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TaxAct Review – Free Online Tax Software

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At a Glance
4.3 / 5
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TaxAct

  • CPA Involvement: No, but good support for complex tax situations from non-licensed tax professionals.
  • Plans: Free, free state and federal filing for simple (1040EZ and 1040A) tax situations; Deluxe+, $29.95 for federal and $39.95 per state filing, ideal for homeowners and others itemizing deductions; Premier+, $39.95 for federal and $39.95 per state filing, ideal for landlords, investors, and others with complex personal situations (plus priority support); Self-Employed, $74.95 for federal and $49.95 for state filing, ideal for sole proprietors and other self-employed filers (plus dedicated support).
  • State Returns Included: Included with Free plan; not included with higher-priced plans.
  • Pay With Your Refund: Yes; pricing varies.
  • Audit Defense: Free informational audit support for all users, with hands-on defense available from third parties for an additional fee.
  • Additional Benefits: Seven years of return access included; maximum refund guarantee; accuracy guarantee (up to $100,000).

Millions of Americans rely on multiple streams of income: independent contractors, small business owners, solopreneurs, freelance workers, hustlers stringing together side gigs, and folks who earn passive income through investing. Their tax situations are significantly more complicated than wage-earners with one or two jobs, especially if they’ve formally incorporated businesses to take advantage of valuable tax breaks and legal protections.

While money may be no object to some, the costs of tax filing matter to the millions who haven’t (yet) grown rich off their efforts. It’s frustrating, but understandable, that business owners and independent workers have to pay more to file their taxes with brand-name services like TurboTax or H&R Block.

Or is it?

TaxAct is significantly cheaper than its better-known competitors, though its free version isn’t suitable for any but the simplest tax situations and its support infrastructure inspires less confidence than nervous filers might like. But substantial improvements to usability make it a serious alternative to gold-plated DIY products, to say nothing of full-service CPAs.

Let’s take a closer look at TaxAct’s plans, features, and overall suitability.

taxact best deal in tax

Plans, Pricing & Features

TaxAct offers four main plans:

  • Free
  • Deluxe+
  • Premier+
  • Self-Employed

Less common products include:

  • Estates & Trusts, a pricier option for filers with income from trusts or estates
  • Distinct small business tax products for various legal business structures, including sole proprietorships, partnerships, S-corporations, C-corporations, and tax-exempt organizations
  • Online tax prep and e-filing solutions for independent CPAs

TaxAct guarantees the accuracy of all returns prepared with its software. TaxAct also has a maximum refund guarantee that’s technically distinct from its accuracy avowal. Bottom line: should you receive less than the maximum refund to which you’d otherwise be entitled or draw an audit due to an error in TaxAct’s software, TaxAct will pay the refund difference or cover any audit-related liability, up to $100,000.

Let’s take a closer look at each plan. Pricing is subject to change and may increase as the July filing deadline approaches, so it’s in your best interest to file as soon as you have all necessary documentation in hand.

Free

TaxAct’s Free plan is totally free: it costs nothing to file your federal and state returns. This plan caters to individual filers whose simple tax situations that require only a 1040-EZ or 1040A to complete. However, its functionality and features, such as prior-year return importing and phone support, are somewhat limited.

  • Simple Tax Situations. The Free version supports simple tax situations. If you earn all or the vast majority of your income from regular employment and don’t need to itemize your deductions, this version is probably all you’ll need. Importantly, it covers the Earned Income Tax Credit and child tax credits, though not dependent care credits. If you have a more complicated situation that includes investment income, itemized deductions, or self-employment tax, you need to upgrade.
  • W-2 Importing. You can import W-2s from your employers, saving some time relative to manual entry.
  • At-a-Glance Help During the Filing Process. TaxAct’s filing system boasts a useful support panel on the right sidebar, next to the fields you use to 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 support system (and temporarily away from your return).
  • Unlimited Tax and Technical Support. TaxAct’s email and phone support system apparatus includes unlimited help with tax-related questions and technical platform issues. TaxAct’s support staffers aren’t necessarily licensed accountants, and they’re not guaranteed to have an answer for esoteric queries, but they are nevertheless authorized to handle general tax issues and provide basic advice and guidance for uncertain filers.
  • Personalized Financial Analysis. Known as BluPrint, this complimentary, automatically generated report uses your tax return (including deductions, investment earnings, and business activities) to recommend opportunities to save on taxes and make changes that may improve your financial situation going forward.

