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TaxAct vs TurboTax: Which One Is Better?

Published March 2, 2021

3 minute read

Cora Walker

By Cora Walker

With as much as our lives have changed over the last year, it can be difficult to remember major obligations. But driver’s licenses need to be renewed, you could receive a summons for jury duty, and tax season still comes around. This can be a stressful time, and most earners may turn to tax prep software, so let’s look at a head-to-head for the two most popular brands on the market today: TaxAct vs TurboTax.

It’s no secret that tax documents can be dizzying. This is understandable; most of us only think about taxes once a year. It’s not like we are reading tax documents all the time unless we are tax professionals.

Some applications help make this yearly requirement a little more user-friendly. Instead of requiring you to decipher deductions and decode what lines or forms you need to fill out, they frame each point as a question. There’s less room for confusion and less room for big mistakes.

We’ll compare these two brands, their strengths, weaknesses, and when you’re probably better off springing for a CPA.

Prices for TaxAct vs TurboTax

Both TurboTax and TaxAct start with free versions. For a majority of earners, this could be all you need. TaxAct charges a $19 fee for state taxes, while TurboTax also offers a free state tax option as well. Note that this is only for the simplest returns with minimal deductions. This is true of both tools.

Both companies have “Deluxe” and “Premier” level packages. TaxAct’s Deluxe package is about $75 compared to TurboTax’s $120. Likewise, TaxAct offers their Premier-level service for $95 while TurboTax charges $170.

Freelancers may also notice a steep difference. Self-employment taxes are naturally more complicated, and people who contract are often short on resources even though they may need the most aid from tax pros. TurboTax charges $200 for self-employment taxes with live support, compared to TaxAct’s $139 for professional assistance.

Beyond the most basic tier, TaxAct wins out if the price is your primary concern.

Customer Experiences for TaxAct vs TurboTax

Price isn’t everything. As part of your research process, it’s important to look up reviews from other users. You’re the one paying money, so making sure others were satisfied with their purchase will help give you a better understanding of which option is right for you. Consumer Affairs is one place to look and see how a product is scoring with other people.

A quick note that while they both have a score of around 4.75 stars, it’s important to note that TurboTax has about 800 reviews, while TaxAct has under 200.

Professional reviews are also important decision-making tools. A 2019 article from Consumer Reports noted that while both TurboTax and TaxAct have good information, support, and user experience, they are both prone to having out-of-date explanations for some tax law changes. This isn’t really a surprise since tax laws can shift significantly year to year, but it is something to keep in mind if you’re seeking to use either one of them.

When to Reach Out to a CPA

With as difficult as it can be to navigate tax season, prep and compliance software is clearly very useful (and—if you’re like me—can help bring down your panic level). But if you have particularly high wages or a large portfolio of investments, we recommend you consider seeking out an accounting firm. We can’t lie, prices can be a bit steeper, but it will be worth it, in the long run, to help prevent major errors.

Audits are a huge drain on resources. Tax prep software like TaxAct and TurboTax are useful tools, but CPAs have extra certifications, training, and experience to help manage large accounts. If you are juggling things like small business ownership, trusts, estates, real estate holdings, or other high-yield investments, you should probably be seeking out a professional accountant. Professional accountants can also help you strategize throughout the year to minimize the hit you take during tax season.

In Conclusion

TaxAct has less name recognition but comparable performance. However, TurboTax still has a 100% free option and TaxAct does not.

Taxpayers with the most complicated returns should pay a CPA. But if you aren’t hung up on the brand and have fairly straightforward returns with a couple of special deductions or minor investments, TaxAct is a great option that could save you some money.

online tax return software

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Cora Walker

Contributor

Cora is a Northwest-based writer and editor who wants to make information as accessible as possible in the internet age. Video games are this writer’s primary vice. With a degree from the University of Washington as well as 5+ years of experience in web writing and publishing, Cora is here to share financial tips from experts and talk about good habits.

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