As someone who mixes and matches freelance work, contract jobs, and side income opportunities to earn a living, I have a pretty complicated tax situation. Millions of Americans are in the same boat – independent contractors, small business owners, and folks who earn passive income through investing.
While money may be no object to some, the costs of tax filing definitely matter to me and many taxpayers like me. It’s frustrating, but understandable, that business owners and independents have to pay more to file their taxes with brand-name services like TurboTax and H&R Block.
TaxACT is a little different from the rest of the pack. Unlike some better-known competitors, it has a robust free version that applies to the vast majority of tax situations, supporting the self-employed, those who take itemized deductions, investors with capital gains and losses, landlords, and anyone who finds themselves shut out of free tax-filing options. Instead of offering additional forms and schedules, TaxACT’s higher-priced plans are more about better customer service and value-added features, such as free phone support and federal-state return bundles.
TaxACT’s lower prices do come with some drawbacks, including a sometimes confusing and ultimately less-than-helpful customer support infrastructure, limited importing capabilities, and stingy access to past-year returns. Its navigation framework can also be confusing and almost overwhelming, limiting your ability to work through a return on your own terms. However, if you’re fine with a slightly rougher approach to tax filing for a much lower cost, TaxACT is definitely worth a closer look.
Plans, Pricing, and Features
TaxACT offers three main plans: Free Federal, Deluxe Federal, and Ultimate Bundle. Additionally, it offers Estates & Trusts, a less commonly used and somewhat more expensive option for filers with income from trusts or estates. Interview-style questions help you determine which forms and schedules you need to file, and which credits and deductions you may be eligible to take.
Unlike some alternatives (particularly TurboTax and H&R Block), TaxACT’s interview system isn’t so clever. You have limited control over which parts of your return you can skip over, and some of the questions are highly esoteric or don’t apply to your situation – for example, I was asked several questions about owning a home after affirming that I’m a renter.
When you upgrade to the Deluxe package, you’re given the option to be guided by questions or select specific topics that you want to cover and skip over sections that don’t apply. For instance, you can bypass the entire Miscellaneous section if none of the less-common situations in it apply to you. If you have enough confidence and experience to file your own taxes without having your hand held, this might be a better – and faster – option.
The Free Federal version costs nothing for federal returns and $14.99 for each state. It covers the majority of tax situations, with limited exceptions pertaining to income from trusts and estates. However, its functionality and features – such as document importing and free customer support – are somewhat limited.
- Wide Range of Tax Situations. The Free Federal version supports a great many tax situations, from filers whose only income is reported on a single W-2 to small business owners and contract employees who itemize their deductions and pay self-employment tax. To determine whether this version has everything you need to complete your taxes, you can check TaxACT’s Free Federal form list.
- At-a-Glance Help During the Filing Process. TaxACT’s filing system boasts a useful help panel on the right sidebar, next to the fields you use to actually complete your return. The panel’s search feature can help you find answers to quick questions, but it’s worth noting that clicking on individual results to get more detail takes you to TaxACT’s main help system (and temporarily away from your return).
- TaxPayer Support. This is TaxACT’s email support system. TaxPayer Support personnel have familiarity with the TaxACT system and experience with basic tax issues, but aren’t necessarily certified accountants or tax experts. Emailed questions typically produce a response within one business day, sometimes faster.
- Phone Support for a Fee. If you want to speak to a live customer support employee at TaxACT’s call center and don’t want to upgrade to the Deluxe plan, you need to pay a one-time fee of $7.99 for unlimited phone support.
This plan costs $12.99 for your federal return, plus $7 for each state return. The main difference between it and the Free Federal plan is added importing functionality and free phone support – there aren’t any major forms available here that aren’t included in the free version.
The Deluxe Federal plan comes with all the features and functions of the Free Federal plan, plus the following:
- Form Importing. You can import forms related to income or losses, including 1099s from a contract employer, bank, or brokerage. This saves time, particularly if you have a lot of income sources or securities transactions to report.
- Past-Year Tax Return Importing and Transfer. You can import your most recent tax return and all the information it contains, as long as you’ve previously downloaded it in PDF format, from TurboTax and H&R Block. If you’re a returning TaxACT customer, you can transfer the information from last year’s return as well.
- Free Phone Support. With the Deluxe Federal plan, you can call in and speak with a TaxACT representative without paying the one-time fee. Customer service hours are the same as for Free Federal customers.
This plan costs $19.99 for a package that includes your federal return and your first state return (extra states are $7 each). It doesn’t have any features or functions that aren’t available with the Deluxe version – it just packages your state and federal returns together so you don’t have to pay twice.
Estates & Trusts
This plan costs $29.99 for your federal return and $14.99 for each state return. It’s specifically designed to provide additional support for customers who need to file IRS Form 1041 and related forms, so it may not be necessary if your tax situation doesn’t involve income from a trust or estate.
- Support for IRS Form 1041 and Related Forms. This plan includes Form 1041 and all related forms necessary for income from trusts and estates. There’s a separate set of interview questions specifically devoted to trusts and estates, so you don’t have to worry about completely winging it here.
