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After everything you’ve been through in the last few years, filing your taxes may seem like too much to ask. But no matter what, the government is not going to give you a pass, so you need to prepare for your 2021 filing now. For many people, that means choosing their tax preparation method. Do you want to file online without assistance? Online with assistance? Download software? Or visit an expert in person? If you are choosing online or downloadable preparation software, you should compare two of the top players in the industry: TurboTax vs. TaxAct.
Both services offer software aimed at people with average (or less) tax knowledge. The programs ask you carefully constructed questions to gently lead you through the necessary tax forms. Both are reasonably easy to use and offer similar features, such as deduction maximizers, simple document importing and easily accessible libraries to answer basic tax questions.
The actual online experience does differ, however. Experts consistently praise TurboTax as being user-friendly due to a design that meets the needs of most users. Tax Act’s design is less sophisticated than TurboTax’s and is not quite as easy to use. TurboTax wins in this category if you value a smoother ride.
Most tax preparers offer some level of free service to those who are filing a simple 1040 federal form. They do vary when it comes to the services included in this free tier. TurboTax has some restrictions on their free returns, but the company does offer some free federal and state filing options. In contrast, Tax Act offers a free federal filing option but charges $39.95 for state filing. If you meet the requirements for a simple 1040 filing, then TurboTax is probably the best choice for you this year.
The next tier up from free is Deluxe on both services. Deluxe is for those who want to get the most from their deductions and credits. You may have child care credits, HSA contributions or student loan interest. In reality, any potential tax complication requires an upgrade for both TurboTax and TaxAct users.
The Deluxe version of TurboTax will cost $39 for the federal return and $39 for a state return, making a total of $78. This year, TaxAct is charging $24.95 for the federal return and $44.95 for a state return on their Deluxe level for a total of $69.90. So, if you choose Tax Act Deluxe, you will save a few dollars on your tax preparation.
Premium tiers are for people with small businesses, brokerage accounts, rental income, etc. Neither TurboTax or TaxAct support these tax needs on their Deluxe tiers. You will be required to upgrade.
TurboTax outshines Tax Act in integration ability. For instance, if your taxes include interactions with third parties such as brokerages and crypto services like Coinbase, TurboTax will make your life easier by allowing you to directly transfer information.
TurboTax offers more features in its premium tier, and they charge more for them. The federal return will cost you $69 while the state return price is $39. That means you’ll pay $108 for the premium version. TaxAct’s federal premium tier costs about half of TurboTax’s offering—$34.95—while the state filing price remains at $44.95. In total, you’ll pay $79.90 for TaxAct’s premium service.
You always need solid customer support when you file your taxes. Comparing TurboTax vs.TaxAct in this area does reveal some differences. TurboTax offers minimal support for those filing a free edition return, but those who upgrade to Deluxe or Premium tiers receive 24/7 online support. You’ll also have access to tax experts if you have questions about your return. You can also pay to have an expert help prepare your taxes, from start to finish.
Tax Act offers support for every tier, including its free offering. You can get email support at that level. When you upgrade, the company gives you access to their answer center.
Both companies advertise a 100-percent accuracy guarantee and promise to pay any penalties or interest accrued due to a mistake on their part. That means you should not suffer any financial penalty due to a miscalculation by their software. Of course, if your return is inaccurate because of the information you provided, you will be responsible for any fines or interest.
Tax Act and TurboTax offer enhanced audit protection options for an additional cost. Tax Act’s Audit Protection Plus is for three years and helps you with both federal and state audits. They will handle any audit correspondence for you and guide you through the audit process.
TurboTax’s Audit Defense option promises the following services:
You will pay around $60 for Audit Defense, while TaxAct’s Audit Protection Plus is approximately $45. Both companies offer basic audit support for free.
The best tax preparation service for you depends on your tax needs. TurboTax is widely considered to be easier to use, but it costs more than Tax Act, which is still relatively simple for taxpayers.
In the past, Tax Act’s free service was the best deal for simple returns, but this year the company has upped its state filing prices. TurboTax state filing is less expensive, but their free tier is somewhat limited.
In most cases, though, TaxAct is cheaper to use than TurboTax, so it comes down to cost vs. convenience. You may be willing to pay a little more for TurboTax’s ease of use. In either case, you’ll have access to tax experts, audit protection and an accuracy guarantee.