Service offering. These situations may include but are not limited to multiple sources of business income, large amounts of cryptocurrency transactions, taxable foreign assets and/or significant foreign investment income. Offer details subject to change at any time without notice. Intuit, in its sole discretion and at any time, may determine that certain tax topics, forms and/or situations are not included as part of TurboTax Live Full Service. Intuit reserves the right to refuse to prepare a tax return for any reason in its sole discretion. Additional limitations apply. See Terms of Service for details.

  • TurboTax Live Full Service - File your taxes as soon as today: TurboTax Full Service Experts are available to prepare 2023 tax returns starting January 8, 2024. Based on completion time for the majority of customers and may vary based on expert availability. The tax preparation assistant will validate the customer’s tax situation during the welcome call and review uploaded documents to assess readiness. 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 -- Verified Pro -- “Local” and “In-Person”: Not all feature combinations are available for all locations. "Local" experts are defined as being located within the same state as the consumer’s zip code for virtual meetings. "Local" Pros for the purpose of in-person meetings are defined as being located within 50 miles of the consumer's zip code. In-person meetings with local Pros are available on a limited basis in some locations, but not available in all States or locations. Not all pros provide in-person services.

  • Smart Insights: Individual taxes only. Included with TurboTax Deluxe, Premium, TurboTax Live, TurboTax Live Full Service, or with PLUS benefits, and is available through 11/1/2024. Terms and conditions may vary and are subject to change without notice.

  • My Docs features: Included with TurboTax Deluxe, Premium TurboTax Live, TurboTax Live Full Service, or with PLUS benefits and is available through 12/31/2025. 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, TurboTax Live Full Service customers and access to up to the prior seven years of tax returns we have on file for you is available through 12/31/2025. Terms and conditions may vary and are subject to change without notice.

  • Easy Online Amend: Individual taxes only. Included with TurboTax Deluxe, Premium, TurboTax Live, TurboTax Live Full Service, or with PLUS benefits. Make changes to your 2023 tax return online for up to 3 years after it has been filed and accepted by the IRS through 10/31/2026. Terms and conditions may vary and are subject to change without notice. For TurboTax Live Full Service, your tax expert will amend your 2023 tax return for you through 11/15/2024. After 11/15/2024, TurboTax Live Full Service customers will be able to amend their 2023 tax return themselves using the Easy Online Amend process described above.

  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2022 TurboTax products.

  • #1 online tax filing solution for self-employed: Based upon IRS Sole Proprietor data as of 2023, tax year 2022. Self-Employed defined as a return with a Schedule C 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 & either e-filed or printed, not including returns prepared through desktop software or FFA prepared returns, 2022.

  • CompleteCheck: Covered under the TurboTax accurate calculations and maximum refund guarantees. Limitations apply. See Terms of Service for details.
  • TurboTax Premium Pricing Comparison: Cost savings based on a comparison of TurboTax product prices to average prices set forth in the 2020-2021 NSA Fees-Acct-Tax Practices Survey Report.

  • 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: Rewards good for up to 20 friends, or $500 - see official terms and conditions for more details.

  • Refer your Expert (Intuit’s own experts): Rewards good for up to 20 referrals, or $500 - see official terms and conditions for more details.

  • Refer your Expert (TurboTax Verified Independent Pro): Rewards good for up to 20 referrals, or $500 - see official terms and conditions for more details.

  • Average Refund Amount: Sum of $3140 is the average refund American taxpayers received based upon IRS data date ending 2/17/23 and may not reflect actual refund amount received.

  • Average Deduction Amount: Based on the average amount of deductions/expenses found by TurboTax Self Employed customers who filed expenses on Schedule C in Tax Year 2022 and may not reflect actual deductions found.

  • 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-C), Trust/Estates (Form 1041), Multiple state filings, Tax Exempt Entities/Non-Profits, Entities electing to be treated as a C-Corp, Schedule C Sole proprietorship, Payroll, Sales tax, Quarterly filings, and Foreign Income. TurboTax Live Assisted Business is currently available only in AK, AZ, CA, CO, CT, DE, FL, GA, 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 a fee, by TaxResources, Inc., dba Tax Audit. See Membership Agreements at https://turbotax.intuit.com/corp/softwarelicense/ 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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