Though it doesn’t have the name recognition of TurboTax or H&R Block, TaxACT is a competitive tax preparation program that offers online federal filing for free, regardless of your income. It gives you the ability to complete an extremely wide variety of tax forms both online or on your computer after download, all at very attractive prices.
However, with those prices come a few flaws. But if you’d like to complete your taxes without spending an arm and a leg this year, TaxACT may be the right program for you.
- Maximum Refund Pledge. TaxACT offers a risk-free federal refund guarantee: If you owe less or get a higher refund through any other tax preparation method – assuming you used the same data as with TaxACT – you get your money back. If you are assessed a penalty due to a calculation error by TaxACT, it pays the penalty plus interest. TaxACT also has a 100% satisfaction guarantee.
- Get Help If You Need It. Video tutorials and help files can guide you through the process. If you need additional help, you can get personal assistance by email. No live chat is available, however. If you prefer speaking on the phone, a $7.99 fee gets you unlimited phone support for the entire tax season. This feature is free with the Deluxe edition.
- Free Federal Filing With No E-File Charge. If you feel confident handling your taxes and they’re relatively simple, the free version may be right for you. It includes forms such as the Schedule A, Schedule C, 1099-MISC, and many more. If you need guidance with these forms, though, the Deluxe version may be your best bet. Preparing and e-filing are free through both.
- Learn How Major Events Affect Your Taxes. The “Life Events” guide explains how many common events – such as getting married and buying a home – can impact your taxes. It also customizes the questions you’re asked during the program’s interview process based on selected life events.
- Import Last Year’s Taxes From Other Programs. If you used H&R Block At Home or TurboTax last year and saved PDF copies of your tax forms, TaxACT imports them for you. It also compares past returns with your current information to catch any errors or typos you may have made this year.
- Import Stock and W-2 Data Easily. If you bought and sold stocks, you can directly import information from those transactions from multiple sources including Gainskeeper, TD Ameritrade, Sharebuilder, Form 8949.com, or a TradeLog or CSV file provided by your broker. TaxACT can also import your W-2 data from certain payroll providers electronically, or from a digital copy of certain revenue forms. Once imported, the Deluxe version stores these documents in the TaxACT DocVault for later access.
- Price Lock Guarantee. If you start your taxes with the free version and eventually upgrade to the Deluxe package, you pay the price that was in effect when you began, even if it’s increased since then.
- Multiple Tools Available. TaxACT provides a number of tools to help with your return. Access Stock Assistant summarizes your investment activity. Dependents Assistant advises you on who qualifies as dependents. TaxWatch shows you how to lower your tax bill next year. The Married Filing Joint vs Separate assistant calculates which filing status would get you the biggest refund. Donation Assistant helps determine the correct IRS-approved value for donated goods (available with the Deluxe edition). To help boost your deductions and overall refund, TaxACT Deduction, Income, and Credit Examiners are available with all editions.
- Complete the FAFSA More Easily. Get a personalized worksheet with the information you need to complete the FAFSA, if you or one of your children are in college and wish to apply for financial aid.
- Multiple Refund Methods. Get your refund by check, direct deposit, or prepaid Visa debit card. You can also use your refund to purchase U.S. savings bonds in $50 increments.
- Bookmark Any Page and Return Later. If you know you’re missing a piece of information, or don’t have an address handy, you can keep working and simply bookmark any page and return to it later.
- File State Taxes Easily. Transfer your information from the federal to state section easily. State taxes are $14.99 if you use the free federal version, or an additional $5 if you’ve purchased the Deluxe version (Deluxe federal is $12.99, or $17.99 for Deluxe federal and state together).
- Free Version Is Really Free. TaxACT’s prices are generally lower than its competitors, and its free federal version does not have an income limit or require an e-file fee. There is no free state tax tool, however.
- Lots of Help Available. TaxACT provides multiple resources for help. In-page tax topics, comprehensive search, videos, and email or phone support are all available. TaxTutor (only available in Deluxe) explains more complicated tax concepts and recent changes in law, and offers year-end strategies for maximizing refunds.
- Free Version Supports Almost All Forms. The free version supports all the same forms as the Deluxe version with the exception of Form 1040X, which is required to amend your taxes. It helps you file an extension and supports Schedule C, mortgage interest deductions, and charitable contributions for your federal taxes. You don’t get access to assistant programs like TaxTutor or the donations assistant, but you do get a basic walk-through of the forms and plenty of related help files.
- Access From Anywhere. Log in from any computer and your data is automatically saved when you move to a new page or log out. The program also allows you to go back and view previously completed forms without losing data you’ve already entered elsewhere.
- See Your Refund Update As You Work. See your total refund or taxes owed update as you work.
