TaxAct 2020 Review: Is It Legit? Which Version Do You Need?

FT Contributor  | 

Electronically filing your taxes, commonly referred to as e-filing, has many benefits. The Internal Revenue Service (IRS) boasts that e-filing is convenient, secure, and the fastest way to get your tax refund. Since e-filing your tax return can be intimidating and complex, there are many tax filing solutions companies that help you complete the process quickly and accurately.

TaxAct is a well-known tax filing assistance company that can help you file your tax return from start to finish. As a major vendor of tax filing solutions, it’s important to review how TaxAct works and the products it provides before deciding if it’s the right company for you.

Quick Facts on TaxAct

  • TaxAct is best for simple filers who don’t need expert tax help.
  • There’s a free tax filing product for simple tax filers and the paid software versions are comparably priced to other tax solutions companies in the industry.
  • If you don’t feel comfortable filing your taxes without help, you can pay extra to enlist assistance from a tax expert.
  • TaxAct offers several different tax preparation versions associated with various fees, which can be confusing for taxpayers trying to find the best deal.

Features of TaxAct

When you file your taxes with TaxAct, you’ll benefit from many features that create a well-rounded and simple online filing experience, including the following:

  • Free simple returns: If your return is simple, you can file your federal return and state income tax return for free using TaxAct.
  • Import information: Using TaxAct’s quick start options, you can import information from a PDF file or an uploaded photo of your W-2 form. If you filed taxes with TaxAct last year, you can choose to import that information into the system.
  • Mobile app: You can upload information, check the status of your return, or sign in to your account to track your filing progress using the TaxAct smartphone app.
  • Accuracy guarantee: If there’s an error on your taxes at the fault of the TaxAct tax filing preparation service and you’re required to pay the IRS or your state government, TaxAct will pay you the difference in the refund or liability up to $100,000.
  • Tax deductions and credits: TaxAct helps you sift through over 350 tax deductions and credits to ensure you’re claiming the ones that apply to your situation and reducing your tax liability.
  • Maximum refund guarantee: If you compare the refund TaxAct calculated with a competing tax preparation company, such as TurboTax, and the competitor finds you a higher tax refund amount, TaxAct will pay you the difference up to $100,000.
  • TaxAct alerts: When you file your return, the TaxAct system reviews it before it’s submitted to the IRS for potential errors to avoid an audit.
  • Enlist the help of a tax expert: You can consult with a tax expert through TaxAct with unlimited video calling and screen sharing for added assistance. However, your tax filing package costs extra if you opt for this additional feature.

Comparing the Free, Deluxe+, and Premier+ Versions

TaxAct offers several versions of tax filing software that cater to different filer’s needs. These versions include the following:

  • Free: The TaxAct Free edition allows you to file a simple return, such as a Form 1040 or Form 1040ES. You can file both your federal and state income tax returns for free while claiming dependents or students.
  • Deluxe+: With the Deluxe+ edition, you pay $54.95 for your federal return and an additional $54.95 to file your state income tax return. In addition to the simple forms you can file with the Free edition, you can also file itemized deductions and access your filed tax return as a PDF file for up to six years after the filing date.
  • Premier+: The Premier+ tax filing software edition costs $79.95 to file your federal return and $54.95 to file your state tax return. You receive all the benefits of the Deluxe+ version but the capability to file with more complicated forms that may allow you to obtain additional credits and deductions. As a Premier+ filer, you can easily report your capital gains for the year.
  • Self-Employed+: If you’re self-employed, the Self-Employed+ software version caters to your tax forms, including estimated tax payments and credits or deductions you may qualify for. It costs $109.95 to file your federal return and $54.95 to file your state return. The system is specifically designed to assist you with equipment depreciation and expenses to minimize your tax liability.

If you need to file your taxes with the assistance of a tax expert, you’re no longer eligible for the Free version. However, you can use the Essential version for $25.60. It costs $81.35 to file with the Deluxe+ version with the help of a tax expert and $118.35 for the Premier+ version with tax expert assistance. To file using the Self-Employed+ edition with tax expert help, you’ll pay $143.95.

TaxAct Pros and Cons

TaxAct filers have reported both pros and cons to using this well-known tax preparation company.

Pros

Promotions

TaxAct is one of many options for filing your taxes online. In an effort to keep up with the competition, TaxAct occasionally runs discount promotions on their services. Currently, TaxAct is offering 35% Off Federal and State Returns for a limited time! Be sure to check TaxAct.com frequently as discounts and promotions may vary.

Free Version Available

If you have a simple tax filing situation, don’t need expert help, and plan to file a simple return, you can use the TaxAct software for free. You can also claim dependents, students, and retirement income taxes using the Free version.

Potential Error Alert System

When you finish your return, the TaxAct automated system reviews your work and provides you with yellow or red alerts so you can review possible mistakes before filing.

Mobile App

The TaxAct mobile app allows you to check your tax refund status on the go or upload photos of your tax forms. You can also check your progress or complete the filing using the mobile app.

Cons

Complex Pricing Structure

There are many products available through TaxAct so it can be hard to figure out which version is right for your situation. If you want tax expert assistance, you’ll pay extra so be prepared for these additional fees.

No Tax Refund Advance

Many other tax filing preparation companies, such as H&R Block, offer tax refund advances that allow you to receive your refund before the IRS issues it. However, TaxAct doesn’t offer this service so you must wait until your return has been processed to receive your refund.

Minimal Educational Resources

The TaxAct website doesn’t provide a lot of educational content that ensures you understand the latest tax laws. If you don’t pay for the help of a tax expert, you may not know how to maximize your refund through credits and deductions without these resources.

How Does TaxAct Compare to Other Platforms?

When compared to other popular tax preparation platforms, such as H&R Block and TurboTax, it’s worth noting that TaxAct allows you to design your own experience. While these other platforms also offer different products, TaxAct stands out for its numerous options. You can choose a software version and decide if you want expert help with your tax filing situation.

Software pricing is also comparable to other competitors and slightly lower than TurboTax. However, the pricing structure with TaxAct is a bit more complicated, which some users may find frustrating.

The website is often described as “no-frills” due to its simple navigation and exclusion of extensive educational tools. However, if you’re a simple tax filer who doesn’t need assistance, the straightforward site may appeal to you.

There are several well-known e-filing companies with different products that offer numerous benefits and drawbacks. Before you decide which e-filing company is best for you, review the options available and ensure you feel comfortable with the fees and level of assistance provided.


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