In addition to its free and paid tax filing packages, TaxACT’s most important features include the following:
- Wills. TaxACT’s LegalACT department can draw up basic wills at very low cost: one for $9.99 and two for $14.99, an ideal package for spouses. While these wills are no substitute for documents prepared in close consultation with a lawyer (or even more hands-on online services like LegalZoom and LawDepot), they can handle routine items like designating a guardian for minor children, assigning an executor to your estate, and designating heirs.
- Tax Return Status App. TaxACT offers a slick iOS and Android app that provides status updates on your state and federal returns (including whether the IRS and your state treasury have accepted them) and helps you estimate how long it should take to get your refund. It’s free for anyone, including non-TaxACT users, to download and use – and though the Federal Government also provides online updates to your return’s status and estimated refund arrival dates, it’s far more mobile-friendly than the IRS’s website.
- DocVault. This is a free mobile app that lets you take photos of anything related to your taxes for the current or coming tax years, including forms, receipts, bills, and invoices. You can edit the photos as necessary and store them in DocVault until you’re ready to file. Each individual DocVault account comes with 3 GB of image storage.
- Data Archive Service. If you want access to your TaxACT returns from the past three years, you need to tap the company’s Data Archive Service, which stores completed and partially completed returns. There’s a one-time fee of $13.99 to access each return, after which you can view, complete, and amend it at will. To complete the return, you also need to purchase TaxACT Deluxe, if you haven’t already. Current Deluxe or Ultimate customers don’t need to pay for another plan, though you need to pay the Data Archive Service fee no matter what. The Data Archive Service is often used by people who need to amend a previously filed return due to an IRS audit or other issue, as well as by folks who need to access completed, accurate returns for whatever reason.
- Refund Via Prepaid Visa Card. TaxACT partners with Visa to offer federal refunds on the credit card company’s prepaid PayPower card. There’s a $9.99 one-time fee for receiving your refund this way, plus a $5.95 recurring monthly fee charged by Visa for as long as you keep your card. Note that you can’t receive state refunds this way.
- Guaranteed Pricing. If you don’t complete your return in one sitting, TaxACT guarantees that you remain locked into the advertised price for your plan at the moment you created your account – even if you did so in January and let your account sit until April. This is useful if TaxACT decides to raise its prices partway through tax season. Within a few minutes of creating my account, I received this email outlining exactly what I’d be paying for this year’s return.
- Audit Support. TaxACT has a helpful audit support knowledge base called Audit Assistant. While it doesn’t put you in direct contact with customer service employees or tax professionals, it does feature a database of common IRS notices and detailed information about common audit-related topics, such as how long you should save documentation related to your tax return and which documents you need when responding to specific IRS requests.
- Audit Defense. Audit Defense is a more hands-on approach to audits, offered in partnership between TaxACT and Tax Audit Defense. It costs $39.99 and covers you for as long as your state and federal returns can be audited. It connects you with tax professionals who handle all correspondence and discovery, helping to interpret IRS notices and requests, and direct negotiation of penalties and potential settlements with the IRS or state treasuries.
- Donation Assistant. In addition to DocVault, TaxACT has a useful mobile app that lets you track charitable contributions made during the course of the tax year. It also helps track the fair market value of non-cash donations, such as clothing, vehicles, and furniture. If you’ve kept paper records of these donations instead, you can also access Donation Assistant through your desktop TaxACT account.
1. Very Affordable at All Levels of Service
TaxACT is extremely affordable. Its most expensive federal package is $29.99, a price that includes your first state return.
Its better-known competitors charge double or triple that amount for similar levels of service. TurboTax’s highest-price federal plan is $79.99, while H&R Block at Home’s is $44.95. The most you can expect to pay for state taxes at TaxACT is $14.99, compared to $36.99 at TurboTax.
A real-world example: If you’re self-employed and need to file Schedule C, you’d have to pay $81.98 (including one state) at H&R Block, and $116.98 at TurboTax. Using TaxACT’s free version to file the same exact return, you’d pay just $14.99: nothing for your federal return, and $14.99 for one state.
2. All Price Points Can Handle Complex Tax Situations
All TaxACT plans offer access to the forms and schedules necessary to handle virtually any tax situation. With the free version, you can itemize your deductions, log capital gains and losses, record rental income, and report self-employment income. The free versions of TurboTax and eSmart Tax don’t allow you to do any of those things – you have to upgrade to a paid plan.
3. DocVault Is a Great Way to Keep Track of Forms
TaxACT’s DocVault app is a simple way to keep track of prior years’ tax forms and tax-related material, such as invoices and receipts. Having access to all these items on a mobile device can save untold amounts of time during tax season and eliminate the need for a well-organized paper filing system at home. Many other tax filing services, including eSmart Tax, don’t have a DocVault-like app.
4. Not as Sales-y as Some Competing Platforms
Though it does offer different price points, TaxACT is only minimally sales-y. It doesn’t push you to upgrade to a higher-cost plan or hound you to purchase add-on services.
