TaxAct vs. TurboTax: 2024 Comparison
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Summary:
As you might imagine, competition is big among tax prep software companies. While TurboTax is generally the most well known in the field, TaxAct is a strong competitor with its fairly comparable tax help. This article delves into the features, pricing, ease of use, and support provided by both platforms to help you make an informed decision on which to use for filing your taxes.
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TaxAct vs. TurboTax
Tax season can be a stressful time of year for many taxpayers. Thankfully, gone are the days when your only option was to fill out paper forms, mail them to the IRS, and hope you didn’t make a mistake. Tax preparation software has come a long way and can be invaluable for filers, but choosing the right one for your budget and tax needs can be challenging.
TaxAct and TurboTax are just two of your many choices. That said, according to Logan Allec, CPA and owner of tax relief company Choice Tax Relief, you really can’t go wrong with either option. Logan, who has conducted in-depth reviews on both tax preparation resources, says it pretty much boils down to how much hand holding you require.
TaxAct vs. TurboTax free tiers
Both TaxAct and TurboTax offer free tiers with various useful features.
- TaxAct: TaxAct’s “free” edition is $0 for federal returns and $39.99 to add a state return. It’s designed for dependent or simple filers with W-2 income or unemployment or retirement income. It also supports Child Tax Credits and Earned Income Credits.
- TurboTax: The free tier by TurboTax is $0 for federal tax returns and $0 for state returns. TurboTax free edition, which approximately 37% of taxpayers qualify for, allows you to file a 1040 for free, but you can’t itemize or file Schedules 2 or 3. In addition, only limited tax credits are supported.
TaxAct vs. TurboTax paid packages
Both TaxAct and TurboTax offer paid packages tailored to different tax situations.
TurboTax
TurboTax has two additional tiers beyond its free edition. Users can also upgrade to “Live Assisted” for extra help at an additional charge.
- TurboTax Deluxe: The Deluxe version of TurboTax costs $39 for federal returns and $39 for state tax returns. It’s designed for homeowners and those who want to maximize over 350 tax deductions and credits.
- TurboTax Premium: TurboTax’s Premium version is priced at $89 for federal returns and $39 for state tax returns. Premium is best for taxpayers with more complex tax situations, such as investors, rental property owners, freelancers, and small business owners.
TaxAct
TaxAct has three additional tier options for taxpayers, which can also be upgraded (at an additional cost) for live expert tax assistance.
- TaxAct Deluxe: The Deluxe version of TaxAct is priced at $29.99 for federal and $39.99 for state returns. Deluxe is best for homeowners and families with deductions and credits.
- TaxAct Premium: The Premium tier costs $39.99 for federal and $39.99 for state tax returns. Premium is designed for investors, rental property owners, or taxpayers with foreign bank accounts.
- TaxAct Self-Employed: This version is priced at $69.99 for federal returns and $39.99 for state tax returns. The Self-Employed tier is ideal for freelancers, independent contractors, side-gig workers, and business owners.
Allec recommends that taxpayers be aware of the fact that prices for tax prep services may fluctuate throughout the season, so it’s important to keep an eye on the costs.
“The major tax software products tend to change their pricing throughout tax season, and TurboTax and TaxAct are no different.”
Other factors to consider regarding TaxAct and TurboTax
Before you decide on a tax prep software, here are some other factors to consider.
Ease of use and features
Both TurboTax and TaxAct provide user-friendly interfaces.
- TurboTax offers a chat-like interface with helpful embedded links and banners to track progress.
- TaxAct has a similar interview process with easy navigation and progress tracking.
- Both platforms allow switching from other providers and provide tools for calculating deduction values of donated items.
Support
Both platforms offer support options for users.
- TurboTax Live provides a one-on-one review with tax pros and unlimited live tax advice.
- TaxAct offers affordable help through Xpert Assist packages, providing unlimited screen-sharing access to tax experts.
Refunds, audits, and other features
Both TurboTax and TaxAct offer various refund options and audit support.
- Refund options include direct deposit, paper check, or applying the refund to next year’s taxes.
- Both platforms offer audit support, with TurboTax providing audit defense as an additional service.
TurboTax vs. TaxAct: Which one is right for you?
Whether TurboTax or TaxAct is right for you depends on your specific tax needs and preferences.
- TaxAct’s affordability and comprehensive packages make it suitable for both beginners and seasoned filers.
- TurboTax’s ease of use and extensive support options make it a preferred choice for users willing to pay for additional features or taxpayers who need a more guided experience.
FAQ
Which tax-prep software is better for beginners?
While both TaxAct and TurboTax offer user-friendly interfaces, TurboTax provides more guidance and support features, making it a better choice for beginners.
Are there any hidden fees associated with TaxAct or TurboTax?
Both TaxAct and TurboTax are transparent about their pricing. However, users should be aware of additional fees for certain features or services, such as audit defense or live tax advice.
What happens if I need assistance while using TaxAct or TurboTax?
Both platforms offer support options, including online help, knowledge bases, and paid upgrades for personalized assistance from tax professionals. TurboTax’s Live packages offer more extensive support features.
Key takeaways
- TaxAct and TurboTax offer similar tools, with TaxAct having a slight edge in pricing.
- TurboTax provides a guided experience, while TaxAct may require more user knowledge.
- Both services offer various pricing tiers to accommodate different tax situations.
- Consulting with a financial advisor can provide expert tax strategy assistance.
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