When you choose to file your taxes on your own, you can select at-home tax preparation software such as TurboTax to facilitate the preparation and filing process. Depending on the complexity of your taxes you will need to purchase a different level of software to accommodate your needs. If you have bought or sold stocks in the year you are filing for, you will need to purchase TurboTax Premier 2021 or TurboTax Self-Employed 2021 for at-home filing.
Consider also: Cashing Out Stocks
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Understanding TurboTax Product Levels
Four levels of TurboTax software are available. They vary both by the features you get as well as the price. More complex returns require the more expensive TurboTax options.
The Free Edition provides the tools for simple tax preparation, while TurboTax Deluxe 2021 includes more features to walk users through the filing process. TurboTax Premier 2021 is billed as for "investment and rental property" and builds upon the lower two levels with the addition of tools for income based on these sources. The fourth available level is the Self-Employed version which adds tools for small business owners.
You can choose either TurboTax Premier or Self-Employed for filings that include stocks.
Consider also: TurboTax Premier vs. Deluxe
Exploring TurboTax Premier 2021 Features
The Premier edition of TurboTax includes tools for reporting your investment sales and cost basis. In addition, you can explore employee stock plans as well as tools to manage your 401(k) plan. And while income you make from the sale of stocks must be reported as another source of income, taxes paid on those sales differ depending on how many of your shares are sold and if they are sold at gains or losses.
Selling higher-cost shares of stock can reduce the tax burden. However, TurboTax Premier will calculate your owed taxes regardless of how you have chosen to sell your stock options.
Get Your Paperwork Ready
When preparing to file taxes with TurboTax Premier 2021, start by gathering together all of the documents that track your investments. Your should have Form 1099-INT for income from interest, Form 1099-B for stock sales and 1099-DIV for any income from dividends. You should also obtain any confirmation slips or brokers' statements for all stocks that you sold. The more information you have, the easier it will be to input the necessary data into the software for an accurate filing.
Getting Professional Help With Filing
TurboTax offers free support with the software along with a few paid expert help options. One of the paid options allows you to get live support as you complete the filing process and includes a review of the final return. The other full-service option has a TurboTax professional complete the whole tax return filing process for you.
You can use these options if you are confused about your filing or any of the questions being asked of you. For example, you might seek expert help if you need to know how to report stocks on taxes. If you'd like to save time or you feel uncomfortable doing your taxes at all, the full-service option can appeal to you.
Otherwise, keep in mind that you are responsible for any information you enter into the TurboTax software. While it is set up to reduce the risk of an audit, knowingly entering false information can still cause trouble between you and the IRS.
Consider also: When Do You Pay Taxes on Stocks?