Deluxe+

This plan costs $29.95 to file your federal return and $39.95 for each state return. It’s a much more robust program that can handle moderately complicated tax situations, including itemized deductions and investments, though it’s not sufficient for small business owners and others with very complex taxes. It includes everything in the Basic+ plan, plus:

  • Itemized Deductions. If you choose to itemize your deductions, which is a common practice for homeowners, parents, and others with more complicated tax situations, you need to file Schedule A.
  • Form 1040 Schedules 1 Through 6. This plan supports IRS Schedules 1 through 6, which cover various types of income, credits, and tax.
  • Donation Assistant. This useful mobile app lets you track charitable contributions over 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. You can add to your Donation Assistant list throughout the year following your filing date.

Premier+

This plan costs $39.95 to file your federal return and $39.95 for each state return. It’s designed for investors, rental property owners, and others with complex tax situations not adequately addressed by lower-priced plans. Premier+ includes everything in the Deluxe+ plan, plus:

  • Interest and Dividend Income. If you earned more than $1,500 from interest or ordinary dividends during the tax year, you need to file Schedule B.
  • Capital Gains. If you earned capital gains income from the sale of an asset, such as a publicly traded security, you need to file Schedule D.
  • Rental Property Income. If you earned rental or royalty income from owned real estate, you need to file Schedule E.
  • Foreign Bank and Financial Accounts. This plan accommodates income from foreign deposit and investment accounts.
  • Priority Support. This plan comes with priority support from TaxAct’s in-house tax experts. Features include a dedicated phone line with screenshare capabilities and in-app chat functionality.

Self-Employed+

This plan costs $74.95 for the federal return and $49.95 for each state return. It’s more comprehensive than Premier+, making it ideal for solopreneurs, small business owners, and others with complex or unusual tax situations. Virtually all IRS forms and schedules are available. In addition to all the features and functions of the Premier+ plan, Self-Employed includes:

  • Small Business/Self-Employment Income. If you earn the bulk of your income from contract or consulting work, or are the proprietor of a small business, you need to file Schedule C and pay self-employment tax.
  • Farm Income. If you earn income from farming activities, you need to file Schedule F. (If you earn rental income from farmland you own, but don’t materially participate in farming activities, you can file Form 4835 with Schedule E.)
  • Year-Round Tax Planning Guidance. TaxAct’s team is available year-round for help with tax planning, a useful perk for self-employed people who need to pay quarterly estimated taxes or make contributions to solo 401(k)s or other retirement plans.
  • Deduction Maximizer. This is a step-by-step guide that helps self-employed filers claim every tax deduction to which their occupation entitles them. It’s built into the prep interface, so you might not even notice it’s running for you.

Estates & Trusts

This plan costs $109.95 for your federal return and $49.95 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.

Small Business & Tax-Exempt Organization Packages

TaxAct has five additional packages designed for small business filers with complex tax situations. Each plan costs $109.95 for the federal return and $49.95 per state, except for Sole Proprietor ($74.95 federal and $49.95 per state). That’s several hundred dollars cheaper than hiring a human CPA.

  • Sole Proprietor. Includes support for IRS Form 1040 and Schedule C, and is ideal for those who are self-employed, as well as for freelancers and contractors. This package is similar to Self-Employed+.
  • Partnership. Includes support for IRS Form 1065 (U.S. Return of Partnership Income) and a host of associated forms commonly used by partnerships.
  • C Corporation. Includes support for IRS Form 1120 (U.S. Corporation Income Tax Return) and associated forms.
  • S Corporation. Includes support for IRS Form 1120S (Income Tax Return for S Corporations) and associated forms.
  • Tax-Exempt Organization. All support necessary to file an informational return under federal income tax exemptions outlined in section 501(a), 527 & 4947(a)(1) of the tax  code.

Additional Features

In addition to its free and paid tax filing packages, TaxAct’s most important features include the following:

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.

Prior Year Returns

If you want access to your TaxAct returns from the past three years, you can do so for free through your account dashboard. This is useful for filers 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.

