
TurboTax Freemium Funnel: Critical Analysis and UX Teardown - breademoji
https://medium.com/@brandonscottread/turbotax-design-1a37356adc61
======
djcapelis
I stopped using TurboTax some years ago and switched to TaxAct as a less bad
alternative. I didn’t believe them to be necessarily tons better than giving
money to TurboTax, but I figured at least it wouldn’t just keep solidifying a
market leader who was capturing a significant market based mostly around
actively lobbying to keep it that way.

In the last two years I took a leap to CreditKarma’s tax offering. It is a bit
basic and not quite as endlessly full featured, but it is simple, efficient,
pretty quick and quite fast. It’s also entirely free. The first year I used it
I ran my numbers in a competing product to check, I was self employed at the
time, which meant my tax situation wasn’t exactly easy that year.

Anyway, the numbers lined up perfectly. So I used CreditKarma to file and have
been happy with it ever since. Honestly at this point I’d pay for it, just to
give them a more solid business model and development budget, but as far as I
know they don’t even have a paid option!

I filed in February this year. It was easy.

I actively avoid Intuit products now.

(Though, pragmatism wins here to some degree: I did use their self-employment
accounting tool for a few years even when I had switched away from their tax
software. That tool makes it annoyingly easy to keep accurate books and Xero
just wasn’t as good and simple at what I was looking for. If I was doing it
again today, I’d definitely again look for alternatives. And frankly I think
I’d find them now.)

~~~
Hello71
too bad they sell your tax information, in all likelihood to companies like
Equifax. now they don't have to ask your employers your salary anymore, you
can just tell them.

~~~
shkkmo
Do you have evidence or justification for this claim?

~~~
Hello71
From their privacy policy
[https://www.creditkarma.com/tax/privacy](https://www.creditkarma.com/tax/privacy):

When We Share the Information We Collect

Affiliates: We may share certain information with our affiliated companies,
such as Credit Karma, to help us provide our Services and manage your account.

now, it seems fine for Credit Karma Tax to share information with Credit
Karma. what exactly counts as an "affiliate" though? I mean, "affiliate
marketing" is a common term, and that's pretty darn broad. I read it in the
broadest terms possible, which would be "everyone we have a business
relationship with", necessarily including TransUnion and probably other CRAs.

~~~
shkkmo
I believe affiliate has a more restrictive meaning that just "everyone we have
a business relationship with" but I'm not a lawyer.

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clumsysmurf
I had an awful experience with TurboTax just a few days ago, and will probably
never use it again. In the very beginning, it asked me to click on some some
things to get a "life picture" and seemed the Free version was fine. Then I
get halfway into it, and it says it can't continue unless I use Premium. When
I was almost done it asked to charge extra for "audit protection" and I had a
wave of anxiety sweep over me, and almost purchased that too.

It has been brought up a few times here: companies like H&R Block have lobbied
to keep things complicated.

[https://www.propublica.org/article/filing-taxes-could-be-
fre...](https://www.propublica.org/article/filing-taxes-could-be-free-simple-
hr-block-intuit-lobbying-against-it)

Unless I have some special deductions to take care of, the government should
just send me something like "we have received forms x,y,z from a,b,c. This is
your AGI, what we/you owe. does this look correct?"

~~~
goatherders
The ridiculous tax code isnt the fault of TT, even though they lobby to keep
it that way. It's the fault of the cowards we keep sending to DC. Take it up
with them.

~~~
votepaunchy
And yet whenever we try to eliminate “loopholes”, there’s some group
complaining vigorously to keep that complexity. The new tax law simplified
taxes for most filers by increasing the standard deduction (by eliminating
exemptions).

~~~
goatherders
How do you know the new tax law simplifies filing since it didn't apply to
2017?

~~~
maxerickson
It's pretty much guaranteed that fewer people will itemize this year.

~~~
Retric
You generally need to do the itemized calculations to see which one saves you
more money. Thus, the result is kind of meaningless as you do the same work
either way.

The only way to simplify taxes is to actually remove deductions.

~~~
astura
I (and probably the vast majority of people) don't have to do any calculations
to know I'll have less than $24,000 in deductions because $24,000 is
ridiculously high amount.

~~~
Retric
You can deduct state taxes which adds up. Really 24,000$ is easier to hit than
you might think.

