What Is TaxAct?
Founded in 1988, TaxAct’s goal is to provide quality tax preparation products at affordable prices. Based in Cedar Rapids, Iowa with a team of over 120 employees, it helps its customers navigate through tax season without a large financial burden. Over 45 million federal tax returns have been filed with TaxAct, by consumers, business owners and tax professionals alike.
TaxAct offers multiple online do-it-yourself tax filing options. These options make it easier and more convenient to file since everything is digital. Plus, with step-by-step guidance, online tools and a maximum refund guarantee, you learn more about the filing process while getting the most out of tax season. All options also come with unlimited phone support, giving you help with specific tax issues as they come up.
TaxAct’s Filing Options
TaxAct offers a range of filing options, all at affordable prices. There are four online plans: Free, Plus, Freelancer and Premium. These options aim at maximizing your returns, looking at more than 300 tax deductions and credits to do so. All plans also come with a price lock guarantee – you pay the price listed at the time you create your return, regardless of when you actually file.
It’s also dedicated to making the filing process faster, easier and more convenient. Since it’s an online process, it’s compatible on multiple devices. If you have a simple tax situation, you can even file through a mobile app called TaxACT Express. TaxAct also allows you to easily import your W-2 and last year’s returns. After you file, you also have access to personalized financial reports like HealthWatch and TaxWatch, which give you tips to maximize tax and healthcare savings.
TaxAct also has a 100% accuracy guarantee, which ensures that the calculations on your return are correct. If there’s a mistake on TaxAct’s end, they’ll pay the resulting penalty and interest fees. Each plan also comes with a maximum refund guarantee. And if you ever need extra help or assistance, there’s unlimited phone support. With a commitment to providing a great user experience, TaxAct is dedicated to giving you an efficient and rewarding experience.
Unlike some other tax planning services, TaxAct’s Free option is completely free. Some other services only offer federal filing for free – with TaxAct, there’s no fee for filing federal or state returns. It’s free to prepare, print and e-file. Since you can only file your 1040EZ or 1040A with this option, it’s targeted at those with simple tax returns.
To file with TaxAct, you answer simple questions about your finances and TaxAct does the rest. As you file, you get step-by-step guidance with tax tips and strategies, so you understand the process completely. There’s also a complete tax glossary to help you understand terms. And with real-time refund status, you’re able to see how different factors impact your final refund.
TaxAct also has easy import and storage. You have unlimited access to your returns up to seven years after filing, so you can refer back to them as you file in the next year. You can also import data from returns prepared with TurboTax or H&R Block. For $15, you can transfer data directly from a previous TaxAct return. These features give you access to the prior year’s comparison report, which compares the returns from this year and last year to check if there are any discrepancies. If there are any errors, you get free amended returns at no cost.
After you file, you receive personalized healthcare and tax reports, plus a complimentary BluPrint financial report. The BluPrint report shares financial planning and tax saving opportunities that may fit your financial situation.
The Plus option is TaxAct’s most popular plan. It targets homeowners, investors and those with itemized returns. It costs $25 for federal filing and $37 per state return. This option comes with all the features of the Free plan, plus access to more forms that focus on the needs of homeowners and investors. For example, you’re able to file Schedule A for itemized deductions and Form 8396 for mortgage interest credit. These forms are just a couple that aren’t offered with the Free option.
TaxAct Plus also helps maximize deductions by including tools to help get the maximum refund available. You can import data about charitable donations and investment income, which are possible areas for deductions.
New for the 2017 tax year is TaxAct’s Freelancer option, which costs $39 for a federal filing and $37 per state filing. This option is designed for independent contractors and self-employed filers.
The Freelancer offers all the features of the Plus option as well as all the essential forms for small business owners, sole proprietors and self-employed people. For example, it gives you access to Schedule F, which reports profit or loss from farming. You also get use of a simple tool to help self-employed and freelance workers maximize their deductions.
Filers who need to report capital gains may also like the Freelancer option. This option makes it easy to import stock data and to record your capital gains.
The most expensive and advanced option is TaxAct Premium. It costs $51 for a federal filing and $37 per state. This option includes the features of the three other filing options plus assistance if you are audited. With this Tax Audit Defense, TaxAct will provide comprehensive strategies for response and resolution of an audit. It will also handle correspondence with the IRS (or with an individual state) on your behalf. This protection lasts for as long as your tax return can be audited.
Refund and Payment Options
You can pay for TaxAct services with credit or debit card. You can also deduct the cost directly from your tax refund, but you must have a refund of at least $100.
The fastest way to receive your tax refund is to directly deposit the money into your bank account. The refund can be deposited into up to three different accounts. You can automatically split the money between both a savings and checking account. You can also use it to purchase U.S. Savings Bonds in $50 increments or deposit it into an American Express Serve Prepaid Debit Account. You can also get the refund as a paper check.
TaxAct also allows you to track your e-file status of your federal and state returns. This gives you an estimate of when you’ll receive your refund.
Tax Audit Services
TaxAct reduces your audit risk with TaxAct alerts, which searches your returns for potential errors that can increase the risk of an audit. In the case that you are audited, TaxAct partners with Protection Plus to offer full audit assistance.
You can enroll in Protection Plus when you file your return. Protection Plus covers your return for three years and guides you through the audit process. It handles all IRS correspondence and you also get assistance with tax debt and tax fraud incidents. This protection doesn’t come automatically with any TaxAct plan, so you’ll have to pay an additional cost.