This is partially due to the fact that a great many forms and schedules are available with TaxACT’s paid plan, but it’s also a function of the site’s laid-back layout and tone. If you try to do something that isn’t supported by your current plan, you’re politely prompted to upgrade. If you’re interested in value-added services, you aren’t reminded of them via jarring pop-ups or ad screens – you can find them in the Add-Ons & Tax Tools section of each plan page. By contrast, both H&R Block and TurboTax actively encourage customers to sign up for higher-cost plans or add-ons with varying degrees of pushiness.
5. Price Guarantee Is Useful If You Don’t Finish Filing Right Away
Since I’m self-employed and have multiple sources of income, my tax situation is fairly complicated, and I often have to wait for all the necessary forms and statements to dribble in. Weeks may pass between the first time I sign into my tax preparation account and the day I actually finish my state and federal returns. TaxACT’s price guarantee is useful for people in my situation – no matter how long we dally before filing, we’re assured of the best available price on our returns.
Many online tax filing services, including TurboTax and H&R Block at Home, don’t offer price lock guarantees. If they raise prices before you finish your return, you could be stuck paying the higher price.
6. Helpful Editing Functions During the Import Process
TaxACT’s import feature lets you edit information on the previous year’s return before overlaying it onto the current year’s. This is very helpful if you moved (like me), got married (also like me), or experienced some other life event that results in changes to your basic information.
Other online tax filing programs, including TurboTax, import your return as-is and then walk you through the editing process step-by-step, asking if each item is still accurate. That’s much more time-consuming.
1. Direct Access to Prior-Year Returns Isn’t Included
TaxACT doesn’t offer free access to prior-year tax returns. To see filed and partially completed returns from the past three years, you need to pay a one-time Data Archive Service fee of $13.99 for each return. Other online tax preparation software, including TurboTax and H&R Block, offer unlimited access to past-year returns with paid plans.
2. Support System Can Be Confusing
TaxACT’s customer support apparatus provides a lot of detail, almost to the point of being overwhelming. The help section is a hodgepodge of semi-related topics, and the search feature doesn’t always return relevant items. To get the best results, you need to answer multiple questions about what your problem is, which can take time.
Additionally, TaxACT seems to actively discourage people – even paying customers – from calling in. The first number that comes up when you Google “TaxACT phone number” is the company’s media contact number, which is also the only number I could find on its website without clicking through those step-by-step questions and being offered alternative forms of assistance (such as FAQ items or email support).
3. No Refund Bonus
TaxACT doesn’t offer to boost your refund if you elect to receive it on a gift card. Its two biggest competitors, H&R Block and TurboTax, both offer such bonuses. TurboTax’s Amazon gift card bonuses range up to 5%, while H&R Block offers up to 10% bonuses on gift cards from major retailers such as Target and Best Buy.
4. Short Timeout Fuse
TaxACT has one of the fastest timeout clocks I’ve ever seen. I didn’t time it with a stopwatch, but I was definitely signed out of my account due to inactivity within 10 minutes of my last edit. While I appreciate the security benefits of session timeouts, such a short clock is overkill. Because of this particular timeout, I had to re-import my previous year’s return, eliminating the time benefit afforded by the easy import-editing process. In fact, this is the only online tax prep program I’ve ever used that hasn’t saved my progress after a timeout. (Fortunately, I wasn’t very far along in the process.) By contrast, I’ve never even been timed out of TurboTax, despite walking away from the editing window for long periods.
5. Only Supports Importing From Two Online Tax Preparation Services
TaxACT only lets you import the previous year’s return from H&R Block at Home and TurboTax. While these are TaxACT’s two biggest competitors, other online services (TaxSlayer and eSmart Tax to name but a few) still handle millions of returns per year. Without support for imported returns from these lesser-known platforms, TaxACT isn’t exactly encouraging their customers to switch. By contrast, TurboTax lets you import from any online service, as long as it supports PDF conversion.
In the car business, there’s an old saying: “Only suckers pay sticker price.” In other words, sticker price is really a suggestion, the dealer’s opening offer at the negotiating table. You’re expected to counter with a lower offer and strike a deal that everyone can live with.
With all the add-ons, upgrades, and processing fees, filing your taxes online can feel like the reverse. Your chosen plan’s sticker price is the bare minimum, an amount you’d be lucky to pay in the final reckoning. That’s not the case with TaxACT, whose free version really does work for the majority of filers. TaxACT definitely requires some sacrifices and assumes a basic level of tax-filing familiarity that other services don’t, but at least it won’t leave you much lighter in the wallet.
If affordability is a major concern and you don’t like taking a DIY approach to filing your taxes, TaxACT may be the program you’re looking for. The free version is expansive, catering to tax situations of almost any complexity, and value-added features like DocVault are a big help too. On the other hand, frustrating website functionality issues, limited customer support, and poor access to prior-year returns reflect poorly on this budget-friendly online tax filing program.
4.3 out of 5 stars: TaxACT is great for budget-minded filers who can get past the limits to customer support and functionality. Its score would be even higher with better importing capabilities, a refund bonus, and access to prior-year returns.