~~~
evanpw
You can only deduct 10k of state taxes starting next year

~~~
jrs235
Which I think is BS for numerous reasons. A few being, the income tax is not
how the federal government was supposed nor should be funded. We need
appropriated funds and taxes, not a slush bucket that ebbs and flows. Also,
states that want to use income taxes to take care of their citizens ought to
have priority and not penalize them. Encouraging subunits to be responsible
for their needs is a good thing. Decentralizing services is beneficial by
design, even if not as efficient. The US is huge and the needs of the states
are so diverse we should leave it to the states to address their own needs.

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codehusker
This might not apply to many who frequent HN, but not enough people know about
Free File options.

If your adjusted gross income is less than $66,000 you can likely file your
federal and potentially state taxes for free.

If you make more than $66,00 AGI, the IRS provides fillable forms that are
pretty easy to use for your federal but might not be applicable in all
circumstances.

[https://www.irs.gov/filing/free-file-do-your-federal-
taxes-f...](https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-
free)

~~~
EsotericAlgo
Many states also offer an online filing option.

For example, California has CalFile[1] which covers most situations. There are
also some options for free federal filing if your AGI exceeds $66,000 as the
requirements set by Free File Alliance[2] members vary depending on the
offerings (e.g. FreeTaxUSA[3] doesn't have AGI limits).

[1]
[https://www.ftb.ca.gov/online/CalFile/index.asp](https://www.ftb.ca.gov/online/CalFile/index.asp)

[2]
[https://en.wikipedia.org/wiki/Free_File_Alliance](https://en.wikipedia.org/wiki/Free_File_Alliance)

[3] [https://www.freetaxusa.com/](https://www.freetaxusa.com/)

~~~
pnutjam
I've been using DIY tax, [http://www.freetax.com](http://www.freetax.com)

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splitrocket
America, one of the few developed nations where doing your taxes involves
paying a third party to help you tell the government what it already knows.

TurboTax and HR block lobby considerably to prevent the government from making
the process of paying taxes free, fast, and painless for the overwhelming
majority of taxpayers.

[https://www.propublica.org/article/filing-taxes-could-be-
fre...](https://www.propublica.org/article/filing-taxes-could-be-free-simple-
hr-block-intuit-lobbying-against-it)

~~~
eh78ssxv2f
There are lot of things that government does not know e.g., how much I donated
to Goodwill or other charities, or if I have multiple homes with mortgages ,
then which one is my primary residence.

We can argue that the tax code should be simpler but that's a different
argument.

~~~
splitrocket
The overwhelming majority of folks don't donate enough to charity to hit the
tax write-off level.

Countries with sane tax collection systems make it easy for you to add those
deductions, either on paper or with a web service run by the government, for
free.

And your mortgages, unless they are from international banks, yes, the IRS
already knows about those too. Let me put it this way: if it goes through a US
domiciled bank, the IRS knows about it already.

Yes, people with complex tax returns do use accountants to file their taxes in
countries with sane systems too, but the overwhelming majority don't need the
complexity for the equivalent of a w2 and/or a couple of 1099s.

------
cbhl
If one has a simple tax situation, I'd recommend looking at Credit Karma (US)
or SimpleTax (Canada).

Unfortunately, I've found TurboTax is better with weird corner cases. It
helped me figure out I was eligible for the American Opportunity Tax Credit
(US citizen going to university in Canada) which alone was a few thousand
dollars that I would have missed if I had filed a 1040-EZ on paper. It has
handled 401k->roth rollovers and cost basis, reporting capital gains (when I
divested from Bitcoin), paying taxes on Canadian RRSP capital gains, and sales
of Restricted Stock Units. I'll probably pay to use it for the foreseeable
future.

In Canada, the tax system is less arcane, so the tax software companies have
to give it to university students for free to get them hooked. It's too bad
that even if I move to another country, I'll have to file US tax returns for
life.

~~~
ams6110
I would always advise filing the full 1040 even if the EZ would work for you.
If your tax situation is simple you leave most of the lines blank, but it will
prompt you to check out a lot of stuff that you would never see if you filed
an EZ, including the American Opportunity tax credit.

