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Harder to use
Compared to TurboTax and TaxCut (the two big boys in the tax prep business), TaxAct's interface is positively austere. Sure, you'll find all the bare essentials, including a Q&A-style interview, which asks questions, then drops your answers into the correct line of the return. But TaxAct's data-entry screens lack an obvious Back button that reverses you through the return. (TaxAct's Back button is buried in a browser-style toolbar at the top, not on the main part of the screen.) Furthermore, TaxAct runs on Windows only, so if you live for your Mac, move on to TaxCut or TurboTax.
Like its competitors, TaxAct displays your virtual tax forms underneath the Interview pane, so, if you want, you can conveniently enter numbers directly into the allotted forms. The program then incorporates those numbers into TaxAct's final calculations. And it includes a separate Navigator drop-down menu that lets you skip around from one part to another. Unfortunately, the drop-down tool is too general; it won't take you directly to the 1099 section of Schedule C, for instance, as TaxCut and TurboTax do. This inflexibility makes TaxAct harder to use.
Don't expect TaxAct to sport any of the fancy gewgaws that power the competition. There's no way to import data from personal finance programs such as Quicken or Money, for example, and no way to import last year's return unless you prepared it with TaxAct. (That alone will steer away anyone who used TurboTax or TaxCut last year; the import will easily save you 30 minutes in total prep time.) Nor does TaxAct feature data downloads from brokers or payroll companies into the 1099 and W-2 section of a return or include links to real-world tax advisers. Neither does it warn you when you run into a part of the return that covers a law that changed during 2001.
The price is right
With so much missing, why bother with TaxAct? It's the money. You can download the elementary TaxAct Basic for free, put your return on paper, and, for the price of a few stamps, send it on its merry way. And for just $10, the more capable TaxAct Deluxe adds 20 forms (such as Form 8396, Mortgage Interest Credit), a what-if tax planner, and a joint vs. separate comparison report that shows you if it makes sense to file as Married Filing Separate. Your $10 lets you download the program from the TaxAct site, prepare a return, and e-file it.
Sounds reasonable, right? But add a state return for another $13 and the return's e-file fee ($5), and suddenly you're in the same price ballpark as the much more capable TaxCut. (Even the Ultimate TaxAct Bundle, which combines federal and one state return, runs $25 total when you toss in an e-file for the state return.) So, unless you stick with just a federal return, TaxAct's not the bargain-basement program it appears to be.
Be warned: You get what you pay for. TaxAct may be cheap (or free), but its program help and tax-advice help stink compared to TurboTax's or TaxCut's. TaxAct's tax help is terse; it offers no how-to video clips. Tech support is likewise second-rate; there's only e-mail access to the help desk, and the online FAQ file skimps on details of nearly every topic except e-filing.
No help means more work hours
We had a tougher time putting together our sample return with TaxAct than with TurboTax or TaxCut. It took us more than four hours to finish a test return in TaxAct, primarily because we weren't able to import the extensive investment and business expense numbers we'd accumulated during the year.
Our advice: Download Basic for free or Deluxe for $10 only if you have a straightforward return and know the ins and outs of taxes. Everyone else will be better off this year spending $10 for TaxCut Basic or $20 for TaxCut Deluxe.