For the 2020-2021 tax season, TaxAct has elevated its software. It now offers integrations with financial institutions, imports for W-2 and 1099-NEC forms, and options for advice from tax experts (like CPAs, enrolled agents, and others).
Despite the myriad improvements, TaxAct is still clunky and hard to use. Users need to know too much about their taxes, and the “guided software” is too cumbersome. If TaxAct were a bargain software, we may recommend it, but the price tags still leave it close to the top end of the market.
For the 2021 tax filing season, we recommend avoiding TaxAct and looking at TaxAct alternatives.
Here’s why in our TaxAct Review. You can also see how TaxAct compares in our list of the best tax software for 2020.
Quick Summary
- Navigation has improved with more import options than past years
- Pricing is near the top of the market for tax software
- Repeat customers will find value in saved data from prior years
TaxAct Details | |
|---|---|
Product Name | TaxAct |
Federal Price | Starts at $0 |
State Price | $45.95 per State |
Preparation Type | Self-Prepared |
Promotions | None |
TaxAct Review Video
Can You Really File For Free?
If you’re a W-2 income earner you may qualify for the free version of TaxAct. The free file service also supports users with retirement income. Users can claim the Earned income tax credit, the child tax credit, and the Rebate Recovery Credit through TaxAct’s free tier. TaxAct’s free tier is truly free. Users will pay $0 for Federal filing and $0 for state filing.
However, if you want to claim a student loan interest deduction, or if you used an HSA, or you want to claim any other deductions, credits, or different forms of income, you will have to upgrade and pay.
What's New In 2021?
TaxAct made some major overhauls in 2021. It now offers more integrations than ever before. If you have 1099 forms from major financial institutions, TaxAct will allow you to import those directly from the institution’s website. Then TaxAct will use those forms to fill in the software for you. It will also do the same with W-2 forms and 1099-NEC forms that users choose to upload.
Another major change is the option for “Xpert Help” which involves tax advice from Enrolled Agents, CPAs, or tax attorneys. You can schedule appointments with the experts during normal working hours, and have them answer at least two tax related questions. Users are allowed to set up unlimited appointments.
This service costs extra, but TaxAct hasn’t revealed its price yet. The service will go live in mid-January 2021.
TaxAct 2021 Price and Plans
All of TaxAct’s paid tiers include technical support options. Unlike previous years, the Premier and Self-Employed tiers do not include access to support from enrolled agents. Instead, users have to upgrade to the Xpert Help to get this personalized support.
It's worth noting that, compared to last year, TaxAct reduced the price of their Federal returns by $5 on Deluxe and Premier, and $10 on Self Employed. However, we noticed they raised the price of filing a state return by $5 across all levels - making it one of the highest priced state returns of any tax software option. As such, the total cost for most filers will be the same as last year.
Plan | Free | Deluxe+ | Premier+ | Self Employed+ |
|---|---|---|---|---|
Best For | W-2 income, Earned Income Tax Credit, Child Tax Credit | Itemized deductions, Student loan interest deduction, HSA, Retirement contributions (Saver’s Credit) | Stock Market Investments, Landlords | Self-Employed People |
Federal Pricing | $0 | $24.95 | $34.95 | $64.95 |
State Pricing | $0 | $44.95 | $44.95 | $44.95 |
Total Cost | $0 | $69.90 | $79.90 | $109.90 |
Note: TaxAct tends to adjust prices throughout the tax season. December and January are the best time to lock in low rates.
Navigation
TaxAct offers both guided and self-guided navigation. The guided navigation showed significant improvement in 2021. Users aren’t forced to “double answer” questions related to their income and expenses, so the user experience is well streamlined. The software’s navigation bar makes it easy for users to enter information they may have skipped. The navbar also makes it easy to get to relevant sections of the tool.
Whenever a user completes a section, TaxAct provides a quick summary which can make it easy for users to catch mistakes. Users can self-guide using the navigation bar on the left side of the software. The navbar simplifies information entry for users who don’t need guidance from the software. Overall, the navigation is on par with the navigation from bargain software like TaxHawk.
Ease Of Use
TaxAct simplifies the filing process by allowing for quite a few imports. These include forms such as W-2, 1099, 1099-NEC, and prior year’s returns. Allowing users to upload relevant forms cuts time and makes the software easier to use.
While the software isn’t horrible, the user experience is not built for humans. The guided navigation tends to ask wordy questions, and users have to scroll to the bottom of the page to select Yes or No to answer the questions. Both Yes and No are green buttons on the right side of the screen. It’s way to easy to answer the question incorrectly. Upon a misclick, users have to bear the cognitive load of figuring out how to navigate back.
While this type of problem is easy to overlook in inexpensive software packages, it’s unacceptable for a software that is near to the top end of the pricing spectrum.