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cproctor
It's not _that_ hard to do your taxes on your own, especially if you have last
year's as a model to check yourself. For computationally-oriented folks, I
imagine you probably want to have a mental model of how you're presenting
yourself tax-wise (instead of just blindly trusting Turbo Tax). In that case,
most of what you're getting with Turbo Tax is UI.

~~~
nsxwolf
There’s a lot of deductions I qualify for that I didn’t know about until I
hired a real accountant. I also didn’t know about depreciation recapture on
the sale of a rental property. I didn’t know about depreciation at all. If I
hadn’t hired an accountant I never would have known to take the depreciation,
and wouldn’t have learned that your depreciation gets recaptured even if you
don’t claim it.

If your tax situation is even remotely complicated it pays to not do it
yourself. You don’t know what you don’t know.

~~~
mgkimsal
Many folks here are web/software people. Many of us would actively argue
against a business owner building their own website precisely because "you
don't know what you don't know", and your time has a certain value. Focus on
your business, leave the tech/web/software/marketing to professionals, etc.

At some point it makes sense to DIY; at another point, switching to a
professional makes more sense. Figuring out where that line is can be years of
"penny-wise, pound-foolish" behaviour of DIY with respect to tax prep.

------
jancsika
I'm almost afraid to ask:

What's the FLOSS analog to Turbotax?

Just to be clear-- I'm talking about a wizard that asks laypeople a clear set
of curated questions and ends up with a set of tax forms that are very likely
filled in with the correct answers.

~~~
ReverseCold
[http://opentaxsolver.sourceforge.net](http://opentaxsolver.sourceforge.net)

It seems to be relatively well updated but I wouldn't be surprised if it made
errors.

~~~
jancsika
Opentaxsolver starts with the following imperative sentence: "Select tax
program." That means I must know _a priori_ which tax form corresponds to my
particular tax situation.

Choosing the correct tax forms is the job of the software, not the layperson.
If it cannot or will not perform that job then it isn't a wizard (or at least
not on the same level of time-saving as Turbotax).

If it's not a wizard then it isn't the FLOSS analog of Turbotax.

Edit: clarification

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nkron
I tried [https://www.freetaxusa.com](https://www.freetaxusa.com) this year
since I dislike Intuit so much for their lobbying. The site works very well
and has a pretty similar flow to TurboTax except no auto import of financial
account info.

I'm not sure the trustworthiness of the company/site. I didn't see any red
flags in the privacy policy but would love to hear from others if they've used
this.

~~~
antisthenes
I've just filed my taxes yesterday with them since TaxAct decided to jack up
the price to $80 for federal + state (used to be $30 back in 2011)

Seemed very straightforward, perhaps not as good on the suggestion front as
far as potentially reducing your tax burden though.

They also managed to import my prior tax PDF from TaxAct flawlessly, so that's
a plus.

------
cortesoft
I do hate that they lobby for keeping taxes hard to file, but I have no issue
paying them $60 to do my taxes. The website is such a great user experience,
and they earned that money in my estimation. Why should it be free? They
clearly put a lot of work into their site.

My only other issue with them is that they keep emailing me telling me to get
started with my filing, but I already completed my tax return weeks ago.

~~~
enraged_camel
It’s not that TurboTax should be free. Obviously no one is arguing that.

The argument is that the tax code shouldn’t be so complicated that you need to
pay a fee to file your taxes smoothly and with little risk of getting it wrong
(and getting audited/fined).

~~~
breademoji
And yes, that's the deeper argument :)

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Lendal
I was with this article until the last paragraph, "Millennials rightly demand
more from their products and services than any generation before, and are
increasingly skeptical toward disingenuous brands like Walmart and McDonalds.
They abhor deceit and trickery, and increasingly gravitate toward brands that
align with their values."

Really? Only millenials (whatever that means) are characterized by these
values? How do you figure? My experience has been exactly the opposite,
actually. But Brandon Read appears to believe that purely because of my
"generation", I gravitate toward deceit and trickery. Okay, thanks for that
valuable insight, Brandon. Whatever.

~~~
emmarose
I don't think calling out the standard values of one generation necessarily
means he's taking shots at other generations. I just think that millennials
have been hit with more advertising over the course of their lives than the
generations before them, and are therefore more distrustful in general. I
think that's all he's trying to say here.

