TaxAct Tax Filing Service: A Comprehensive Review
When it comes to filing taxes, choosing the right tax software is crucial for accuracy, convenience, and affordability. Among the many options available, TaxAct is one of the more well-known services, offering a range of tax filing products aimed at both individuals and businesses. In this comprehensive review, we’ll evaluate TaxAct based on several key factors, including ease of use, features, pricing, customer support, and overall value, helping you determine whether this service is the right fit for your tax filing needs.
Overview of TaxAct
TaxAct is a tax preparation software that offers both DIY tax filing options and professional tax filing support. Launched in 1998, it has steadily gained a foothold in the market due to its low-cost solutions compared to competitors like TurboTax and H&R Block. TaxAct provides online, desktop, and mobile options for taxpayers, catering to individuals with simple tax returns as well as those with more complex filings, such as small business owners and investors.
User Experience and Ease of Use
One of the most important factors in tax filing software is how user-friendly it is. TaxAct provides a clean and straightforward interface, though it is not as visually engaging or intuitive as some of its competitors. For users who are tech-savvy or familiar with tax preparation software, TaxAct will feel straightforward and easy to navigate. However, for first-time users or those less familiar with tax jargon, it can feel slightly more cumbersome than alternatives like TurboTax, which offers a more conversational and guided approach.
Pros:
- The user dashboard is logically arranged, with clearly labeled sections for different parts of the tax filing process (e.g., income, deductions, credits).
- You can import prior-year tax returns from other software providers, which is a handy feature for those switching to TaxAct from another service.
- The mobile app is functional and allows users to file taxes on the go, although its interface is somewhat basic compared to the desktop version.
Cons:
- It lacks the dynamic question-and-answer format that makes other tax software feel like a guided interview.
- Some users have reported occasional issues with navigation, particularly when switching between sections of their return or correcting errors.
- Fewer in-app explanations of tax terms and potential deductions, requiring more external research compared to TurboTax or H&R Block.
Features and Tools
TaxAct provides a decent set of features, though it might not be as robust as some of its pricier competitors. Below are some of the key features that make TaxAct a strong contender for budget-conscious users.
1. Deduction Maximizer
TaxAct’s Deduction Maximizer ensures that you do not overlook any deductions. This tool scans your return for potential deductions and tax-saving opportunities, ensuring you get the maximum refund possible. While this is a valuable tool, it’s not as comprehensive as similar tools in more premium tax software packages.
2. Import Options
TaxAct allows users to import tax data from other platforms and their previous year’s return. You can import a PDF of your W-2, which saves time compared to manually entering your income details.
3. Audit Support
TaxAct offers free audit assistance, which helps if your tax return gets flagged for review. However, this assistance is limited to providing advice rather than representing you in interactions with the IRS. In contrast, more expensive plans from other services, such as TurboTax, include more comprehensive audit defense.
4. Accuracy Guarantee
Like most major tax software providers, TaxAct offers a $100k Accuracy Guarantee, meaning they’ll pay for any legal or IRS penalties resulting from calculation errors in your return.
5. Small Business Filing
TaxAct has dedicated packages for self-employed individuals, freelancers, and small business owners. These packages cover Schedule C filings and offer additional support for business deductions and expenses. However, some users might find the options lacking in terms of guidance and the ability to handle more complex tax situations involving multiple income streams.
Pricing and Plans
One of the biggest selling points of TaxAct is its affordability. It consistently offers lower pricing than leading tax software brands, making it an attractive option for budget-conscious filers.
Free Edition:
The Free Edition covers simple tax returns with W-2 income and can be used by those claiming the standard deduction, unemployment income, or child tax credits. This version includes free federal filing and state filing for an additional fee.
Deluxe:
For $49.99, the Deluxe Edition is suitable for taxpayers with itemized deductions, such as homeowners. It offers additional tools for maximizing deductions and credits.
Premier:
The Premier Edition ($79.99) targets individuals with investments or rental property income. It includes more advanced features to handle capital gains and Schedule E filings, making it an affordable choice for investors.
Self-Employed:
The Self-Employed package is priced at $99.99 and is designed for freelancers, contractors, and small business owners. This version includes all features of the Premier Edition plus tools tailored to business deductions, depreciation, and more complex income structures.
State Filing:
One downside of TaxAct’s pricing is that state filing is not included in the base prices for most plans. State filing costs an additional $39.99 in the Free Plan, and $59.99 in other plans, which can significantly increase the overall cost for those who need to file in multiple states.
While TaxAct is more affordable than its premium competitors, the price gap has narrowed in recent years, especially when factoring in the cost of state returns.
Customer Support
Customer support is an essential feature for tax software, especially for users who need assistance with more complicated returns. TaxAct provides several support channels, including:
- Phone support: Available to all users, though the quality of service can be inconsistent.
- Email support: Response times are generally prompt but not immediate, especially during peak tax season.
- Knowledge Base and FAQs: TaxAct has a robust online help center with FAQs, articles, and guides covering common tax issues.
- Live Tax Expert: TaxAct offers the option to chat with a tax professional, but this service is only available with higher-tier plans. It lacks the extensive access that other software like TurboTax offers with its “Live” product, which provides more hands-on professional help throughout the process.
Pros:
- Quick email responses.
- Access to tax experts with premium plans.
Cons:
- Limited weekend support during non-peak times.
- Customer service can feel less comprehensive compared to other platforms that offer a more white-glove approach.
Security and Privacy
TaxAct takes the privacy and security of its users seriously. It uses bank-level encryption to protect data and offers multi-factor authentication (MFA) for additional security when logging into accounts. These are standard features for most tax software providers, but they offer peace of mind for users concerned about their personal data.
Pros and Cons Summary
Pros:
- Affordable pricing, especially for individuals with simple returns.
- $100k Accuracy Guarantee for peace of mind.
- Free import of previous tax returns and W-2s.
- Deduction maximizer for identifying potential savings.
- Functional mobile app for filing on the go.
- Audit assistance available.
Cons:
- User interface is less intuitive compared to competitors.
- Less guidance for complex tax situations like investments or multiple income streams.
- State returns are priced separately, increasing the overall cost.
- Customer support options are less robust than premium competitors.
Final Verdict
TaxAct offers solid value for those looking for an affordable tax filing solution without all the bells and whistles of pricier alternatives. Its features are sufficient for most individual taxpayers, and its low-cost business tax options can help self-employed individuals and small business owners save money on filing fees. However, users who prefer a more guided, intuitive tax filing experience, or those with very complex tax situations, might find the service lacking compared to competitors like TurboTax or H&R Block.
For most users, TaxAct strikes a balance between cost and functionality, making it an excellent option for those who are confident in their ability to navigate tax forms and don’t mind a bit less hand-holding throughout the process. If you’re primarily concerned with affordability and have a relatively straightforward tax return, TaxAct is a strong contender. However, for those who require a bit more assistance or prefer a slicker interface, it may be worth exploring higher-end options.