TaxAct and TurboTax are two of the biggest players in the tax business, but if these companies all are using the same math to calculate your tax return, there shouldn’t be any differences between them, right? Wrong. There’s more to preparing your tax return than just running the numbers: There’s cost, support and plenty of other moving parts, too.
- What’s free: Form 1040EZ, 1040A
- Paid versions: Basic, Plus and Premium (online and desktop)
- State return prep: $0 to $24.99 depending on version and time of year
- See our TaxAct review.
- What’s free: Form 1040EZ, 1040A (online only)
- Paid versions: Basic (online only); Deluxe, Premier, Home & Business (online and desktop)
- State return prep: $29.99 to $44.99 depending on version
- See our TurboTax review.
Comparing the paid versions
TaxAct and TurboTax offer multiple tiers of paid products for varying tax situations. If you’re itemizing, you’ll probably find TaxAct’s Plus version a good pick; it’s also able to handle investors and homeowners.
TurboTax parses things out a bit more. The Deluxe version is good for itemizers, but the Premier version is what you’ll need to accommodate investments or rental property. Self-employed people or folks who run a small business will need to take another step up to the Home & Business version, which is comparable to TaxAct’s Premium version.
» MORE: NerdWallet’s best free online tax-prep software
This table highlights one of the most notable differences between TaxAct and TurboTax: price. TaxAct’s products across the board are cheaper — in some cases, they’re less than half the price of TurboTax.
Another thing with TurboTax, its free version doesn’t have a desktop option — it’s online only, which means your return will be in the cloud rather than on your hard drive. That’s not necessarily a bad thing, but you might want to have the choice.
As for your state taxes, both tax-prep providers can handle it, though here, too, there’s a wide gap in cost depending on the version and whether you use the online or desktop platform.
E-filing, which allows you to send your return to the IRS and the state electronically, is free for folks who use the online versions. But desktop users will have to pay to e-file, and this, too, is cheaper with TaxAct.
The savings of 50% or more means more money in your pocket.
» MORE: How to e-file like a pro
Both tax-prep companies can help if you get stuck. TaxAct offers unlimited phone support and identity-recovery assistance from InfoArmor for Basic, Plus and Premium users. It also offers free tax and tech support to all users via email, and there’s a searchable knowledge base.
However, support is where TurboTax really shines. It has a huge knowledge base and a big, active user community that are great resources for answering questions. You can also get live advice via phone (though fees might apply and the experience level and availability of live help varies). The company’s new SmartLook service, free for all users, offers real-time help via TurboTax online and the TurboTax mobile app. Their experts can answer questions and even see your screen, which lets them show you what to do.
Its wide variety of support options and a big user community can help (and console) you if you’re confused.
Refunds and other considerations
|By direct deposit?||Yes.||Yes.|
|Onto a prepaid debit card?||Yes, an American Express Serve card.||Yes, a NetSpend Premier Visa card.|
TaxAct will knock $9.99 off the cost of its Basic, Plus and Premium packages when you choose to receive your refund via prepaid debit card. TaxAct also offers the option to put your refund into Series I U.S. savings bonds in increments of $50, up to $5,000. You can allocate just a portion of your refund to bonds, if you like, and route the rest to your bank account.
Audit protection is a common feature in tax-prep software across the board, though the level of service varies, so be sure to read the fine print. In general, there are two levels of service: guidance (which basically means helping you understand what’s happening) and representation (which means someone from the company will speak with the IRS on your behalf). Most preparers offer free guidance, but you’ll likely have to pay for representation.
TaxAct users can purchase Tax Audit Defense for $39.99 before filing their returns (or for $99.99 after they file). TurboTax also offers free guidance, but if you want actual representation before the IRS, you’ll need to pay. Its MAX Audit Defense product is available for purchase, but you have to do it before filing.
The two are practically neck and neck here, given their similar refund offerings. But TaxAct has a slight edge in that its audit defense is a little more user-friendly and its refund options include a novel way to encourage saving.
Which one is right for you?
TurboTax is a clear choice if you need a lot of support options, but keep in mind: You’ll pay for it. If you don’t need all the bells and whistles in that area, it may be worth giving TaxAct a hard look — you could save some serious money.
Tina Orem is a staff writer at NerdWallet, a personal finance website. Email: email@example.com.