Guaranteed Pricing With Auto-Enroll

TaxAct’s Auto-Enroll service lets you lock in your return’s price before tax season begins, and for the duration – even if you don’t complete your return in a single sitting. This is useful if TaxAct decides to raise its prices before or partway through the present tax season.

Audit Defense (Protection Plus)

This benefit is offered in partnership between TaxAct and Protection Plus, a third-party provider. You need to purchase Protection Plus when you file, but you can cancel for a full refund within 30 days of purchase, as long as you haven’t already received an audit notice. Pricing is subject to change, but the line-item cost for Protection Plus has never exceeded the cost of a Self-Employed+ plan.

Protection Plus 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.

Advantages

1. Affordable at All Levels of Service
TaxAct is very affordable. Its most expensive federal package for individual filers, Self-Employed+, is $74.95, plus $49.95 for each state return.

Some of TaxAct’s better-known competitors charge double or triple what TaxAct Premium costs for similar levels of service. The cost of TurboTax’s highest-priced federal plan approaches $200, for instance.

2. Not as Promotional as Competing Platforms
Though it does offer different price points, TaxAct is only minimally promotional. It doesn’t push you to upgrade to a higher-cost plan or hound you to purchase add-on services.

Put another way, TaxAct’s website has a pretty 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 simply find them on 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.

3. Auto-Enroll Grants You Time
If you’re self-employed or otherwise have multiple sources of income, you may not be ready to file your taxes until mid-March, after all the necessary forms and statements dribble in. Weeks may pass between the first time you sign into you tax preparation account and the day you complete your state and federal returns.

TaxAct’s price guarantee is useful for people in your situation. No matter how long you procrastinate before filing, you’re assured of the best available price on our returns.

Many online tax filing services, including TurboTax and H&R Block, don’t automatically offer price lock guarantees. If they raise prices before you finish your return, you could be stuck paying the higher price.

4. 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’ve recently moved, got married, bought a new house, 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.

5. Human Support Is Better Than Some Competitors
The quality of TaxAct’s human support team has improved markedly since the early 2010s, when I first began preparing my taxes here. Today, most paying customers have access to complimentary in-app chat or live phone support, and those willing to spring for higher-priced plans enjoyed dedicated lines to credentialed tax experts.

6. Direct Access to Prior-Year Returns Comes Standard
This is another positive change to TaxAct’s service. In years past, TaxAct hasn’t always offered free access to prior-year tax returns. To see filed and partially completed returns from the past three years, you had to pay a one-time Data Archive Service fee of $13.99 for each return. These days, prior-year access is included in your filing fee.

Disadvantages

1. Text 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. It’s easy to get bogged down in irrelevant help topics on your way to content that actually addresses your questions. That’s not great for busy filers squeezing in tax prep between everything else they’ve got going on.

2. Short Timeout Fuse
TaxAct has a very short timeout fuse, which can be problematic for filers who need to step away from the computer during the prep process. While data loss is unlikely, having to sign back in is annoying and disruptive, particularly for those with just a few minutes to spare before the next obligation.

3. No Hands-off Prep Option
TaxAct remains a DIY tax prep aid, even as competitors like TurboTax move toward hybrid models that see (at least at higher price points) certified tax preparers or CPAs doing much of the grunt work. If you can’t devote several hours during tax season to prepping your return by yourself, you may be willing to pay more for hands-on help.

Final Word

In the car business, there’s an old saying: “Only suckers pay sticker price.” In other words, a new or used car’s sticker price is really a suggestion for 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, which remains cheaper than its better-known competitors. TaxAct requires some sacrifices and assumes a basic level of tax-filing familiarity, but at least it won’t leave you much lighter in the wallet.

If you’re looking to save even more money, check out our Top Options for Free Online Tax Preparation Software & Services.

Have you ever user TaxAct or its competition?

Verdict
4.3 / 5
Rating

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TaxAct

If affordability is a major concern, but you’re not willing to trade too much in the way of support and service, TaxAct may be the tax prep program you’re looking for. Though the free version can’t handle complex tax situations, higher-end versions are much more affordable than equivalent products from TaxAct’s top competitors. Value-added features like Deduction Maximizer and a personalized financial assessment are helpful, too.

TaxAct is great for budget-minded filers, regardless of financial complexity. It’s not perfect, though — pricier competitors offer more support and nuance.

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Brian Martucci
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

Comments Disclosure: The below responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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