- Advice on Life Events. TaxACT asks you to choose from a menu of life events such as marriage, home purchase, or disaster survival, where you may be eligible for a tax break. Answer questions specific to each situation and get guidance on how they might affect your taxes and finances. Support for one life event is included in the free version; in the Deluxe you get unlimited access.
- Extremely Thorough. This was the only program that I tested which asked me about less common tax situations, such as needing to repay part of my homebuyer’s incentive from 2008. Since I had forgotten all about it, TaxACT saved the day there. It didn’t miss a thing and made sure to ask me about a wide range of special tax situations.
- Always Free E-Filing. E-filing is free in all editions, and the state return tool is the cheapest among its competitors. (State return is $14.99 with the free federal version, or an additional $5 if you’ve already upgraded to the federal Deluxe version, for a total of $17.99.)
- Too Many Guidance Pages. Including all the life events choices, the number of information screens can be pretty overwhelming if you just want to finish your taxes as quickly as possible. I didn’t find these particularly helpful, since they often aren’t intended to be at that particular moment – they’re more of a reference tool. But whether you want to see them or not, you have to click through these screens to get to the next page. They would be more effective if packaged in a PDF that you could download and read as you wish.
- Free Version Offers No Phone Support. The free version offers email assistance and access to help files, but phone support is an additional $7.99 – a one-time fee that buys you unlimited calls. Deluxe members do get phone support for free, however none of the versions offer online chat support.
- Help Files Can Be Confusing. Many of the help files are both extremely complete and extremely confusing. The wording often lacks clarity, which means unless you’re merely looking for a refresher, you may be more confused after reading them. In fact, much of the guidance on TaxACT’s pages – in the form of a sidebar, pop-up, or hyperlink to the appropriate IRS webpage – is often much more confusing than it needs to be. An approach similar to TurboTax’s help files (where a two-sentence answer suffices for many questions) would be a major improvement.
- Too Many Inapplicable Questions. While I was indeed grateful that TaxACT reminded me about my homebuyer’s incentive repayment, the program also asked too many questions that didn’t apply to me. While there are literally thousands of special tax situations that could be relevant to you, it would have been more efficient – and less annoying – to use either the H&R Block At Home method of checking applicable situations off a list, or the TurboTax method of assuming the most common situation applies. TaxACT provides the least guidance of the major tax programs in this area, and took me the longest to complete in a head-to-head comparison as a result.
- Document Import Can Be Iffy. While TaxACT states that you can import prior year taxes, it can’t always read PDFs generated by other programs. It was also not able to import W-2s from either of my payroll providers where other tax programs were. The reason for this could be that TaxACT may not have agreements with as many payroll providers as TurboTax or H&R Block.
- Little Audit Support Available. H&R Block at Home and TurboTax both offer live help in the event of an audit, and for a fee both send a representative to meet with the IRS for you. It’s unclear if your free phone calls with the Deluxe version include advice about audits, but it seems unlikely as TaxACT states that phone support is limited to the tax season. TaxACT has a serviceable FAQ section, but that’s all it provides in the way of audit support.
Free Federal Edition – Free
Everything about this product is free, from e-filing to email support. However, you don’t get access to any of TaxACT’s tools such as the Donation Assistant, which helps you determine the IRS-mandated value for your charitable donations. If you feel confident in your ability to use the IRS website to answer your questions, as TaxACT often prompts you to do, you should be just fine. Completing your state taxes, including e-file, runs you $14.99 if you use the free federal edition.
Deluxe Federal Edition – $12.99
Includes everything you get in the free federal edition plus the ability to import last year’s data and use the Donation Assistant, Depreciation Assistant, and other tools. You get free phone support and guidance on unlimited life events as well. Adding the state edition is an extra $5 (essentially an upgrade to the Ultimate Bundle).
Ultimate Bundle Edition – $17.99
The Ultimate bundle includes the Deluxe edition plus state taxes. This is the best value for those needing to file federal and state taxes, and the cheapest for both among other online tax prep software we’ve reviewed. It includes the Deluxe edition and your choice of one state.
TaxACT is more thorough, but also more confusing, than other major tax preparation software options. The Deluxe edition is significantly less costly than comparable products by TurboTax and H&R Block, but you may need some tax knowledge going in if you want to get everything completed correctly.
I did find it refreshing to not pay more than necessary or have to pick between several different versions to try to figure out which best supports the forms I need. TaxACT has made efforts over the past few years to improve its help systems, which are complete but overwhelming if you’re just looking for a quick answer. Overall, this is a good tradeoff between price and convenience. All of the personal editions can be initiated for free and no payment is required until you’re ready to hit the File button. However, if you want more hand-holding, have no idea how a 1040 is organized, or get nervous just thinking about your taxes, you might want a more user-friendly program.
Looking to file your taxes online using a different service? Check out our comparison table of TaxACT vs TurboTax vs H&R Block.