TaxAct is a tax preparation software package distributed by 2nd Story Software. It is a web-based platform that simplifies filing tax returns and alerts users of mistakes and omissions. TaxAct uses an interview format to determine the deductions and credits that apply to each customer.
The company was first launched in 1998 and has its headquarters in Cedar Rapids, Iowa. TaxAct was built on a previous software package called Personal Tax Edge, which was sold by Parsons Technology. TaxAct has an A+ rating with the BBB.
What Services Does TaxAct Offer?
TaxAct provides the following services:
- Federal Tax Returns
- State Tax Returns
- E-file Service
- Account Information Roll Over
- Automatically imports W-2 tax forms
- Printing of Tax Return
- Complex Tax Filing
- Federal Tax Extension
- State Tax Filing and Preparation
- Amended Tax Return
- Priority Customer Support
- Mobile/Tablet App
What Is TaxAct's Pricing Structure?
TaxAct has three editions: a free edition, a plus edition ($37), and a premium edition ($47).
The Free edition offers free federal and state tax filing, but it is only for taxpayers with simple tax returns. It only includes forms 1040EZ/1040A. Taxpayers who own a business, are freelancers or have rental property will need to purchase a plus or a premium edition. The free version doesn’t allow customers to import data from previous years (that feature costs $5 extra) and only includes technical support by email. Nevertheless, it is an excellent deal for taxpayers with simple returns who don’t need a sophisticated package and want to file federal and state returns for free.
The Plus edition ($37) is for customers with itemized returns, homeowners, and people with substantial investments. As well as the services offered by the deluxe edition it also provides coverage for stocks, bonds, and other types of investment income (Schedule D). It also covers rental income (Schedule E), and itemized deductions (Schedule A), but it doesn’t offer support for self-employment and small business income (Schedule C). State returns are an additional $38.
The Premium edition ($47) is built for taxpayers who are self-employed, contractors and freelancers. As well as all the services offered by the Plus version, it also covers small-business tax deductions and asset depreciation (Schedule C). State returns are an additional $38.
Only the free edition includes state returns. Customers who use any of the other packages must pay an additional $38 for state returns.
What Are the Advantages & Disadvantages of TaxAct?
Benefits of TaxAct:
- Customers with simple tax returns can file federal and state tax returns for free.
- Provides similar services to TurboTax at a much lower cost.
- The software provides free advice on the credits and deductions you can claim.
- Returning users are not charged additional fees for rolling-over prior year tax data when using the Plus or Premium editions. (Free users only get this service for an extra fee of $10.)
- Automatic Error Detection is a feature.
- E-Filing is included in the free edition.
Disadvantages of TaxAct:
- The free returns are only for people with very simple tax returns. There are additional fees for “complex” returns. “Complex” returns include federal returns with investments, self-employed taxpayers, taxpayers who own homes, and taxpayers with rental income.
- The paying editions do not include state returns, which come with an extra $38 fee.
- Does not provide in-person support.
Compare TaxAct with other leading tax preparation services to ensure you are getting the best deal possible.