Last Updated: January 11, 2023
Filing taxes on your own could be intimidating. But evading your obligations isn’t wise, to say the least. Luckily, there are tax filing software solutions that will help you prepare and file your taxes in just a few steps.
In this TaxAct vs FreeTaxUSA review, we will compare two well-known tax prep services providers and enclose details about their prices, benefits, support, and more.
TaxAct versus FreeTaxUSA: Side-by-Side Comparison
The table below illustrates the basic differences and similarities between TaxAct and FreeTaxUSA.
|Cost of DIY filing||$0–$94.95
+$39.95/$54.95 per state filed
+$14.99 per state filed
|Support||Live chat, phone, email||Email, account message center, live chat (for Deluxe subscribers only)|
|Access to a tax expert||Yes||Yes|
|Guarantees||Maximum refund, $100,000 accuracy guarantee, 100% satisfaction (for online products only), and money-back guarantee (for download product only)||Maximum refund, 100% calculation accuracy, and always free federal return guarantee|
What Is TaxAct?
TaxAct is a tax filing software founded in 1998 by four industry veterans. Since then, the company has helped more than 85 million customers file their tax returns. In 2005, TaxAct became the first to offer free tax prep services. Today, the software is among the most popular on the market.
What Is FreeTaxUSA?
Founded in 2001 and owned by TaxHawk, FreeTaxUSA is a trusted and IRS-approved e-file provider with over 43 million tax returns filed. With its “always free federal returns” guarantee, taxpayers save millions of dollars each year.
FreeTaxUSA vs TaxAct: Free Edition
TaxAct offers a free version for the most basic federal returns, including:
- W-2 income
- Interest and dividend income
- Earned income tax credit
- Unemployment income
- Child tax credit
- Retirement distributions
State returns aren’t included in the plan, though. You have to pay $39.95 per state.
On the other hand, FreeTaxUSA covers all federal tax forms for free. You can report investment income, rental property income, and homeownership details. There are only a few forms that FreeTaxUSA doesn’t support. For example, you can’t file foreign employment income, prior year minimum tax credit, and nonresident returns.
Filing state returns costs $14.99 per state, which is more than half TaxAct’s price.
In addition to their free offerings, both TaxAct and FreeTaxUSA provide paid tax prep services. But TaxAct offers three tiers, while FreeTaxUSA has just one upgrade option from the basic package.
This edition will cost you an extra $6.99, and the price of state returns remains $14.99.
The difference between FreeTaxUSA’s free edition and Deluxe plan is that with the latter, you get:
- Live chat: Step-by-step assistance from a tax professional.
- Audit support: Assistance and instructions for handling IRS audits.
- Unlimited amended returns: Correcting mistakes and adding missed out tax deductions or credits.
One of the most popular plans of TaxAct is the Deluxe. It includes forms for homeowners, ex-students who pay student loan interest, those who itemize deductions, etc. The price for the Deluxe plan is $46.95 for federal returns plus $54.95 per state.
TaxAct Premium is designed for people who have investments, foreign bank accounts, or rental properties. The cost of this plan is $69.95 for a federal return and $54.95 per state. It helps with schedule A, schedule E, and other forms for reporting investment property.
Self-employed is the most expensive and advanced option of TaxAct. This plan includes all features of the previous plans plus forms for self-employed and small business owners, like schedule C. The price of the TaxAct’s Self-employed plan is $94.95 for a federal filing and $54.95 per state.
FreeTaxUSA vs TaxAct: Ease of Use
TaxAct offers a user-friendly experience and various tools to help you with the process. There is a calendar that keeps track of important dates and also a checklist for tax planning. Other available tools are tax calculator, loan calculator, and healthcare tax credit calculator.
The filing process with TaxAct starts with simple questions about your financial situation, and you get step-by-step guidance with tax tips and strategies. Embedded links offer tips and explanations, and a help centre links to a search area where you can ask for help. A shopping cart icon at the top of the screen shows which plan you bought and the total software bill.
