A super deal for people who don’t need TurboTax’s depth of help and advice.
At $10 for a federal return under the Deluxe version and about a mere $17 if you upgrade to TaxAct Ultimate (federal and state), 2nd Story Software’s TaxAct is a real steal. At that price, customers can usually expect little more than basic entry forms, but with its good navigability and ample instructions, TaxAct offers huge bang for the buck.
As I worked my way through my test return, tabs across the top made the crucial act of backtracking easy, and the refund ticker kept me updated on how much Uncle Sam was going to either cough up or wring out of me. You can import W-2 forms electronically if your employer is hooked up with W-2 eXpress, an Equifax-owned company that provides W-2 forms for some businesses. TaxAct can also import investment-transaction information from the GainsKeeper financial services site.
A good piece of tax software doesn’t just tell the user how to make entries; it makes an effort to actually advise the taxpayer. That’s one reason TaxAct is one of my favorites. For example, instead of just telling me to enter my IRA contributions for the year, TaxAct advised me that the contribution limit on traditional IRAs may be different than the Roth IRA limit. For those pondering opening or contributing to an account by April 15 (IRA contributions made by then can often be counted as 2008 contributions), little pieces of advice like that can affect the bottom line.
When I indicated that I had sold a house during the year, TaxAct did me the favor of saying up front that the loss on the sale wasn’t deductible; other sites made me go the long way around the block by asking for pages of information and then breaking the news. TaxAct also noticed that my Social Security and Medicare withholding amounts weren’t the right percentage of my wages, and it noticed that I didn’t enter any property taxes even though I owned a house.
The main help section, called TaxTutor, is fueled by famed tax-guide publisher J.K. Lasser, and those interested in reading chapter-and-verse rules have easy access to the actual IRS form instructions. New this year is the Donation Assistant, which finds the resale values on 700 items that you might have donated to charity this year. The module is very similar to TurboTax‘s ItsDeductible module, but be aware that the categories and values aren’t the same (for example, a hardback book in good-but-not-fabulous condition warrants a $1 deduction in TaxAct versus $2.50 in TurboTax–not a big difference, but it adds up quickly if you’ve cleaned out the attic).
Don’t get me wrong; TaxAct has some flaws. For example, the talking heads who appear in videos to offer guidance are basically useless, and the layout of the manual W-2 entry form seems like it’s begging people to make a mistake. The sales tax deduction section also has room for error; I indicated that I lived in a state that doesn’t impose a sales tax, but TaxAct still let me input a sales tax rate (which I made up; many will be tempted to take a similar step, given that the site doesn’t offer local rate tables). Two screens later, it simply told me that it was better to deduct the state tax withheld on my W-2.