------
desheikh
In Canada, I've switched over to [https://simpletax.ca](https://simpletax.ca).
It's free, (supported by donations), and works well even for more complicated
filings.

------
nodesocket
QuickBooks Self Employed is actually a really nice product that I use for my
consulting and SaaS companies. I linked my business checking accounts and
credit cards with it and can easily tag all transactions (income and schedule
C). It also handles estimating quarterly taxes and allow me to make quarterly
payments online via eftps.gov. Finally at the end of the year it exports
everything right into TurboTax.

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jiveturkey
eh. mediocre only because he sets the stage early as TT being able to do this
devilish stuff because they’ve studied user behavior for a decade or decades
and know you. making TT out to be some devil that knows you personally.

honestly it’s standard predatory sales technique that many many companies use,
including amazon. (like pretending that prime day prices are actually a
bargain)

------
astura
I am baffled why anyone would ever use TurboTax. It's full of these dark UI
patterns and tricks and comparable products exist for a very small fraction of
the price. Out of curiosity I looked up what TurboTax would have costed me and
they wanted $100 (I have business income) whereas I used TaxHawk for $14.

------
rdl
I'm selfishly happy that tax year 2017 is the last year I'll probably be
filing a personal US tax return (at least a substantial one) for a long time.
Maybe in 2036 they will have solved this.

~~~
geomark
Did you renounce US citizenship? I think that's the only way to remove the
requirement to file a US tax return.

~~~
rdl
No. There are lots of other ways. (Renouncing is bad for many reasons; I'm
patriotic, although the US has a lot of problems, and there's essentially a
10y tax on unrealized gains at exit, plus lifetime visa problems.)

1) Make <threshold income. (Admittedly, that sucks.) I think it is around
$3k/yr.

2) Move to a place which under Section 933 of the IRC can make its own tax
laws for bona fide residents. I'm doing Act 22 (and Act 20 for business, and
some other things) and taking advantage of the opportunities in the Isle of
Enchantment, the Commonwealth of Puerto Rico. There are some similar
opportunities for US citizens in the other US territories, but PR is the best
one I think, and is certainly the biggest and most developed.

Essentially, until 2035, you pay 0% short term, long term capital gains or
dividends. Under Act 20, businesses pay 0-5% on exported services revenue
(i.e. anything sold outside PR: SaaS, consulting, etc.). It's pretty nice.
Infrastructure is an issue (although gigabit internet is $60/mo), and some
costs are higher, but overall it's a good deal. It's hugely popular with
cryptocurrency people after crypto to crypto trades started getting taxed
fully as st cg.

(Actually I have to file 2018 too, although it will be for <$100, since I
think I have some US bank accounts which earn interest.)

~~~
geomark
That's interesting. But you still have to file a US tax return, right?

~~~
rdl
Only year-of-move (and year-of-return, but I an uncertain if the US will exist
in 2036.) If you have no US liability, because all of your income is PR-
source, no need to file US returns in the intervening years. It's possible
I'll have some US source income, though, but obviously the goal is to minimize
that in favor of PR source income. There are a bunch of complex sourcing
rules.

This is different than the Foreign Earned Income Exclusion (FEIE), where you
get a $100500 (indexed) deduction, but have to file to claim it.

~~~
geomark
That's interesting. I left the US many years ago but still have to file an
income tax return as well as FBAR. But I don't live in PR.

~~~
rdl
Yeah, I spent all but 2 years 1998-2011 doing same. FATCA just keeps making it
worse.

------
arikrak
I bought the turbo tax CD which claimed to come with phone support from CPAs.
The CD worked fine for the most part but the phone support was basically a
scam.

~~~
edraferi
I used their online video support this year. I thought it was pretty good. You
get an appointment, the. They all you (on time!) and open a little video
window in your browser. Overall I felt more confident in my return knowing a
CPA looked at it, mostly because I could describe my individual situation and
confirm I was reporting it correctly.

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0xBA5ED
I don't believe you need to read any of their clever commentary to use the
service. You can ascertain the purpose of each screen by looking at the
available options and click through ignoring all suggestions to pay them more.

