Eligibility for free federal return: individuals who have adjusted gross income of $52,000 or less and are between the ages of 18 and 57.
Cost to prepare state tax return: $14.99.
Free state returns available for residents of AR, AZ, DC, GA, IA, ID, IN, KY, MI, MN, MO, MS, ND, OK, OR, PA, RI, SC, VT, and WV.
Time: about two hours to complete a sample federal and state tax return.
Notable Features: free extensions, dependent quiz, bookmarks, life events, FAFSA worksheet, prior year comparison chart, HealthWatch provides guidance on the new health insurance regulations, provides calculations to adjust withholding.
Rating: 3.5 (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. 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.
A sidebar on the right-hand side of the screen features help, forms, 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.
Error Checking Features:
In the Review process, TaxACT provides alerts for why certain tax breaks are not allowed, data items to review, and alerts for tax deductions that the user might want to consider.
TaxACT provides calculations to help the user adjust withholding and to print out a new Form W-4, which is found in the Next Year tab.
At end of completing taxes, there was an option of completing the FAFSA form for college financial aid. HealthWatch 2014 will provide comprehensive information on the new health care rules, give specific information on how to access the health insurance marketplaces, print a checklist for items needed to file through the marketplaces, as well as calculate any potential penalty based on your 2013 income.
Overall Experience of the Software:
Overall, the free file edition of TaxACT is a very strong program. TaxACT's colorful and friendly interface and strong help functions makes the software highly useful. While the Q&A-style navigation can be tedious, there are plenty of navigation options to help people access different parts of the software. TaxACT gets high marks for including a withholding calculator, FAFSA worksheets, and guidance on the new health insurance mandate.
To check out the software for yourself, visit TaxACT Free File Edition.
Learn more about Free File