When it comes to doing your taxes, choosing the right tax preparation software is crucial. You want a program that is accurate, secure, easy to use, and reasonably priced. TaxAct is one of the most popular DIY tax software options, but is it trustworthy? Let’s take an in-depth look at TaxAct to see how it stacks up.
TaxAct Overview
TaxAct is an online and downloadable tax preparation program created by Blucora, formerly known as InfoSpace. It was originally launched in 1998 under the name “2nd Story Software.” The software enables users to file their federal and state income taxes electronically. Key features include:
- Step-by-step guidance for entering tax information
- Support for all major IRS forms and schedules
- Accuracy review to catch errors before filing
- Max refund and audit risk indicators
- Secure file uploading and encryption
- Unlimited free phone and email support
- Free re-filing if TaxAct makes an error
TaxAct offers a range of DIY products for simple to complex tax situations at varying price points. This includes free filing for basic returns, Deluxe for homeowners and investors, Premier for those with stocks and rental property, and Self-Employed for freelancers and small business owners. TaxAct also provides live support from tax experts for an additional fee.
Accuracy and Guarantees
The most important factor in choosing tax software is accuracy. No one wants to face an audit or penalties because of a tax preparation mistake. TaxAct states that their software guarantees 100% accurate calculations and that if they make an error, they will pay resulting IRS or state penalty fees. They also offer free re-filing by TaxAct experts if needed.
User reviews on sites like BestCompany.com report that TaxAct tends to be highly accurate for basic tax situations. However, some users with more complex returns involving investments, business income, or foreign assets have reported errors. This suggests that while TaxAct can reliably handle simple tax returns, those with complicated taxes may want to use professional software or an accountant.
Security
Protecting your personal information is essential when using tax software. TaxAct states that they use multi-level security safeguards to keep customer data private and secure. This includes:
- TLS 1.2 encryption during online sessions
- Multi-factor authentication for account access
- Restricted employee access to customer data
- Regular third-party security audits
TaxAct also provides no-risk $1 million identity protection in case of tax identity theft. Reviews indicate users feel their information is safe when using TaxAct software. There are very few complaints of security breaches.
Ease of Use
Filing taxes can be a complex process for many taxpayers. Tax preparation software aims to make this process straightforward and hassle-free. TaxAct gets positive reviews from users for ease of use, especially for basic returns.
The interface uses a simple step-by-step questionnaire format to guide users through the tax preparation process. Helpful features include skip logic that omits irrelevant questions, hyperlinked explanations of tax terms, and rollover definitions for unfamiliar entries. Users mention the prompts are clear and the process is quick and intuitive.
However, for more advanced tax situations, some users report getting confused and needing to seek out support articles or ask customer service. So while TaxAct seems easy for simple taxes, users with more complex returns may require a bit of a learning curve.
Customer Support
Quality customer support can make or break the experience with tax software. TaxAct receives mixed reviews when it comes to their customer service options.
On the positive side, they offer US-based customer support 364 days per year. Users mention being able to reliably reach a live person for help by phone or chat. TaxAct also provides thorough self-help options through FAQs, instructional videos, taxpayer community forums, and online tax courses.
However, some users complain of reps being tax preparers rather than certified accountants, resulting in incorrect advice at times. Support levels and response times also appear to decline during peak tax season. So while TaxAct’s customer service options seem decent, they may falter when demand is highest.
| Customer Support Channel | Availability |
|---|---|
| Phone support | 364 days per year 7am – 10pm CT |
| Live chat | 364 days per year 24/7 |
| Email support | Year round |
| Self-help options | Available 24/7 |
Pricing and Value
TaxAct positions itself as an affordable DIY tax software option. The basic free file version covers simple federal returns at no cost. To itemize deductions, report investments, or include state returns, you must upgrade to a paid package. Below are TaxAct’s 2023 product pricing tiers:
| Package | Federal Price | State Price |
|---|---|---|
| Free | $0 | N/A |
| Deluxe | $24.95 | +$39.95 per state |
| Premier | $34.95 | +$44.95 per state |
| Self-Employed | $74.95 | +$44.95 per state |
| Live Expert Support | +$79 | +$40 per state |
Overall most users feel TaxAct provides good value, especially for those with simple tax filings. The free version is very robust and reasonably priced upgrade packages are available. However, other tax software like TurboTax and H&R Block provide better value for self-employed filers and small businesses according to reviews.
Other TaxAct Services
In addition to DIY tax software, TaxAct offers some other useful tax-related services:
Refund Transfer
TaxAct refund transfer service allows you to pay your tax preparation fees directly from your refund once the IRS has accepted your return. This helps avoid upfront out-of-pocket costs.
Refund Advance Loan
Qualifying taxpayers can receive a no-fee, 0% interest loan of up to $3500 from TaxAct while waiting for their refund to arrive from the IRS. Loan amounts are repaid out of your refund.
Audit Assistance
Get help from tax experts at TaxAct in the event you are audited by the IRS. Starting at $249.
Expert Review
Tax pros will review your return for accuracy before filing. Price starts at $79 for federal review.
Answers from CPAs
Get tax questions answered on-demand by verified CPAs through TaxAct’s CPAanswer service. Starting at $24.99 per question.
Conclusion
Overall, TaxAct appears to be a good option for doing your own taxes if you have a relatively simple return. The software is reasonably priced, easy to use, and accurate for basic filings. Security measures also seem adequate to protect user data. However, those with more complex taxes may want to use TaxAct’s higher tier paid products, enlist live expert support, or work with a tax professional for maximum accuracy.
Here are some key takeaways on TaxAct’s trustworthiness:
- Calculations are generally accurate for simple returns
- Robust security features protect user data and privacy
- Relatively easy for beginners to navigate
- Good value for free and Deluxe tiers
- Limited support and accuracy for complex taxes
- Mixed reviews of customer service responsiveness
While TaxAct likely makes sense for many DIY filers with straightforward taxes, it pays to understand the limitations. Consulting tax experts or professionals may be wise for error prone situations. But for simple 1040 filings, TaxAct offers a combination of accuracy, security, value, and ease of use that makes it a trustworthy option.