TurboTax "Audit Defense" worth it?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Theseus
Posts: 454
Joined: Sat Jan 23, 2016 9:40 am

TurboTax "Audit Defense" worth it?

Post by Theseus » Sat Apr 07, 2018 2:08 pm

I just finished my return in TurboTax. I have a complex situation in 2017 with business sale, large donation to charity, starting a new LLC and some investments from foreign bank accounts (all reported). TurboTax is offering Audit Defense for $44.99. I think in my situation it seems worth spending that amount.

Does anyone have experience with it or thoughts regarding this?

RadAudit
Posts: 3092
Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: TurboTax "Audit Defense" worth it?

Post by RadAudit » Sat Apr 07, 2018 2:12 pm

In your case, it might be. Couldn't hurt.

For my returns, not so much.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The calvary isn't coming, kids. You are on your own.

supalong52
Posts: 123
Joined: Tue Feb 09, 2010 1:51 pm

Re: TurboTax "Audit Defense" worth it?

Post by supalong52 » Sat Apr 07, 2018 2:14 pm

This article suggests it's not worth it given the coverage: http://time.com/money/3473/dont-pay-for-irs-protection/

When I had a complicated return a few years ago and wanted some more confidence, I did the H&R Block Second Look (https://www.hrblock.com/tax-offices/ext ... .html#/en/) where they see if an amended return is needed. If not, then it's free. They weren't that thorough, but I just talked over the big issues with the tax guy and felt better about what I had done.

User avatar
nisiprius
Advisory Board
Posts: 37075
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: TurboTax "Audit Defense" worth it?

Post by nisiprius » Sat Apr 07, 2018 2:22 pm

If they sold "mistake insurance" I'd buy it. But they don't.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Theseus
Posts: 454
Joined: Sat Jan 23, 2016 9:40 am

Re: TurboTax "Audit Defense" worth it?

Post by Theseus » Sat Apr 07, 2018 2:22 pm

supalong52 wrote:
Sat Apr 07, 2018 2:14 pm
This article suggests it's not worth it given the coverage: http://time.com/money/3473/dont-pay-for-irs-protection/

When I had a complicated return a few years ago and wanted some more confidence, I did the H&R Block Second Look (https://www.hrblock.com/tax-offices/ext ... .html#/en/) where they see if an amended return is needed. If not, then it's free. They weren't that thorough, but I just talked over the big issues with the tax guy and felt better about what I had done.
Thank you. I had my return prepared by my CPA that handled my business and personal taxes. In parallel I was doing the return myself in TurboTax since going forward I want to do the taxes myself. Since our returns are mostly matching up I am planning to submit my Turbotax version since that will make it easier in 2018.

For me $45 is not too much if they provide real representation in case of an audit.

Thanks for the link to HR block. I might check it out.

TravelGeek
Posts: 2464
Joined: Sat Oct 25, 2014 3:23 pm

Re: TurboTax "Audit Defense" worth it?

Post by TravelGeek » Sat Apr 07, 2018 2:43 pm

I asked myself the same question again recently, after having sometimes paid and sometimes skipped it in the past. Search found some earlier threads on this topic. No clear answer, unfortunately/unsurprisingly. Haven’t made up my mind, but leaning towards it for the peace of mind at a relatively small cost. (TurboTax itself was free for me thanks to Fidelity). I think i did a “good enough” job filling out the return, but if I were to get an IRS request, it might save some time/headache.

And, Nisiprius, some 20+ years ago when I had H&R Block do my tax return with ESPP transactions, I was fairly certain that the preparer has screwed up in my favor. I explained it during the review and she insisted that she was right. It was my first non-trivial return, so I accepted it but bought their “mistake Insurance” for a few bucks. IRS accepted the return. I never went back to H&R Block.

I should dig through my old paperwork and see if I can today determine if I was right or wrong. :)

SlowMovingInvestor
Posts: 916
Joined: Sun Sep 11, 2016 11:27 am

Re: TurboTax "Audit Defense" worth it?

Post by SlowMovingInvestor » Sun Apr 08, 2018 9:53 am

I'm thinking about Audit Defense this year. Not to hijack this thread, but I did have a few questions. I use TT download, not online.

1) I'm thinking of filing an extension. I can still get audit defense when I actually file later, right ?

2) Is Audit defense only available if you efile ? I ask because I may need to manually override some TT entries at the state level owing to complicated part year residency. If you manually override an entry, efiling is not allowed, so I may be able to get Audit Defense only for Federal.

3) Does TT preserve your return or other private information if you ask for Audit defense, but don't actually get audited ? I don't want TT to keep my return just because I buy Audit Defense. I'm fine with their preserving name and address when/if purchase it, but I don't want them to retain anything else unless I get audited.

mjdaniel
Posts: 111
Joined: Sat Jan 21, 2012 2:20 pm
Location: Temecula, CA

Re: TurboTax "Audit Defense" worth it?

Post by mjdaniel » Sun Apr 08, 2018 10:13 am

If you have represented yourself honestly and have thorough backup documentation, I don't see the need for it.

stan1
Posts: 6087
Joined: Mon Oct 08, 2007 4:35 pm

Re: TurboTax "Audit Defense" worth it?

Post by stan1 » Sun Apr 08, 2018 10:43 am

It's basically insurance. We have never been audited in the past but I bought it this year for the first time because of a large contribution of appreciated securities to my donor advised fund and sale of a limited partnership. Will not buy it next year. It's $45, not $450 or $4500. If I don't need it or they fail to come through I won't lose sleep over $45.

sophie1
Posts: 72
Joined: Thu Apr 18, 2013 1:58 pm

Re: TurboTax "Audit Defense" worth it?

Post by sophie1 » Sun Apr 08, 2018 11:58 am

I bought the service for a couple of years and had occasion to use it last year. I didn't find it to be worthwhile. They only permit contact by phone during very narrow time windows and have a cumbersome system for sending documentation. I ended up spending twice as much time as I would have if I'd simply handled it myself. Also I discovered that it's easy to request extensions from the IRS, so no worries about being audited at a bad time.

As long as you don't file anything that's beyond what you understand, or that you know isn't defensible, you'll be fine. If that's not the case, you probably should have a real life CPA taking care of your taxes.

Post Reply