TaxAct vs. TurboTax: Which Is the Best Tax Software?

Preparing and filing your taxes isn’t usually a pleasant experience, especially if you’re doing the work yourself. Two of the largest tax-filing software programs, TaxAct and TurboTax, can make it faster and easier by walking you step by step through the process.

Here’s a comparison of TaxAct versus TurboTax to help you decide which free tax-filing service is best for you.

TaxAct and TurboTax Features

Although both platforms do essentially the same thing — help you prepare and file your tax returns — each has several versions with unique features and ways to support you as you work.

TaxAct

You can file for free using TaxAct Free for the most basic federal return using Form 1040. The version might work for you even if you received unemployment or retirement income. It also handles child and earned-income tax credits as well as stimulus credits. Although you can also use TaxAct Free to prepare your state return for free, you’ll pay $39.95 for each state return you print or file.

For filers with a more complicated return, TaxAct has paid versions that support more forms:

• Deluxe is for filers with loans and children and it has the same features as the Free version, but it supports itemized deductions.

• Premier is for filers with investments and it adds ProTips and personalized tax planning to the features offered by Deluxe.

• Self-Employment helps filers with 1099 income to claim all the business deductions they’re entitled to.

All versions include free Xpert Assist. This service provides unlimited access to a live tax expert who can offer tax advice, help you prepare your return and review the return before you file it.

TaxAct also has an all-inclusive bundle. This optional package supplies you with all online federal forms, one state tax return, Refund Transfer, E-File Concierge and Audit Defense for $229.75 and it’s offered at 50% off as of Jan. 10.

No matter which version you use, you can import your last year’s return from TaxAct, TurboTax or H&R Block. TaxAct keeps returns you file with its service for seven years. During this time, you can access and print copies whenever you want.

Another useful feature available to all users is assistance with your Free Application for Federal Student Aid. TaxAct Free lets you complete and print a worksheet containing the information you’ll need when you fill out the FASFA.

The program also includes TaxAct Alerts that let you know if you’ve made a mistake that could trigger an audit or cause you to pay more tax than you need to.

In addition, TaxAct Free guarantees that you’ll receive the maximum refund available and that its software is 100% accurate.

Optional services, some of which are offered by third parties, include E-File Concierge, which keeps you up to date when the status of your return changes. Other options include Audit Defense, where tax pros will handle communications with the IRS if you get audited within three years.

To ease the pain of filing fees, you can have TaxAct deduct them from your tax refund. Although TaxAct notes there’s a fee for this service, it doesn’t disclose the amount.

TurboTax

Like TaxAct Free, TurboTax Free Edition is a free program to file basic federal tax returns, but unlike with TaxAct, you can file your state return for free as well. Free Edition also supports student loan interest deductions and, in some cases, income from hobbies, personal property rentals and personal sales reported on Form 1099-K.

TurboTax offers paid versions for filers with more complex returns:

• Deluxe adds support for itemized deductions to the features in the free edition.

• Premier, for filers with investments and/or rental property, auto-imports investment activity and calculates gains and losses. It covers a variety of investment types, including cryptocurrency.

• Self-Employed can help you find industry-specific business deductions and evaluate your return for audit triggers.

No matter which version you use, TurboTax gives you a jump on preparing your return by allowing you to import PDFs of prior-year returns. The list of compatible providers includes TaxAct, H&R Block, Credit Karma, ezTaxReturn, TaxSlayer and Liberty Tax/Tax Brain.

All TurboTax versions provide free access to a product specialist who can help you navigate the software if you get stuck. A community forum with message boards and an extensive library of FAQs and articles gives you an additional place to go for help. And if you get audited, TurboTax will guide you through the process at no extra charge.

You’ll also receive guarantees that your return is accurate and results in the maximum refund you’re entitled to. A CompleteCheck feature reviews your return to look for errors and omissions before you file.

You have a couple of ways to get help with your taxes. The first is to upgrade to TurboTax Live Assisted at any time to get help from a tax professional. Live Assisted Basic is free for simple returns filed by March 31. The regular price to add Live Assisted to paid products ranges from $129 to $209, but prices are reduced as of Jan. 10.

The alternative is to have an expert do your return for you. The fee for Live Full Service varies according to the complexity of your return.

If you need your refund faster than the IRS can get it to you, you can get up to $4,000 as a free advance from TurboTax. The funds are available almost immediately after the IRS accepts your return. The caveat is that you must open a Credit Karma Money checking account to receive the direct deposit.

TaxAct and TurboTax Pros and Cons

Both programs have a lot to offer anyone looking to do their own taxes, no matter how simple or complex their situation is. But both also have drawbacks to consider.

TaxAct Pros and Cons

Here’s what to like — and what to watch out for — with TaxAct.

Pros

• Affordable price

• Free Xpert Assist with all online versions of TaxAct software

• All-inclusive bundle available with Audit Defense and E-File Concierge

• Expanded hours for phone support on peak days

Cons

• Common deductions and personal income types not included with the Free version

TurboTax Pros and Cons

Here’s what you need to know about the benefits and drawbacks of using TurboTax to prepare and file your taxes.

Pros

• Free version includes forms TaxAct doesn’t

• Imports prior-year returns from more providers

• Free audit support

• Offers optional tax preparation services

• Community forum for assistance

Cons

• Expensive paid versions

• Live Assisted not included in paid versions

TaxAct vs. TurboTax: Which Tax Software Is Better?

TaxAct and TurboTax are full-featured programs that make preparing accurate returns as painless as possible. However, TaxAct may be the better choice for filers who need one of the paid versions. Prices are low, and you get free assistance with your returns. TurboTax is a good choice for filers with simple returns because it includes credits and income types that TaxAct doesn’t. It’s also the better choice for those who worry about audits, since audit consultations are free.

FAQ

• Are TurboTax and TaxAct the same thing?

  • Although TurboTax and TaxAct essentially do the same thing -- help you prepare and file your tax returns -- each has several versions with unique features and ways to support you as you work.

• Can I switch from TurboTax to TaxAct?

  • You can switch from TurboTax to TaxAct by uploading a PDF of a prior-year return.

• How reliable is TaxAct?

  • TaxAct is a reliable program that guarantees you'll receive the maximum refund available and that its software is 100% accurate.

Krista Baum and Taylor Bell contributed to the reporting for this article.

Data is accurate as of Jan. 10, 2023, and is subject to change.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

This article originally appeared on GOBankingRates.com: TaxAct vs. TurboTax: Which Is the Best Tax Software?