Getting ready to file your taxes or hoping to make the process easier next time around? You may be in search of a cheap way to do it without the headaches and have come across TaxAct. In this article, we’ll discuss how TaxAct works, the benefits, and help you decide if the software is a good choice for you.
What Is TaxAct and How Does It Work?
TaxAct is an unpaid software to file taxes and allows you to prepare, print and file your income taxes online. The cloud-based software is much cheaper than alternative online services and comes with some interesting features that are unique and add to its allure.
TaxAct allows you to file for free if you are filing a Form 1040A or a 1040EZ, but you will have to pay more for other types of tax forms. The software also gives you the ability to import your previous year's tax returns, and it also has a W-2 import feature.
The software also features some calculators and planning tools that can be helpful during the process. TaxAct features unlimited phone and email support which makes for a great addition to the service.
Since the software is online, you can start working on your tax returns on any internet-connected device and then continuing to work on it at your own pace. TaxAct does offer a desktop version of the software, but many people find that working on their tax returns in the cloud is the most convenient option.
As far as getting your tax refund, TaxAct offers several options. You can choose to receive your refund via a paper check or by direct deposit to your bank account. You can also opt to apply the refund to your next year's taxes or allow the IRS to buy U.S. Savings Bonds with it.
Overall, the software is simplistic in design, and this both works for it and against it in the end. Below we’ll take a closer look at the TaxAct including its benefits and its flaws.
The Benefits of Using TaxAct
TaxAct is by far the cheapest online tax filing software. The software offers a free federal and state filing system. The TaxAct free version can be great to use as an alternative to other services such as Turbotax and H&R Block.
Simple forms 1040EZ and 1040A filers can file for free, although people who need to do more advanced filing will have to pay more. However, the prices for more advanced forms are still lower than alternative services.
The TaxAct has plan options for people with a single income, freelancers, homeowners, the self-employed, and more. The software also offers several excellent ways to receive any refunds.
TaxAct offers some useful features that attempt to make filing taxes a straightforward and easy process. Some of the main features included with TaxAct include:
- Price Lock Guarantee – With this feature, TaxAct promises to charge you a consistent amount. No matter when you begin filing, the prices that are there when you start filing are what you pay even if prices increase later on.
- Maximize Credits and Deductions – TaxAct promises access to over 300 tax credits and deductions that can be applied during the filing process, helping you to optimize your tax return.
- Easily Report on Investments and Rental Income – TaxAct lets you quickly report your rental income and other investments while filing, helping you to get the largest tax breaks possible from interest, mortgage payments, and donations to charity
- Personalized Financial Assessment – Included in the TaxAct service is a financial assessment which helps to give you guidance on how to improve your future financial wellbeing, lower your tax bill, and save money.
TaxAct includes three payment options depending on your needs.
As mentioned above, the Free plan can be used for anyone who is filing a 1040A or a 1040EZ form. The Plus plan includes more options for filing and according to the site is ideal for itemizers, homeowners, and investors. The Premium plan is the most expensive plan and is perfect for people who are self-employed, freelancers and contractors.
Compared to the pricing on similar cloud-based tax services, each of the TaxAct plans is considerably lower, meaning that if you're looking to save money by spending less, TaxAct is an excellent option.
- Free: Federal $45, State $35
- Plus: Federal: $30, State $35
- Premium: Federal $45, State $35
Who Is TaxAct Ideal For?
TaxAct can be the ideal option for many types of people. In particular, TaxAct is an excellent choice for individuals who have just one job or couples who each have only one job.
Anybody who is filing only a 1040A or a 1040EZ will benefit the most from using the service, as these users can file their taxes entirely for free.
How People Feel About It
Although TaxAct does have some excellent features, many people have been less than satisfied with the service. Much of the response and reactions to the TaxAct software has been on the negative side, and there are several reasons why.
Keep reading to find out the primary reasons people feel that TaxAct could be improved upon.
Has the Same Problems as TurboTax
Like Turbotax, TaxAct ropes you in with free stuff and then charges you.
While the service appears to be well-priced, it's not as simple as it may seem. Like TurboTax, TaxAct likes to tout itself as a free service but then adds on hidden charges and costs once a user is roped in.
TaxAct offers a very basic number of features for free but for the functionality that most users need isn't included and will have to be purchased as an addition to the service.
Terrible for Complicated Returns
While TaxAct does an excellent job has a filing option for users who have simple and straightforward tax filing needs, the service fails at actually helping users with a more complicated tax situation.
It's not very easy to use for anyone who has a more complex income to report. The service is especially ideal for people with one job or a single income but isn't the best for other users.
Despite hidden costs, the TaxAct service is relatively inexpensive compared to similar tax filing options and services.
The Free plan is especially useful and affordable for users, but even the more extensive Plus and Premium plans are a real improvement over many competitors.
Huge Price Increase
While the TaxAct is the cheapest option compared to other services, many users of the service in the past have been surprised by price increases that the service has undergone recently.
Prices were once even lower than they are now and quickly went through changes which turned many users off. It's entirely possible that prices may undergo more unexpected changes in the future as well.
The interface has improved somewhat but has been well known for having one of the most cumbersome and ugly interfaces of any of the major tax software options. The ugly interface makes doing your taxes even more of a hassle and can be difficult to use.
Semi-Difficult to Use
While the TaxAct is very user-friendly in some ways, it other ways it can be difficult to use. The interface is ugly, and a bit too simplistic and doesn't offer the same number of features and guidance as TurboTax does.
While it can be overcome, if you're looking for ease of use another option may be a better choice.
How It Compares
We've already mentioned some of the ways that TaxAct compares to other services. TaxAct's primary competitors are Turbotax and H&R Block. While each service has some advantages over the others, they vary in many ways.
Compared to TaxAct, Turbotax is regarded as an easier service to use. Unfortunately, TurboTax is also the more expensive option.
For a closer look at TurboTax check out our TurboTax Review 2018.
When compared to H&R Block, TaxAct also falls short. H&R Block has much better customer service, and the interface is slightly easier to use as well.
TaxAct really beats the competitors due to its pricing. TaxAct is currently still cheaper than the competing services, which makes this the best service for people on a budget to use.
What We Think
Now that we’ve sufficiently covered all of the ins and outs of TaxAct, let’s get to our overall verdict.
TaxAct is Good for Simple Tax Returns
Where TaxAct works well is with the filing of simple tax returns. The design and interface of the software are simple and limited, and for users filing a 1040A or a 1040EZ the service is free.
TaxAct doesn't work as well for more complicated returns and doesn't have as many features as competitors such as TurboTax.
Falls Into the Same Shady Business Practices as Competitors
Unfortunately, like TaxAct's competitors, the service has some shady business practices which make using the service a frustrating experience. While the pricing seems simple enough, hidden costs make the service a bit more expensive than it first appears.
Difficult to Use
While the service is simplistic in nature, it is also not incredibly intuitive and easy to use. The ugly and frustrating user interface has much to learn from its competitors such as TurboTax and H&R Block when it comes to ease of use and functionality.