Competition is fierce between two of the biggest tax-prep software providers. Here’s NerdWallet’s point-by-point comparison to help you sort out which cloud-based software is better for you: TurboTax or TaxAct.
TurboTax vs. TaxAct: Price
Both providers offer several versions of paid products that accommodate increasingly complex tax situations. And both have a truly free “free” version, meaning there’s no separate charge for filing a state return.
Itemizers probably will find TaxAct’s Deluxe+ version and TurboTax’s Deluxe version good picks. Higher-priced versions are tailored more toward investors, people with rental property and the self-employed.
TaxAct is much cheaper across the board, even at the high end. TurboTax’s top-tier, throw-it-all-at-us version costs well over $100 at list price when you add in a state return (that rises to over $200 if you go with its software-slash-human hybrid package called TurboTax Live).
TaxAct will cost you less than the comparable TurboTax package. Both providers offer a free version, though only for people who have fairly simple tax returns.
TurboTax vs. TaxAct: Features and ease of use
Only one entity determines how the math works on a tax return, and that’s the IRS. So unless there’s a programming error, you should get the same numerical “answer” no matter which tax software you use. But you still have to feed the software all of your information, and there are a million ways to do that. Which is why we look at features and ease of use — we want to know which offerings are least likely to make you want to pull your hair out.
TurboTax is widely considered the most user-friendly tax software provider on the market. The interview-style Q&A interface keeps things in plain English, and you can skip around.
Both providers offer photo and other import options for W-2s to speed things up. TurboTax’s Deluxe, Premier or Self-Employed packages also integrate ItsDeductible, which is helpful for quickly finding the deduction value of donated clothes, household items or other objects. TurboTax’s Self-Employed version offers a neat expense-tracking feature through QuickBooks, including the ability to store photos of your receipts and track mileage from your phone.
TaxAct underwent a significant visual revamp this year, ditching stock images and adding a new color palette and font, as well as a simplified picker, more in-process tips and more obvious flags when you’ve got missing information. It still has all the basics, such as importing last year’s returns, a W-2 import and a donation assistant (for some of the paid packages), as well as some planning tools and calculators.
Like many other tax packages, help is available throughout the preparation process, but higher-priced competitors do seem to have more robust help. As with most software packages, a banner running down the side keeps track of where you are in the process.
Both providers offer solid options with intuitive interfaces that keep the process moving in a logical manner so you get done quickly. But if you want every bell and whistle on the market, TurboTax is the better choice.
TurboTax vs. TaxAct: Support
If you need (or want) a lot of handholding, TurboTax could be a great choice. Its searchable knowledge base, video tutorials and online community are great for research on the fly, but one of TurboTax’s most outstanding support features is TurboTax Live, which is in its second year. It’s an add-on (and not a cheap one; see our pricing table for costs) that offers a one-on-one review with a CPA or enrolled agent before you file, as well as unlimited live tax advice. They’ll even sign and e-file your tax return if you want. You can make an appointment or talk on the fly to a tax pro via one-way video (you see them, but they don’t see you — they just see your screen). Hours of operation are 8 a.m. to midnight Eastern, seven days a week.
New this year is an offline expert review option that lets you ask questions and get answers from a CPA, enrolled agent or tax attorney via email. To boot, you can get tax advice year-round with TurboTaxLive (it doesn’t close up shop on April 15). Having on-demand access to a tax pro all year is huge, although you can’t ask to talk to the same tax expert each time you call.
TaxAct will hook you up with unlimited tax support via in-app email with paid versions. Deluxe+, Premier+ and Self-Employed+ get unlimited tax support via phone, and Premier + and Self-Employed+ get a dedicated phone line, screen-sharing and limited in-app chat.
TaxAct offers tech support via the typical channels and tax support via in-app email for paid users. It also offers an interesting screen-share option for its Premier+ and Self-Employed+ users. It’s not a face-to-face video connection like you might find in TurboTax Live; rather, it simply lets the user and the support agent see each other’s screens, including cursor moves and clicks. The company says the support agent can’t see entry fields containing password or payment information.
The qualifications of the tax support staff varies among tax providers. Some providers require CPAs or enrolled agents, some don’t. TaxAct says its tax specialists are people who have prepared taxes before, have taken and completed tax classes, have taken a company tax certification course and have received 80 to 100 hours of in-house training, according to the company. They are supervised by an enrolled agent.
The company says its tax specialists don’t provide “tax advice” (they won’t tell you whether you should take a particular deduction or how you can cut your bill, for example), but they do provide “tax support” by helping your understand what forms you may need and where to put information on forms. TaxAct also has an online knowledge base that users can search for answers about specific tax issues.
TurboTax Live is a cutting-edge hookup with a qualified tax pro; TurboTax also has a huge knowledge base. TaxAct offers access to tax pros too, but they may not be CPAs or EAs, you can’t see the person you’re talking to and the advice may be limited. TurboTax has an edge, but you’ll have to pay more.
Refunds, audits and other considerations
No matter how you file, you can choose to receive your refund via direct deposit to a bank account (the fastest option) or in the form of a paper check. Other options include applying the refund to next year’s taxes or directing the IRS to buy U.S. Savings Bonds with your refund. And both have a debit card option, which means you can have your refund loaded onto a prepaid card. (These cards come with fees, so be sure to factor that into your decision.) But there are some other things to know about, too.
Both let you use your refund to pay for your tax-prep fees. But there’s a fee for that: TurboTax charges $39.99; TaxAct charges $39.
Getting audited is scary, so it’s important to know what kind of support you’re getting from your tax software. First, be sure you know the difference between “support” and “defense.” With most providers, audit support (or “assistance”) typically means guidance about what to expect and how to prepare — that’s it. Audit defense, on the other hand, gets you full representation before the IRS from a tax professional.
TurboTax gives everyone free audit “guidance” from a tax pro to help you understand what’s going on if you get that dreaded letter, but if you want someone to represent you in front of the IRS, you’ll need TurboTax’s audit defense product, called Max Defend & Restore. It costs $39.99.
TaxAct’s audit assistance consists of a FAQ page on its website. But customers can buy audit defense from a partner company called Protection Plus for $49. Coverage includes three years of audit services for this year’s return, and TaxAct says the product will guide you through the audit process, handle IRS and state correspondence on your behalf, help with denied tax credits, as well as provide tax fraud assistance. You have to buy the coverage at the time of filing — you can’t but it after the fact.
Which one is right for you?
TaxAct costs less and still does plenty, so really take a hard look at this option. But if you like face-to-face support and can afford it, TurboTax has all the bells and whistles and is a very attractive choice.