In addition, with TaxAct, you can import and store your tax returns for future years, as well as returns prepared with TurboTax or H&R Block.
FreeTaxUSA doesn’t have as many features as TaxAct. The company has an easy-to-use interface, but there’s s no skip option. If you are ready to finish your taxes in one sitting, FreeTaxUSA works best.
The process is the same as any other software. First, you answer questions about your financial situation, and then you move through forms where you can manually enter your income. After that, you will see if you are qualified for certain deductions or credits.
FreeTaxUSA doesn’t have a mobile app, but it offers a good mobile version of its website. The layout is the same as on the desktop platform, and it’s easy to navigate.
TaxAct Express is TaxAct’s mobile app available for Android and iOS. It has a high customer rating on Google Play and App Store. In case you haven’t finished your tax filing on the desktop version, you can always switch to the mobile app and complete the process.
With TaxAct and FreeTaxUSA, you can get your refund through a direct deposit, credit card, or a paper check. And both companies guarantee a maximum refund.
FreeTaxUSA allows you to deduct the filing service cost from your refund, but you will be charged $19.99 for this option.
TaxAct also allows you to pay your tax fees from your tax refund. To qualify for this option, your federal refund amount must be $50 greater than the TaxAct and Republic Bank processing fees.
Support and Resources
TaxAct has many support options, and there are various ways you can find answers and guidance when filing your return. TaxAct offers tech support as well, which can be by chat or phone.
It’s important to mention that TaxAct also offers an option called Xpert Assist, where you can file your taxes with a tax professional. You can schedule a call, or you can get help immediately. This option provides access to Certified Public Accounts (CPAs), tax attorneys, and IRS agents. The add-on is available at an additional cost or for free, depending on current prices and promotions. At the time of writing this article, Xpert Assist is $0 for all users.
If you have questions, FreeTaxUSA will send you answers through email or the account message center. The support team responds within 30 minutes or less. If you’re a Deluxe user, though, you get priority support, jumping to the front of the queue and chatting directly with a tax specialist.
Everyone can get audited, but you don’t have to worry about it because your tax software can give you the support you need.
TaxAct reduces your audit risk with TaxAct Alerts. It searches for mistakes and errors in your returns that can increase the risk of being audited.
TaxAct is also in partnership with Protection Plus, which will offer you full audit support. If you are audited, the Protection Plus team will guide you through the process and even represent you in front of the IRS. The service costs $39.95, and it can be added to your selected plan.
FreeTaxUSA offers audit support if you have paid for the Deluxe plan. Audit Assist will connect you with an audit specialist to help you prepare. You can also access the audit center that will give you the information you need to prepare so you can easily respond to the IRS. Notably, FreeTaxUSA Audit Assist doesn’t include audit defence, meaning the company can’t represent you before the IRS.
FreeTaxUSA doesn’t have a ton of features and tools, but it’s arguably the cheapest tax filing solution on the market. With it, you only pay for state returns and optional add-ons. Federal tax filing is always free, no matter how complex your tax situation is.
However, if you’re a first-time filer, you may be better off with TaxAct. The company offers more assistance and convenience with its intuitive interface and mobile app. It’s a pricier option, though.
Both providers are reliable and guarantee a maximum refund. So whichever you choose, you can rest assured your return will be submitted quickly and securely.
TaxAct offers a free edition but only for simple federal tax returns. State returns cost $39.95 per state.
FreeTaxUSA is free for all federal tax returns. State filing costs $14.99 per state.
Yes, FreeTaxUSA is trusted and approved by the IRS. It’s an original member of the IRS Free File Alliance.
When comparing TaxAct vs FreeTaxUSA, the major differences that emerge are in their pricing and assistance level. Essentially, TaxAct is better for people who need extra support and guidance through the filing process. On the other hand, FreeTaxUSA caters to more experienced taxfilers looking for an affordable solution.