Online Tax Tools
TaxAct offers a variety of tools on its website to help with the filing process. You have access to a tax calendar to keep track of important dates and a tax planning checklist to ensure you have all the information you need. There are also tools available, like a tax bracket calculator, loan calculator or healthcare tax credit calculator. TaxAct also lists recent tax law changes that will affect the tax season.
|TaxAct Free Option||Federal: $0 State: $0||Best for 1040EZ and 1040A filers; Comes with completely free filing of federal and state returns, unlimited phone support and step-by-step guidance|
|TaxAct Plus Option||Federal: $25 State: $37||Best for itemizers, homeowners and investors; Comes with all Free features, plus access to more forms and schedules, multiple import options, charitable donations tracker|
|TaxAct Freelancer Option||Federal: $39 State: $37||Best for independent contractors and self-employed filers; Comes with all Plus features, plus access to more forms and schedules, ability to import and record capital gains|
|TaxAct Premium Option||Federal: $51 State: $37||Best for all filers who want complete peace of mind; Comes with all Freelancer features, plus audit protection|
Compared to other tax planning services, TaxAct’s prices are more affordable and the options don’t have a large price difference between them. For the most part, the different options have similar features. Unlike its competitors, TaxAct does not offer a large increase in features as plans get more expensive. The only big differences between options are the forms and schedules available – the more expensive the plan, the more complex your financial needs.
Who TaxAct Is For
If you’re looking for an affordable tax planning service, TaxAct is a good option. TaxAct offers a variety of plans, each targeted at different financial situations. Whether you’re a student or a business owner, you’re able to get the maximum refunds available at an affordable cost. There are also tools that guide you through the process and unlimited phone support.
TaxAct is also fit for those who don’t need as many extra features. It’s known as a no-nonsense tax service – it isn’t the fanciest one out there, but it gets the job done. The interface is clean and straightforward. But the drawback is that other services offer more educational tools and features that can make the filing process slightly more helpful. So if you’re a first-time filer, things can get confusing if you’re unfamiliar with the field.
What’s the Catch?
TaxAct’s affordable prices mean it doesn’t offer as many features as some of its competitors. It has enough guidance, tips and tools to help you navigate through tax season – though it may be hard for a first-time filer to understand everything. Many of its competitors offer more information and help at your fingertips. TaxAct does have step-by-step guidance and some explanations but it’s not nearly as extensive as other services.
TaxAct also doesn’t have built-in audit support service. It partners with another company to offer audit assistance, but at an extra cost.
In addition, TaxAct isn’t the fanciest service out there. Its interface is user-friendly and makes it easy to input information, but it can appear a bit plain. To compare, TurboTax has an interview approach of filing your taxes – you answer straightforward questions and it does all the calculations for you. TaxAct uses this approach as well, but not as interactive as TurboTax.
How TaxAct Stacks Up
|Tax Planner||Plans Offered||Costs (Federal)||Costs (State)|
|TaxAct||Free, Plus, Freelancer, Premium||Free: $0 Plus: $25 Freelancer: $39 Premium: $51||Free: $0 Plus: $37 Freelancer: Premium: $37|
|TurboTax||Absolute Zero, Deluxe, Premier, Self-Employed, TurboTax Live||Absolute Zero: $0 Deluxe: $39.99 Premier: $59.99 Self-Employed: $89.99 TurboTax Live: $149.99||Abcolute Zero: $0 Deluxe: $36.99 Premier: $36.99 Self-Employed: $36.99 TurboTax Live: $36.99|
|H&R Block||More Zero, Deluxe Premium, Self-Employed||More Zero: $0 Deluxe: $34.99 Premium: $54.99 Self-Employed: $74.99||More Zero: $0 Deluxe: $36.99 Premium: $36.99 Self-Employed: $36.99|
TaxAct may not have as many features as its competitors, but it gets the job done at an affordable price. TurboTax and H&R Block are two of the most established tax planning services, but their prices range on the higher end. For those higher prices, they both offer some useful features that TaxAct doesn’t.
TurboTax has similar basic features, like easy import and refund explanations. But TurboTax has more of an interview approach of filing – for the most part, it asks simple questions and you answer them. With your answers, it does most of the calculations and filling out for you.
For the 2017 tax season, TurboTax offers discounts for all filing options. All state filing is reduced to $36.99. Federal filing is reduced $20 for every plan.TurboTax also offers the Absolute Zero program, which allows you to file federal 1040EZ, 1040A and state returns at no cost. But to qualify, you can’t earn more than $100,000 per year, owe money on medical expenses, be an investor or be a business owner, homeowner or rental property owner.
H&R Block is another tax planning service that not only offers online filing options, but an in-person option, as well. You’re able to file at one of its 12,000 physical locations worldwide. This increases its convenience and availability. TaxAct only offers digital products. In addition, H&R Block’s free option, called More Zero, allows you to file a federal 1040. TaxAct only allows you to file a 1040EZ and 1040A with TaxAct Free – for a 1040, you’ll need to upgrade to a paid plan. So though H&R Block’s Free option isn’t completely free, it has more form compatibility.
For the 2017 tax season, H&R Block has reduced prices for federal filing by $20 for each plan. Plus, if you choose to receive your refund on a gift card, you get a 5% bonus.
Bottom Line: Should You Use TaxAct?
TaxAct is an affordable tax planning service that gets the job done. It offers a variety of tax options, fit for users of different tax needs. Whether you’re self-employed or an investor, TaxAct can help you navigate through tax season. You get the guidance you need, along with unlimited phone support.
But TaxAct’s affordability means that it has less features than its competitors. This isn’t necessarily a bad thing since you still get all the guidance you need – you just don’t get as much as with other services. Though its interface is simple and straightforward, it isn’t as fancy as other sites. Explanations also aren’t as extensive and can be confusing, which can be hard for first-time filers.