Turbotax: Audit defence in Turbotax online and Turbotax desktop

 

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Relevant Material: "TurboTax Audit Defense is a paid, optional service (provided through a partnership with the independent firm TaxAudit) that provides a dedicated tax professional to represent you fully in the event of an IRS or state tax audit. Its primary significance is offering peace of mind and professional representation, so you do not have to communicate with the tax authorities alone. 
Key Features and Significance
  • Full Representation: The primary value of the service is that a qualified representative (an Enrolled Agent, CPA, or tax attorney) handles all communication, correspondence, and appointments with the IRS or state tax agency on your behalf. You generally never have to speak directly with the auditor.
  • Expert Handling: Representatives develop a strategy, review all documentation, and negotiate with the tax authority, including through the appeals process if necessary.
  • Stress Reduction: For many taxpayers, the significance lies in avoiding the stress and time commitment of dealing with government audits, which can be an intimidating process.
  • Cost Certainty: The service is purchased for a one-time fee before you file your return. The same level of professional representation purchased after an audit notice could cost significantly more.
  • Coverage: It covers both federal and state income tax audits for the tax return year identified on your membership certificate, for as long as that return can be audited (typically three years for the IRS). 
Limitations and Considerations
While valuable, Audit Defense has limitations: 
  • It does not provide legal assistance in a federal or state court, including tax court.
  • It does not cover issues of civil or criminal fraud.
  • It does not help with bookkeeping, organizing records, or preparing or amending tax returns.
  • For those with very simple, straightforward returns, the risk of a full audit is low, so the added cost may not be necessary. 
Audit Support vs. Audit Defense
It's important to distinguish Audit Defense from the free Audit Support Guarantee included with all TurboTax products: 
Feature TurboTax Audit Support (Free)TurboTax Audit Defense (Paid Add-on)
Service ProvidedGuidance and answers to questions.Full professional representation.
CommunicationYou handle communication with the tax agency.A tax professional handles all communication.
CostIncluded for free with any product.An additional fee (often part of the MAX package).
In summary, the significance of TurboTax Audit Defense is primarily as an insurance policy that provides expert representation and handles the entire audit process, offering considerable value for those with complex tax situations or a desire for complete peace of mind..." (Google) 
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