TaxACT Software Review
TaxACT is one of the best consumer tax preparation programs with the most features. While it does take some time to go through the program's question-and-answer interface, TaxACT provides multiple ways to access helpful content and provides utilities for importing data, analyzing the tax return, and checking for errors. TaxACT earns high marks for including features to plan out next year's taxes through its withholding calculator and the ability to build what-if scenarios to test out tax strategies for future years.
- Version tested: Ultimate Bundle
- Cost: $24.99 (web-based), $21.99 (download), $28.99 (download for up to 5 federal e-files)
- Time: about two hours to complete a sample federal and state tax return.
- Rating: 4 out of 5 (how we test and rate tax software)
Navigation and User Interface
TaxACT has a question and answer style of gathering tax data. When entering information from Form W-2, users can choose between a Quick Entry, which has a worksheet formatted to look like Form W-2, or Step-by-Step Guidance, which collects the same information by asking questions one screen at a time.
TaxACT's beautiful, somewhat busy screen features bright blue buttons, orange buttons, green bold lettering, then black lettering on gray background with white mixed in. Font sizes and colors and thicknesses are varied to make it more exciting and interesting to read and explore. TaxACT features navigational links for moving to different parts of the program.
Top-level navigation has tabs for Basic Info, Life Events, Federal Q&A, State Q&A, Review, Filing, Next Year. Second-level navigation enables you to navigate to different sections of the software. Also into the second-level navigation is a link to Jump to Forms & Topics. A bookmarks feature enables a person to mark a particular page to go back to that page again if you need to.
For entering Schedule D transactions relating to the sale of investments, TaxACT provides either a Q&A format, a spreadsheet-style Stock Assistant, or attaching a statement for Form 8949 to summarize the transactions.
When entering business expenses for Schedule C, there's a green magnifying glass icon next to expense categories. Clicking on that reveals a worksheet that can be used to tally up expenses with the total carried to the data field. A
After entering business income and expenses, TaxACT performs a review of the Schedule C to assist the user in confirming the data input and review any deductions that might have been overlooked. TaxACT allows users to preview their Form 1040 in PDF.
Help and Support Features
A sidebar on the right-hand side of the screen features help, forms, images, and tools, plus links to help topics relevant to the data entry page. A link for IRS Form Instructions takes open a pop-up window displaying the IRS's instructions for the particular data entry page the user is working on. Below this is a search box: entering a question will pull up the TaxACT Answer Center. TaxACT also provides customer support via e-mail.
TaxACT Provides the Following Utilities
- Dependent Quiz (if you're not sure whether you qualify to claim a dependent)
- TaxTutor Guidance (to help with filing status, Form W-2, and business income, for example)
- Highlights of the new tax benefits for insurance in 2014
- Discussion of the tax impacts of various life events
- Tax Return Checklist that can be downloaded or printed to help organize documents
- Donation Assistant to calculate the fair market value of noncash items donated to charity
- FAFSA Tax Summary Worksheet
- Prior Year Comparison
- National Averages Comparison
- TaxWatch 2014 to identify tax planning opportunities based on data contained in your tax return
- HealthWatch 2014 explains the tax impact of the health insurance requirements for 2014
Data Import Capabilities
- Import W-2 data from W-2 Management.
- Stock Data Import from TD Ameritrade, Sharebuilder, Form8949.com, and GainsKeeper
- Import stock transactions from a .CSV-formatted spreadsheet
Error Checking and Review Features
Towards the bottom of the screen, TaxACT will sometimes display a link for a particular tax form or schedule, such as Schedule C or Schedule E, so that you can preview what the form looks like as you are working on that section of your tax return. Mini Alerts check eligibility or limitations for certain deductions (such as mortgage interest). Alerts identify incomplete data entries, potential problems, or opportunities for additional tax savings.
- Calculates withholding allowances for Form W-4.
- Tax Calculator enables a person to build three "what-if" scenarios to compare different tax plans for the current and future years.
Disclosure: The company provided free access to this service for review purposes. For more information, please see our Ethics Policy.