TaxAct vs. TurboTax: Which Can Beef Up Your Refund The Most?

As you prepare for Tax Day, you might be overwhelmed by the options available for filing your taxes online. You’ve probably heard of TaxAct and TurboTax, two of the most popular tax-filing services on the market. But which is right for you? Here’s how they compare to each other and what to consider when using either platform. If you want expert help with your tax strategy, consider speaking with financial advisor.

Pros and Cons of TaxAct

TaxAct might not have the name recognition as TurboTax and other services, but it offers a similar process and can be less expensive for many filers. Let’s take a deeper look at some of the upsides and downsides of TaxAct.

Pros

• It’s cheaper than TurboTax. The TaxAct website claims you’ll save up to 20% on your federal tax preparation compared to TurboTax. TaxAct does not offer a fully free option for filing simple returns, but all of its other products are less expensive. (A note on pricing: Many tax preparers raise their prices as Tax Day draws nearer, so the prices listed here might not be current. All prices listed here are as of April 6, 2023.)

• Simple and easy-to-use interface. While it offers less hand-holding and special features than some other e-filing software, that can be a plus for those who are looking for a straightforward process and already have a solid base of tax knowledge.

Cons

• May be more difficult for tax novices. Less hand-holding throughout the e-filing process might be a positive for taxpayers who already know the basics, but others may need more guidance. TaxAct doesn’t provide many explanations or a guided experience, so it might not be as well-suited for those who have never filed their own taxes before.

Pros and Cons of TurboTax

TurboTax is one of the most popular e-filing options, with a streamlined interface that makes filing easy. But that ease of use comes at a cost. Let’s take a look at the positives and negatives of their products.

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Pros

• A guided experience. TurboTax’s software takes a lot of guesswork out of the process of filing your taxes. If you’re not sure about something, TurboTax often has a simple questionnaire to help guide you to the right choice. While this might seem like extra steps for those who have a solid understanding of their taxes, for many this can be extremely helpful and offer peace of mind that you’re making the right tax decision.

• Seamless integration. TurboTax makes it easy to import not just tax information such as W-2s and prior returns, but data from QuickBooks and other services, like Uber. While TaxAct allows you to import prior returns or W-2s, it’s not set up to easily connect with QuickBooks (which is also owned by Intuit, like TurboTax) or import information from an Uber account.

• Free option. If you have a tax return with only W-2 income, no Schedule B interest or dividends, and take the standard deduction rather than itemizing, you may be able to file both your federal and state taxes for $0.

Cons

• More expensive. The real downside of TurboTax is simply that it costs more. Other than TurboTax’s completely free option, TaxAct is significantly less expensive across the board. You’ll save $93.15 using TaxAct’s self-employed option with expert help rather than TurboTax’s equivalent product. For budget-conscious filers, that might edge TurboTax out of the running.

What’s the Same?

Both companies have a very similar structure — a basic or free plan that allows filers with simple tax situations to file their federal return for $0 (TaxAct charges $39.95 for state returns). The next step up is the Deluxe plan, intended for families with more complex deductions and credits. Above that option is the Premier plan, intended for filers with investments, such as stocks or real estate. Then, both companies offer a product for self-employed filers, designed to assist freelancers, independent contractors and gig workers with their returns.

Both offer audit support in the event of an IRS audit. They also both offer maximum refund guarantees and have mobile apps.

Price Comparison: TaxAct vs. TurboTax

Here’s a cost breakdown of the different services that TaxAct and TurboTax offer:

Service Level TaxAct TurboTax Basic 0 + $39.95 per state  $0 Deluxe $46.95 + $54.95 per state  $69 + $59 per state Premier $69.95 + $54.95 per state  $99 + $59 per state Self-employed $94.95 + $54.95 per state $129 + $59 per state

Here’s how much each service level costs when adding expert help:

Service Level TaxAct TurboTax Basic $39.95 + $39.95 per state $99 + $54 per state Deluxe $86.90 + $54.95 per state $139 + $64 per state Premier $109.90 + $54.95 per state $189 + $64 per state Self-employed $134.90 + $54.95 per state $219 + $64 per state

Prices as of April 6, 2023. 

Bottom Line

Both TaxAct and TurboTax are solid e-filing options. While TurboTax is more expensive overall, the ease of its process will likely make it the best choice for taxpayers who have a lot of questions about their taxes and would benefit from the guidance. On the other hand, TaxAct can be a great way to save some money if you’re a savvy e-filer who knows what you’re doing. If you qualify for TurboTax’s completely free filing option, that might be the best of both worlds.

Tax Filing Tips

• If you’re precise with numbers and good at record-keeping, you’re probably fine using tax preparation software. But if you want help minimizing your tax liability, you can consider hiring a financial advisor who specializes in taxes. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• If you need more time to file your taxes, you can use Form 4868 to get a maximum extension of six months from the April 18 deadline. But remember, this extension does not apply to payments. So if you owe taxes, you should estimate what you owe and pay what you can to avoid a penalty and interest.

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