Finally, you sit down in front of your computer to prepare your taxes. Tax preparation is indeed a tedious task, especially if you need to handle stacks of W-2s and documents. However, a good tax software app can help you get the job done more quickly and efficiently. The question is, which is the best tax software app that you should choose? There are many different options available on the market, each with different sets of features and prices. TaxAct and TurboTax are two of the most popular tools that you can consider. See the comparisons between TaxAct vs TurboTax below.
TaxAct: User Experience and Features
TaxAct is a very popular tool that many people use to prepare their taxes not only because it is one of the most inexpensive options available, but also because of the excellent user experience. The interface is not fancy, but it is effective and intuitive. It starts with a few interview questions to help you determine your filing needs. However, apparently, TaxAct has given up some details and advices in order to cut down the costs and come up with less expensive prices. Unlike other options, TaxAct provides fewer tutorials and explanations, which are actually needed by beginners who do not know much about the process.
In addition, the features are also more limited. For example, it cannot help you file a Schedule C or F form. So, if you are self-employed or if you own some sort of farm, you can’t use TaxAct and have to find an alternative. Furthermore, the tools provided to identify deductions are basic. If you only have a simple basic filing, the tools will probably catch everything. However, if you have a complicated one, the tools may miss some deductions.
There is a free mobile app, but it is very basic. It is only effective for the simplest tax situations. If you have a complicated filing, the mobile app won’t suffice. For example, if you tell the mobile app that you are married, have kids, and are filing jointly, it will tell you to use an online product instead.
TurboTax: User Experience and Features
On the other hand, TurboTax is considered by many people as the most user-friendly tax software available in the market. It has an interview-style interface if you prefer to keep things in plain English, but you can also skip forward and go straight to the forms if you are bored with the interview process or if you are confident enough.
One of the features that make TurboTax awesome is the W-2 snap and auto-fill feature, which enables you to snap and upload a photo of your W-2 to TurboTax. From there, the app can fill the required information automatically. There are good tutorials and explanations that can help a beginner understand the whole process and how different things affect the refund.
TurboTax comes with better deduction tools, which allow you to be certain that it goes through all options for potential deductions so that you can get the most refund possible. Deluxe, Premier, and Self-Employed users can get Its Deductible, which is a feature and a stand-alone mobile app that can help you to quickly find the deduction value of donated objects, clothes, and household items. By the way, the Self-Employed version has a feature which scans your spending on linked credit cards and bank accounts to help you find deductible business expenses.
If you are getting some refund, both TaxAct vs TurboTax can have the IRS deposit it directly to a bank account or send you a paper check. Both also provide a debit card option, which you can choose if you prefer to get the refund loaded to a prepaid card. However, keep in mind that these cards come with fees. Both apps allow you to use the refund to pay your prep fees, but there is also an additional fee for such operation. Of the two, TaxAct is less expensive because the additional fee is $20. TurboTax charges $34.99; but for users in California, the service to pay the prep fees with a federal refund is bundles with the Premium Services package which costs another $39.99.
Next, consider the differences between TaxAct vs TurboTax in terms of support. TaxAct has an online knowledge base where you can search answers about specific tax issues. While it is not very robust, it indeed provides free support via phone or email for seven days a week.
The audit support and guidance on TaxAct is mostly in the form of a FAQ page on the website. But you can choose to buy assistance services which are provided by a partner company, Protection Plus. The coverage provides three years auditing for the current year’s return, along with assistance on denied credits, tax debt, and tax fraud.
On the other hand, TurboTax provides audit support and guidance for free on all versions. There is also an add-on feature called Max Assist and Defend if you want representation so that someone will speak with the IRS on your behalf.
Both TaxAct vs TurboTax offer several different versions. Each has a truly free version which means that there won’t be an additional cost for filing a state return, but note that the free version of TaxAct charges $10 to import last year’s return. On TurboTax, if you sign in using last year’s login, the last year’s return will be transferred but you need to upgrade in order to keep the data. Both apps provide 1040EZ and 1040A federal forms in the free versions. The higher versions are suitable for investors, self-employed users, and people with rental property.
TaxAct is cheaper on all tiers. The state return prep cost is $0 for the free version, $35 for the paid version. There are two paid options, Plus (which costs $30) and Premium (which costs $45).
TurboTax is more expensive. The state return prep cost is $29.99 for the free version, $39.99 for the paid version. There are three paid options, which are Deluxe ($54.99), Premier ($79.99), and Self-Employed ($114.99).
|- Good for simple filing, but the features are limited, i.e. there is no Schedule C or F form||- Has complete features, great for basic and complex filings|
|- Basic deduction tools||- Advanced deduction tools|
|- Good support, add-on feature for assistance and representation||- Great support, free assistance and add-on representation|
|- Significantly more affordable||- More expensive|
TaxAct makes the best way to go if your tax filing is simple. It is cheaper, and you can use the mobile app for the simplest tax filing. However, if your taxes are more complicated, for example if you are self-employed, you should choose TurboTax, which has more complete features. The deductions tools and support are also better.