Competent tax preparation with an excellent final review
TaxAct Deluxe has roots that go back to the 1990s. It’s a reliable and thorough tax preparation service with a large potential audience of taxpayers, primarily W-2 earners who want to itemize. Since we last reviewed it, the company has improved the user experience and enhanced existing features like ProTips, Deduction Double Check, Deduction Maximizer, and data-importing tools. Other new features will be announced soon, so be sure to check back for an update to this review. Note that we haven’t assigned a rating to TaxAct yet, as we are still in the process of evaluating the competition. Not to worry, we’ll return to this preview before tax time. How Much Does TaxAct Cost? TaxAct broke the price barrier when it introduced completely free online personal tax preparation and e-filing for both federal and state several years ago, but it no longer offers that. There still is a free version, but it doesn’t support schedules A–F. The major topics it includes are W-2 income, college expenses, Earned Income Credit, Child Tax Credit, retirement income, and unemployment. State returns are no longer free if you choose the free federal filing. It now costs $39.95 per state filed. The next step up is Deluxe, which is the version I tested for this review. It’s $44.95 (that’s the list price; you may see a different offer online) for federal filing, though all of TaxAct’s prices are discounted if you file early. If you have to report investments or rental property, you’ll need Premier ($69.95 for federal). At one more step up is the Self-Employed option ($79.95 for federal), which is the top-of-the-line service and the only one to offer Schedules C and F. State returns cost $44.95 per state filed for all the paid editions. You can also save money by buying a bundle of TaxAct products called All-Inclusive, although you won’t see this offer until you’ve started a return with TaxAct. In other words, it isn’t a public-facing offer. All-Inclusive includes federal prep and filing and one state return (all TaxAct versions), refund transfer (subtract TaxAct fees from your refund), E-File Concierge (personalized help with return status), and Audit Defense (a pro will deal with the IRS for you). As of this writing, the price is $114.95, which may or may not go up to $229.95. TaxAct no longer offers what it used to call the Price Lock Guarantee. In the past, no matter when you filed, TaxAct would charge you the price the product was when you started your return. Tax preparation services tend to get more expensive the closer you get to the filing deadline, and competitors generally charge you whatever the rate is at the time you file. This is a disappointing development, as it was one of the things that set TaxAct apart. How Do TaxAct’s Prices Compare? The price for TaxAct Deluxe is now just a few dollars less than the Deluxe version from H&R Block. Cash App Taxes, formerly Credit Karma Tax, is now the only service that has supported all the major forms and schedules for both federal and state for free. FreeTaxUSA supports all major forms and schedules for free, with only a $14.99 charge for state returns. Of course, you get what you pay for, and what you don’t get for these low prices is a deep and thorough help system. TaxAct Deluxe gives you the option to enter data on reproductions of official IRS forms sometimes, but you may find it easier to follow along with the step-by-step interview wizard. TaxAct’s Wizard Wizardry TaxAct, like its competitors, is an online version of all those paper documents you would otherwise need to assemble to do your tax preparation. If you have a complicated financial life and have ever tried to complete your return on paper, you know how frustrating and time-consuming it is to keep flipping back and forth between forms and schedules, doing all your calculations, and transferring the correct numbers to your 1040 form. TaxAct makes this grueling process more organized and manageable. Just as a human being in a tax preparer’s office would do, it interviews you to get all the information needed to complete your return, taking you through a lengthy step-by-step wizard. All you need to do is answer the questions on each page before you advance to the next. Sometimes you have to fill in a number or a few words, whereas other pages ask you to select responses from lists of options. As you enter information, TaxAct does the necessary calculations and puts your answers onto the right lines on the appropriate forms or schedules. At almost every step of the way, it offers support of one kind or another. After you visit every topic applicable to your situation, TaxAct goes through your return and alerts you to potential problems before allowing you to e-file or print out paper returns to mail. You aren’t asked to pay until this point, as is typical with these services. Early Tax Info Your first steps in getting started are to create a username and password and enter codes sent by both text and email. Once you’re in, the site asks which version you want to use. It also asks if you want to import your tax data from last year, and you have the opportunity to edit anything that’s changed. TaxAct Deluxe can also import information from a PDF file of your 2020 return that was prepared by another service, which can save you a lot of time and improve the accuracy of your return, assuming your data was correct last year. The process is even simpler and better automated if you used TaxAct Deluxe last year. If you’re starting from scratch, TaxAct Deluxe has to get some basic information about you up front, such as filing status, names and addresses, birth dates, and Social Security numbers. Then, it’s on to questions about dependents. This part is all fairly straightforward and done in a serious way. Other services, such as TurboTax and to a lesser extent H&R Block, try to be a little friendlier and even folksier, which doesn’t affect the actual tax preparation, but some people may find the chummier style can make a tedious experience a bit more pleasant. Others may prefer a more matter-of-fact approach.
