TaxAct Review 2023: Same Tax Return, Lower Cost

Filing taxes is an annual practice that most of us try to do as quickly as possible and at the lowest cost. TaxAct is a popular discount tax software that can produce the same results as the more expensive platforms.

It’s also possible to prepare simple tax returns for free. Besides the free version, TaxAct offers three levels of service: Deluxe, Premier, and Self Employed. Deluxe supports unemployment income, student loan and mortgage interest, and itemized returns. Premier supports the sale of a home, the sale of investments, and foreign bank accounts. Self Employed supports business income. 

TaxAct can do what most other tax software can do but at a lower cost.

Is TaxAct Really Free?

Yes and no. TaxAct offers free online tax prep for non-itemized simple tax returns that can include these income streams:

• W-2 income
• Child tax credits
• Earned income credits
• Retirement income

Unfortunately, it costs to use TaxAct if you receive unemployment benefits, earn self-employed income, or sell investments. Filing an itemized tax return or deducting student loan interest payments incur a fee too.

There isn’t a maximum income limit to qualify for the free version of TaxAct. Instead, how much you pay depends on which taxable events you report.

Online Filing Options

The easiest way to file your taxes with TaxAct is by using their online software. No download is necessary and you can use your phone or computer to prepare your returns. Preparing your return online also lets you file your taxes for free.

Free

Cost: $0 Federal and $39.95 State

Qualifying simple tax returns can file federal returns for free and state returns only $4.95. The tax situations that can file for free with TaxAct are similar to most online tax prep software.

You can prepare a non-itemized 1040 Individual Income Tax Return. It’s possible to claim these income streams, tax credits, and tax deductions in the Free edition:

• W-2 income
• Retirement income
• Child tax credit
• Earned income tax credit
• Tuition and fees

Those currently making student loan payments will need to pay to use TaxAct to claim the student loan interest deduction. But current students can deduct tuition and fees for the current year.

Any tax event that requires a Schedule A or Schedule 1-3 requires a paid plan. Some tax events include self-employment income (Form 1099), unemployment income (Form 1099-G), rental property income, and less-common retirement plan contributions.

These standard features can make filing a free tax return easier:

• Import prior-year tax return from TurboTax, H&R Block, or TaxAct
• Online tax glossary for self-help
• Chat, email, and phone technical support
• FAFSA assistance
• One year of online return access and six years of PDF access
• Real-time filing status updates by text or email

The TaxAct Express mobile app supports mobile uploads of W-2 and driver’s license documents by filing with your smartphone. The paid online versions can support importing bank and brokerage documents.

Deluxe

Cost: $46.95 Federal and $54.95 State

Itemized tax returns and non-itemizers claiming the standard deduction but with advanced deductions and credits will need to choose TaxAct Deluxe. Homeowners and those with student loan payments are most likely to need this version.

The TaxAct Deluxe edition covers these tax situations:

• Unemployment income
• Itemized deductions
• Adoption credits
• Child and dependent care
• Deductible student loan interest
• Mortgage interest
• Real estate taxes
• Health Savings Account (HSA) contributions

Itemizers with charity contributions may appreciate the Donation Assistant that tracks the value of cash and physical donations. The paid versions also support more import options including 1099 and W-2 tax forms.

The paid versions include the same support technical support options accessibility as the free plan via phone, email, or chat. Screen sharing is available with the chat support option.

You can look for answers to your tax questions in the free TaxAct online library. A tax specialist package is available at an extra cost of approximately $50 to get personal tax advice.

Premier

Cost: $69.95 Federal and $54.95 State

Selling investments, a home, or earning rental property income requires opting for the Premier plan. These tax events report on a Schedule D (Capital Gains or Losses) and Schedule E (Supplemental Income and Loss).

You will need to choose TaxAct Premier for these tax situations:

• Sell investments
• Sale of home (primary residence or investment property)
• Rental property income
• Royalty and Schedule K-1 income
• Foreign bank and financial accounts

The TaxAct tax interview will guide you through the process of reporting your investment and real estate gains and losses. It’s possible to import the end-of-year brokerage documents from select online brokers. If a direct import isn’t possible, you can upload a CSV file.

