TaxAct is one of the leading tax preparation software packages available. The service was founded in 1998, and it enables you to prepare all types of returns, regardless of the degree of difficulty. Small and medium-size business tax returns are a niche of this product, but they even have a professional edition available for career tax preparers.
Why Choose TaxAct to File Your Tax Return?
Like most tax software programs, you can file a free basic federal tax return with TaxAct (Form 1040A and 1040EZ only). But TaxAct also excels if you have a more complicated tax return, including tax payers who have income from real estate rentals, investment income, freelancing, consulting, a small business, 1099 income, and similar situations. TaxAct offers some real advantages that make it well worth investigating.
First, the software generally costs less than competing packages. The difference isn’t dramatic, but they tend to be less expensive across-the-board. And since your return is guaranteed, you can feel comfortable using the software that offers the best pricing, so long as it meets your needs.
They also provide free technical phone support. More common in the industry is to provide library type content, where you can look up specific tax questions in the database. But given that most people don’t prepare taxes for a living, being able to talk to a live person can be reassuring. It’s especially comforting if you’re preparing your taxes online for the first time. Bonus: each version comes with unlimited phone and email support, not just the more expensive versions.
TaxAct comes with a Price Lock Guarantee. You will get the price for the plan you select, regardless of when you actually file your return. Lock in your price now, and it will be good until you file your tax return. This is an important feature, since many tax prep plans increase their prices closer to April 15. You can purchase TaxAct now, and make sure that that doesn’t happen.
Accuracy Guarantee. TaxAct Alerts inspects your return for errors and omissions that could increase your chance of being audited. It also finds opportunities for tax saving that you may have missed.
Track Your Tax Refund Status. When you file online, they provide you with easy access to track when your e-filed tax return has been received by the IRS, as well as the anticipated date of your refund. Here is a screenshot of the TaxAct tax refund status tool. It’s easy to use, simply enter your information, click enter, and TaxAct will give you a status update on your tax refund.
TaxAct Features and Benefits
Some of the additional features and benefits provided by TaxAct include:
- TaxTutor Guidance. This tool provides easy-to-follow, expert tax tips and strategies. They will help provide the biggest money-saving deductions.
- TaxAct Bookmarks. This tool enables you to mark a spot in your Questions & Answers so that you can return to that section anytime you like.
- FAFSA Assistance. Got a student in the family, who will need to apply for a government loan or assistance? TaxAct’s FAFSA Assistance can help with that. It enables you to prepare and print a worksheet with the tax information needed to get federal financial aid.
- Complete tax glossary. You can get definitions for almost 300 tax terms, linked directly from the TaxAct interview process anytime you need them.
- Personalized healthcare and tax reports. This tool enables you to maximize future tax and healthcare savings with personal strategies and tips.
- Personalized Financial BluPrint. This is a complementary financial report provided after you file your return. It provides financial planning and tax saving opportunities based on the information in your tax return.
- Tax Extensions. You can use TaxAct to file a free tax deadline extension. (learn more about tax deadline extensions).
Options for Receiving Your Tax Refund with TaxAct
Tax filers who use TaxAct can choose to receive their tax refund via direct deposit to their bank account, or via a check from the IRS. You can also choose to apply your refund to future tax payments. Finally, tax filers can choose to receive their tax refund on a American Express Serve prepaid debit card. The latter is a good option for those who do not have access to a bank, and want to avoid paying check cashing fees.
TaxAct Software Versions, Features, and Pricing
Like other popular tax software programs, TaxAct offers several different versions.
TaxAct Free Version – Price $0 for Federal and State
The free version enables you to file either 1040 EZ or 1040A forms at no cost. There is one add-on fee, and that’s $15 for the optional prior-year import of your tax information, plus unlimited phone support.
This version is of course only for the simplest tax returns. But it provides all the basic preparation options available with the premium versions, such as preparation, printing and e-filing of your return. You will be kept apprised of your refund or the amount due as you prepare your tax return.
TaxAct Plus Version – Price $25 + $37.00 per State
This is TaxAct’s most popular program. It’s for moderately complicated returns, including those who itemize tax deductions, own a home, take advantage of certain tax credits, and have investments and rental properties.
In fact, at just $25, it’s one of the most reasonably priced plans for owners of rental properties among all of the various tax prep services.
The Plus version also allows you to transfer data from last year’s tax return. This version enables you to import prior years information from both TurboTax and H&R Block.* You can also import charitable donations, stock transactions and W-2 information. It also enables you to prepare free amended tax returns at any time, with no upsells or upgrades required.
As part of this plan, you will get a personalized financial assessment. It’s a complementary report that shows you opportunities to reduce your tax bill, and to save for your future.
*Note about changing tax software programs: Most top tier tax software programs can import your previous tax returns, even if you are using a different software program (note: there may be a fee to import previous tax returns). That said, it’s a good idea to maintain copies of your tax records for at least 7 years. These tips are helpful for organizing your tax paperwork.
TaxAct Freelancer – Price $39 or $60, + $37.00 per State
This is the TaxAct plan for the self-employed, including freelancers, independent contractors and small business owners. It’s even an excellent plan for investors. It allows you to import and record capital gains, or to use the Stock Assistant tool for quick entry of investment information. This is especially valuable if you are an active investment trader, and have dozens of individual transactions to report on your return.
You can also use the import function to transfer important personal data from last year’s tax return, even if those returns were filed with TurboTax or H&R Block. You could even import W-2s and charitable deductions.
Freelancer also comes with the Deduction Maximizer tool. It’s a simple tool designed specifically for the self-employed, enabling you to take advantage of the deductions that are most commonly claimed by those in your line of business.
As with the Plus version, Freelancer also comes with free amended tax returns, and TaxAct Alerts to minimize audit risk, and maximize deductions.
If you have a partnership, an LLC, and either a C or S corporation, the fee for the program is higher, at $60. But that will include filing form 1065 (partnership or LLC), 1120 (C Corporation) or 1120S (S corporation) for your business, as well as your individual 1040.
Like the Plus version, you also get personalized financial assessment with the Freelancer Plan.
TaxAct Premium Version – Price $51 + $37.00 per State
This version provides all of the features and benefits of TaxAct’s other plans. But it also comes with TaxAct’s Audit Defense, which provides the following services in the event that your return is audited:
- Comprehensive response and resolution strategies
- Assistance with tax debt relief, denied credits, fraud and more.
- Correspondence with the IRS or your state tax agency on your behalf.
- Available on currently filed returns for the next three years.
- Represent you in contact with the IRS.
TaxAct has partnered with Protection Plus for audit assistance services and is backed with a $100K Accuracy Guarantee.
Should You Use TaxAct to Prepare Your Income Taxes this Year?
The major advantage in using TaxAct is that the plans cost less than comparable versions with other popular tax preparation software. Here’s how TaxAct’s fee structure compares with that of H&R Block and TurboTax:
TaxAct’s plans do virtually the same job as those of the more expensive providers, they just do it at a lower cost. TaxAct may have fewer bells and whistles than the other plans. For example, TurboTax integrates with QuickBooks Self-Employed, while TaxAct has no equivalent offering.
But for most people, in most tax filing situations, TaxAct will enable you to get the job done, and do it at minimal cost.
To learn more, or to sign up for the service, visit the TaxAct website.