Knowledge Base Articles
Overall, TaxAct has a decent library of articles on tax topics, and it has info bubbles sprinkled throughout the software. This year, the software included “Pro Tips” and short videos that offer useful nuggets of information. Users who don’t know a lot about tax codes and tax planning can benefit from these types of tips.
The quality of the articles varies by topic. Some articles are too laden with tax jargon to be useful. Others offer adequate details without being overwhelming.
TaxAct Extras
This year, TaxAct rolled out the Xpert Help option for people who want a tax consultation with an expert. This is a useful feature for people who have tax optimization questions, and want to learn from a certified expert.
Another bonus feature from TaxAct is the personalized tax plan. TaxAct automatically generates a tax plan that gives users action tips on how to minimize their tax burden in the coming year. This is a massive value add for users that don’t know much about the tax code.
Does TaxAct Support Crytpo Investments?
TaxAct supports the Schedule C or Form 1099-B that are required for filing Crypto investment returns. However, it does not have special instructions to assist crypto traders or miners.
Crypto investors should consider TurboTax or H&R Block rather than TaxAct for filing taxes.
Can I Request My Stimulus Check?
Due to the economic strains caused by Covid-19, Congress issued a stimulus check for $1200 per adult and $500 per child (with some income restrictions) in March of 2020. If you didn’t get a stimulus check this year or you think you were underpaid, TaxAct can help you claim your Recovery Rebate Credit. TaxAct will make the credit request at all pricing tiers.
Is TaxAct Secure and Legit?
TaxAct requires users to enable multi-factor authentication, and I was consistently prompted for a form of secondary verification. This is a great enhancement from previous years when changing IP addresses didn’t always yield a prompt for a second authentication.
How Does TaxAct Compare To Other Tax Software?
TaxAct positions itself as a premium product, but its performance is more comparable to bargain software.
It certainly gets the job done, but the pricing leaves a lot to be desired. For 2021, we compared TaxAct to FreeTaxUSA (a true bargain) and H&R Block (a true premium software with prices that are comparable to TaxAct’s).
Header |  |  |  |
|---|---|---|---|
Rating | |||
Stimulus Check | Free+ | Free | Free |
Unemployment Income | Deluxe+ | Free | Free |
Student Loan Interest | Deluxe+ | Free | Free |
Import Last Year's Taxes | Free+ | Free | Free |
Import/Picture of W2 | Free+ | Free | Not Available |
Multiple States | $44.95 per additional state | $36.99 per additional state | $12.95 per additional state |
Multiple W2s | Free+ | Free | Free |
Earned Income Tax Credit | Free+ | Free | Free |
Child Tax Credit | Free+ | Free | Free |
HSAs | Deluxe+ | Deluxe | Free |
Retirement Contributions | Free+ | Free | Free |
Retirement Income (SS, Pension, etc.) | Free+ | Free | Free |
Interest Income | Deluxe+ | Free | Free |
Itemize Deductions | Deluxe+ | Deluxe | Free |
Dividend Income | Deluxe+ | Deluxe | Free |
Capital Gains Income | Premier+ | Premium | Free |
Rental Income | Premier+ | Premium | Free |
Self-Employment Income | Self-Employed+ | Premium | Free |
Audit Support | Not Offered | Add-On | Deluxe |
Small Business Owner (over $5k in expenses) | Self-Employed | Self-Employed | Free |
Free Tier Price | $0 Fed & $12.95 State | $0 Fed & $0 State | $0 Fed & $12.95 State |
Deluxe Tier Price | $24.95 Fed & $44.95 State | $29.99 Fed & $36.99 State | $6.99 Fed & $12.95 State |
Premium Tier Price | $34.95 Fed & $44.95 State | $49.99 Fed & $36.99 State | $6.99 Fed & $12.95 State |
Self-Employed Tier Price | $74.95 Fed & $44.95 State | $84.99 Fed & $36.99 State | $6.99 Fed & $12.95 State |
Cell |
Who Should Use TaxAct 2021?
In spite of performance improvements, TaxAct isn’t a competitively priced software. At the time this review was performed, TaxAct’s prices matched H&R Block’s in most cases. However, H&R Block consistently outperformed TaxAct. Less expensive software options like TaxSlayer and TaxHawk are less expensive and offer better user experiences. Consistent with previous years, we recommend staying away from TaxAct in 2021.
Find our picks for the best tax software here.
Are you planning on using TaxAct? Share your experience below!
TaxAct 2021 Review
- Navigation
- Ease Of Use
- Features And Options
- Customer Service
- Plans And Pricing
Overall
Summary
TaxAct is a good choice for repeat customers but doesn’t compete with other companies for new filers. We found the software to be higher price compared to similar programs, and a bit clunkier to use.
Pros
- Guided tax prep software
- Allows integrations for import with financial institutions
- Options to get tax advice from a CPA or EA
Cons
- Price is high compared to the features and usability you get
- A bit clunky to use at times
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.