Self Employed

Cost: $94.95 Federal and $54.95 State

Filers that earn self-employment or freelance income reporting on a Form 1099 will need to opt for the Self Employed version to complete a Schedule C.

The Deduction Maximizer tool looks for niche-specific deductions to lower your tax bill. Some examples include the home office deduction, website hosting, business-related travel, and membership dues.

Expense and mileage tracking apps can fill in the gaps so you don’t overlook a tax deduction.

The Self Employed version also helps you calculate your business depreciation and next year’s estimated taxes.

Using TaxAct Self Employed can be cheaper than other online platforms or hiring a local enrolled agent or CPA. If you want access to a tax expert to review your return and provide personal tax advice, consider TurboTax or H&R Block that offer tax expert packages.

TaxAct Download

If you don’t qualify for the TaxAct Free edition, you might consider purchasing the TaxAct Download edition. The desktop version can be a better option when multiple people must pay to file a federal tax return and you want to save some money.

Below are the costs for each TaxAct Download package:

• Basic: $26.95
• Deluxe: $96.90
• Premier: $101.90
• Self Employed: $124.90

The Basic package includes five federal e-files but each state return costs $49.95. Choosing the TaxAct Free online version can be a cheaper alternative with similar perks.

The remaining TaxAct Download packages (Deluxe, Premier, and Self Employed) include five federal e-files and one state return. Each additional state return costs $49.95.

Home and Business Tax Software Bundles

It’s also possible to file select small business tax returns using TaxAct. A Home and Business bundle costs $200 and lets your personal and business income taxes.

TaxAct offers these business tax bundles:

• 1065 Bundle (Partnership)
• 1120 Bundle (C Corp)
• 1120S Bundle (S Corp)

Each bundle includes one federal and state tax return (i.e., 1065, 1120, or 1120S). Plus, you get five federal and one state e-file at the TaxAct Self Employed tier for your personal income taxes.

If you only want to file your business taxes, it costs $109.95 for the federal return plus $49.95 per state.

Pricing for Other Tax Situations

TaxAct supports several other tax return types:

• Tax-exempt organizations (Form 990)
• Estates and Trusts (Form 1041)

Either package costs $109.95. State tax returns cost $49.95 each.

Receiving a Refund

If you qualify for a tax refund, TaxAct won’t charge any extra fees for these payout methods:

• Direct deposit
• Paper check
• American Express Serve prepaid debit card

There is a $49.95 fee if you choose to pay the TaxAct product fees from your refund amount. Immediately paying TaxAct when you e-file with a credit card or debit card lets you avoid this extra fee.

TaxAct Features

While TaxAct doesn’t boast as many features as other platforms, there are several that can make preparing your taxes easy.

Step-by-Step Interview

After selecting your TaxAct package, you complete your taxes with a step-by-step interview. You will answer different questions about these tax factors:

• Personal information
• Last year’s tax return
• Income
• Deductions
• Credits
• Taxes (i.e., Alternative Minimum Tax, self-employment tax)
• Miscellaneous (i.e., estimated taxes, disaster designation, combat zone)

You can skip around sections and bookmark questions to answer later.

Data Import

TaxAct supports importing last year’s tax return from TurboTax and H&R Block. One can also upload a PDF copy of their prior-year return. The TaxAct mobile app can upload W-2 forms. Some online brokerages can upload documents but you can also upload a CSV document.

TaxAct Mobile App

The TaxAct Express app is available for Android and iOS devices. This free mobile app supports uploading your W-2 and driver’s license information. In-app chat support is available too.

Real-Time Refund Calculator

Like other tax prep software, an indicator displays your estimated refund or tax liability as you work on your return.

Deduction Maximizer

Many freelancers and real estate investors choose to hire a tax expert to prepare their taxes to avoid overlooking deductions. The Deduction Maximizer tool can produce similar results by helping you find any relevant deduction.

$100k Accuracy Guarantee

As you complete your return, TaxAct looks for IRS audit flags and reporting errors. Your tax return has an accuracy guarantee of up to $100,000. If TaxAct miscalculates your results, you receive the cash difference for the actual refund or tax liability when another tax software produces the accurate result.

