What is the best tax software?

For millions of taxpayers, choosing the right software to file their returns comes down to a battle of TurboTax versus TaxAct – or, if they want the option of face-to-face service, TaxAct versus TurboTax versus H&R Block.

But assuming you don’t need physical office visits, TaxAct and TurboTax are probably on your short list.

Both are major players in the industry with software platforms that are flexible, intuitive and accurate. Both offer a variety of services and features, spanning a range of price levels, and both have free versions for those with simple returns.

However, both TurboTax and TaxAct have pros and cons that can make them attractive to some taxpayers and exclusionary to others.

Here’s what you need to know before you make your choice.

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Key Differences Between TaxAct and TurboTax

In terms of feel and functionality, TurboTax and TaxAct have a lot in common. The two platforms offer free versions with similar functionality and limitations, and both scale up, adding more features at each progressive price level.

They both reassure users with similar guarantees of accuracy and maximum refunds, and both offer a host of options for DIYers and those who need professional guidance.

The main difference is the price and ease of use.

TurboTax, the market leader, generally costs more than TaxAct but offers more substantial guidance and a more streamlined experience. If users run into trouble, TurboTax unveils a questionnaire that guides them to the right choice, while TaxAct users may have to muddle through.

However, TaxAct can pull your wallet in other ways.

As you’ll learn further down the page, the free version charges a hefty fee for state returns. Additionally, TaxAct offers functionality similar to what the more expensive TurboTax pricing tiers offer, but only in the form of add-ons that can quickly add up to parity in pricing. Before we get into these more in-depth details, here’s a look at the cost structure of TurboTax and TaxAct, and the features and functionality that come with each price level.

Prices and features: a comparison

You will find the right software supplier at the intersection of costs and possibilities. Here’s what you need to know about the features you get from TurboTax and TaxAct at each provider’s different price points.

Ease of use

As the price comparison shows, TaxAct customers gain access to more complex tax solutions as they move up to each new price level. On the other hand, TurboTax’s price increases to give you more access to live help, professional guidance, and ongoing support.

That’s because TaxAct keeps prices low by eliminating the many bells and whistles that make TurboTax one of the most user-friendly yet expensive software platforms on the market.

There are many similarities. For example, both follow a simple interview style that guides users through and lets them jump to and from sections, and both show progress banners that let you know where you are in the process.

Both TaxAct and TurboTax streamline the import of familiar documents like W-2s and prior year returns, but TurboTax also makes it easy to pull information from its own QuickBooks services and commonly used third-party platforms like Uber.

Tax law does not.

The ‘free’ version

Both TaxAct and TurboTax offer free federal returns to filers with simple tax situations. Neither has an income limit, but they have other restrictions and qualifying standards that you should be aware of before making a decision.

TurboTax

You can qualify for the free TurboTax service with a Form 1040 that includes:

• W-2 income

• 1099-INT/1099-DIV/1099-OID forms that do not require filing a Schedule B and cover only interest, dividends, and original discounts.

• Benefits from pension plans

• Interest deduction for student loans

• The income tax credit and/or child tax credit

• IRS Standard Deduction

You are not eligible if your Form 1040 includes:

• Schedule A itemized deductions

• Crypto and stock sales

• 1099-G unemployment income

• Income from rental or sale of real estate

• Business or 1099-NEC income from freelance work or side jobs

• Income, credits and deductions reported on other forms or schedules

Tax law

TaxAct applies the exact same standards for the situations that qualify for the free option, but adds the following situations to the list of disqualifying factors:

• Adoption loans and child care and child care

• HSAs

• Royalties, trusts and foreign accounts

• Business and agricultural income

As you can see, the can’s and can’ts are virtually identical, but the main difference is that if your federal return is free with TurboTax, so is your state return. With TaxAct, you’ll pay a few cents under $40 regardless of whether you qualify for free returns or not.

Optional add-ons and upgrades

TurboTax is a more comprehensive and easier-to-use service that you’ll have to pay more to use unless you want to purchase access to similar features with TaxAct upgrades.

The platform allows users at any price level to add Xpert Assist live tax assistance for $60.

That increases its service levels to the following prices, which are much more comparable to TurboTax’s offering:

TaxAct also offers an “all-inclusive bundle” for $137.97, which includes:

TurboTax has preset buttons that users can click to filter their a la carte services and see their exact price. For example:

• Unemployment income increases Live Full Service from $89 to $149

• The sale of shares or cryptocurrency increases Live Full Service from $89 to $229

• Rental property income increases Live Assisted from $49 to $169

TaxAct and TurboTax pros and cons

Both programs have a lot to offer anyone who wants to do their own taxes, no matter how simple or complex their situation. But both also have disadvantages that should be taken into account.

TaxAct advantages and disadvantages

Here’s what to like – and what to look out for – with TaxAct.

Positives

• Affordable price

• Available Xpert Assist with all online versions of TaxAct software

• All-inclusive bundle available with Audit Defense and E-File Concierge

• Extended opening hours for telephone support on peak days

Disadvantages

TurboTax pros and cons

Here’s what you need to know about the pros and cons of using TurboTax to prepare and file your taxes.

Positives

• The free version contains forms that TaxAct does not have

• State returns are free if you qualify for free federal filing

• Imports returns from previous years from more providers

• Free audit support

• Offers optional tax preparation services

• Community forum for help

Disadvantages

Which tax software suits you?

TaxAct and TurboTax are complete programs that make preparing accurate returns as painless as possible. However, TaxAct may be the better choice for filers on a budget who feel comfortable DIYing, while TurboTax is a good choice for filers who want guided help or for those who have simple returns and want a truly free federal and state return .

Frequently asked questions

Daria Uhlig, Krista Baum and Taylor Bell contributed reporting for this article.

Data is accurate as of December 6, 2024 and is subject to change.

Editor’s note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings, or recommendations expressed in this article are those of the author alone and have not been reviewed, approved, or otherwise endorsed by any entity mentioned in this article.

This article originally appeared on GOBankingRates.com: TaxAct vs. TurboTax: What’s the Best Tax Software?