TurboTax is a tax preparation software developed by Michael A. in 1984 to prepare income tax returns. Chipman and acquired by Intuit in 1993 for around $225 million.
TurboTax provides a free version of their software to individuals earning less than a specific amount and filing a reasonably easy tax return. The premium version is available only for users who need to manage complicated tax returns.
What is TurboTax?
TurboTax is a tax preparation software designed to enable users to file their taxes electronically. Taxes may be filed both at the federal and state levels.
TurboTax earns money through subscription fees for access to its premium products and specialized tax professionals. It is freemium software, which means that plenty of its features can be accessed without charge.
TurboTax is a (SaaS) Software as a Service application that allows customers to file their taxes electronically. You can file a tax return in Canada or the United States.
Chipset created TurboTax in 1984. Intuit acquired it in 1993 as part of its acquisition of financial software behemoth Intuit. During the purchase, Intuit paid $225 million for the company and its products.
TurboTax is a subsidiary of Intuit’s Consumer Tax Group, located in San Diego, California (Intuit is based in Mountain View, California).
TurboTax offers several tax preparation tools, including those for employees, investors, and owners of rental properties, freelancers, and small business owners.
TurboTax offers a variety of free resources to help consumers file their taxes. This includes a tax calculator, information about tax reform, and tax advice and videos.
TurboTax is available via CD-ROM, the company’s website, and mobile and tablet phone applications (available for Android and iOS). The CD ROM provides users to file their taxes offline, but the applications and website require an internet connection.
Success Story of TurboTax
TurboTax is a software product used to prepare income tax returns.
Intuit acquired the software in 1993 for around $225 million from Michael A. Chipman.
Intuit was the most prominent provider of personal finance software solutions in the United States during this time. Consumers were also largely unaware of internet-based tax filing in the 1990s.
TurboTax Online launched in 1999, giving the firm a six-year head start over competitors such as Microsoft.
TurboTax sold around 4.2 million copies in the first year it was released. To maintain its market dominance, the corporation launched an intensive sales campaign.
Furthermore, it offered a freemium edition to low-income clients without sacrificing functionality. During the early 2000s, TurboTax’s free version was so popular that it captured 60% of the market.
During the next few years, the organization expanded rapidly by targeting taxpayers who relied on paper returns.
The user experience was enhanced based on a comprehensive understanding of its target demographic.
TurboTax’s revenue growth increased by 11% in 2020, primarily because of the COVID-19 pandemic.
How Does TurboTax Make Money?
TurboTax provides a free version of its program to anyone earning below a certain amount and filing a relatively easy tax return.
There is a certain amount of freeware included to encourage customers to upgrade later on.
Whenever you upgrade, you must obtain premium software. In addition, the organization charges users for the services of a dedicated agent who completes their tax return on their behalf.
Turbotax earns money by charging a fee for premium versions of its tax preparation software and offering tax professionals assistance.
TurboTax operates on a freemium model, which is why most of its products are free. There are two reasons for this:
- The free version lacks some features, for example, which leads clients to upgrade.
- To familiarize consumers with the platform to be familiar with how to use it when their tax situation becomes more complex.
In addition to the free version, there are three paid tiers: Deluxe, Premier, and Self-Employed.
A one-time fee is charged to each customer for any of the three alternatives. The price ranges from $60 to $120.
Consumers must repurchase the program during the next tax-filing season because the charge is paid annually.
Premium versions offer additional features, including the ability to deduct profits from real estate, bonds, stocks, and cryptocurrencies, as well as the ability to deduct donations.
Thus, consumers who require assistance from a qualified tax expert can hire one of TurboTax’s tax consultants. Access to these experts is included in TurboTax’s three tiers.
Premium features include live guidance from a professional during the filing process, as well as an evaluation of submitted documents.
Let’s begin by examining the available premium editions:
- Deluxe ($60): Those who want to maximize their deductions and credits can purchase a Deluxe plan.
- Premier ($90): People with Individuals with rental or investment properties can go for the Premier plan.
- Self-employed ($120): For sole proprietors whose income and expenses need to be reported.
Features of TurboTax Premium Plans
- The following income sources are tax-deductible: real estate, gifts, bonds, stocks, and cryptocurrency.
- Live chat assistance throughout the filing process.
- Dedicated tax experts can assist consumers in preparing their tax returns. Documents are submitted to the system, which matches them with the most qualified expert. TurboTax says its tax specialists and certified practicing accountants (CPAs) have an average of 12 years of industry experience.
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Final Word about TurboTax Business Model
TurboTax is a tax preparation software program designed to help individuals and businesses file their taxes. Intuit purchased the company in 1993 after it was founded in 1984 by Michael A. Chipman.
With the advent of online filing of tax returns at the turn of the millennium, Intuit pioneered the market.
TurboTax has a free version of its software for low-income individuals with a relatively simple filing process. Furthermore, three premium editions are available: Deluxe, Premier, and Self-Employed.
TurboTax also offers assistance to people who need help filing their taxes. A licensed accountant can also handle the entire process of filing tax returns for premium software users.
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