This guarantee applies to the consumer 1040 federal and state tax returns but not the business filings.

Audit Assistance

TaxAct offers free audit assistance which is an online FAQs page. You can find answers explaining the different IRS forms or how to contact an IRS agent. The phone and chat support may not help you prepare for an audit.

For extra help, you can purchase an add-on Audit Defense package for $49.95. Protection Plus offers personalized support and correspondence for the next three years if the IRS or your state tax agency audits you.

Here’s how to get free audit defense. 

Seven Years of Tax Return Access

TaxAct provides one year of online access and six years of PDF access to each tax return. It’s possible to download and print a tax return during this period.

Is TaxAct Easy to Use?

Most people will find TaxAct easy to use. The step-by-step interview can make sure you don’t forget any tax details. You can also bookmark sections and return to them later. It’s possible to get the same results but at a lower cost.

Spending the extra money might be worth it for complex returns requiring plenty of manual entry. TaxAct has limited upload options that can make reporting sold investment and real estate income prone to reporting errors.

Technical support is free and available by chat, phone, or email.

For personal tax advice, an add-on package is available. TaxAct provides an online tax glossary that can answer common tax questions. Those wanting one-on-one assistance may find another platform more desirable.

Is TaxAct Secure?

Filing your taxes can be a prime opportunity for identity theft. TaxAct uses standard industry security measures to protect your sensitive information.

Some of the best security practices include:

• Two-factor authentication by email, phone, or Google Authenticator
• Social Security Number alerts (if TaxAct detects another tax return with your SSN)
• Complex password requirements
• Trusted device verification
• Device sign in history
• Customizable security rules

TaxAct encrypts each webpage as well.

TaxAct Advantages & Disadvantages

Like any packages, there are advantages and disadvantages to the platform:

Advantages

• Free online filing edition
• Can be cheaper than other tax software for complex tax returns
• Upload W-2s and other tax data
• Supports personal and business taxes
• Easy to use despite lack of features
• $100,000 accuracy guarantee

Disadvantages

• Student loan interest deduction doesn’t qualify for free file option
• Limited data import options
• Audit support costs extra
• Minimal one-on-one tax expert support packages
• $49.95 fee to pay TaxAct product fees with a tax refund

Who Should Use TaxAct?

TaxAct is a good option for those who can either qualify for the free filing option or are confident filing a return by themselves. While TaxAct doesn’t offer as many convenient features that making prepare a tax return easier, the product fees can be cheaper.

TaxAct Alternatives

Using other tax software can be better depending on your personal needs.

TurboTax

Many consider TurboTax to be the “gold standard” tax software. Despite its higher fees, TurboTax offers more features and data import options to reduce the time it takes to prepare your return. Those wanting one-on-one tax expert support will prefer the TurboTax Live packages.

Here’s a breakdown of the different TurboTax versions. 

H&R Block

H&R Block offers online and local tax prep services and offers more features than TaxAct. It’s also free to file if you have unemployment income or deductible student loan interest that TaxAct charges a fee for. H&R Block’s complex plans can cost more than TaxAct.

Cash App Taxes

It’s possible to file taxes for free with Cash App Taxes. Complex tax returns including self-employment income, rental properties, or selling investments are free to fill at the federal and state level. Each tax return also includes free audit defense that TaxAct charges $49.95 for. Business taxes and part-year state tax returns are ineligible on Cash App Taxes. Our comprehensive Cash App Taxes review will explain more.

Summary

TaxAct is a good option if you want to file your taxes for less money. However, you sacrifice the newest features and one-on-one tax support that more expensive tax software offers. You can save the most money with TaxAct if you have self-employment, rental property, or investment income to report.

Tax Act

9

Product Rating

9.0/10

Strengths

• Free online filing edition
• Can be cheaper than other tax software for complex tax returns
• Upload W-2s and other tax data
• Easy to use

Weaknesses

• Student loan interest deduction doesn’t qualify for free file option
• Limited data import options
• Audit support costs extra
• Minimal one-on-one tax expert support packages

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