Entry-level tax prep

Stripped-down features and a low-end interface keep TaxAct's costs down, but those uncomfortable with tax prep or with complex situations may miss the extra help.

When it comes down to it, the actual content of rival tax prep apps is nearly identical. So fear not. TaxAct's significantly lower price point doesn't necessarily translate into shoddier tax return calculation. We got virtually the same result using TaxAct, Intuit's TurboTax, and H&R Block At Home (Disclaimer: this result may not apply to every tax scenario.) What you do sacrifice in TaxAct is the glossy graphics, the straightforward help files, and the extensive FAQs and audit support of the other two DIY apps apps.

Because of the striking similarity of the desktop and online versions, we're covering both in this review.

Like all tax prep apps, TaxAct's desktop software takes some time to install, download updates, and generally ready itself for your use. Set-up with the online version is significantly shorter, but there are pros and cons to using online versus desktop prep--we cover this at the end.

TaxAct sports a stripped-down, low-end interface with small text and minimal visual cues to make the important points pop out. Like TurboTax and H&R Block At Home, TaxAct can import W-2 forms, but only those prepared by TALX W-2 eXpress. It will import capital gains information from the GainsKeeper service and from a CSV file, but not other 1099 forms from your bank or brokerage.

In addition, TaxAct leaves quite a bit of legalese to you. For instance, the interview asks for the financial institution's ID number, but the help file doesn't say where to look. Key jargon in the interview goes unexplained, like the difference between passive versus active category foreign tax credit. The Help files didn't contain references to these phrases, either.

The few in-app videos concentrate on the process rather than on picking apart tax conundrums. A Tax Tutor powered by J.K.Lasser.com provides basic reminders, like reporting taxes on severance pay and tips, but the help files--the glossary in particular--contain the most confusing jargon of the three apps we reviewed.

Tools include some calculators and assistants, like for helping find the costs basis of a stock. The ticker adding up your tax return is so small we almost missed it.

On the plus side, TaxAct displays the digits you enter in the guided interview on the tax form itself, by default, so you can follow along on the tax form (H&R Block At Home and TurboTax both take you to the official form on demand.) Another minor complaint: we noticed that TaxAct's online form kept us from cutting and pasting, an inconvenience.

While TaxAct clearly lacks some of the major and minor features that justify TurboTax and H&R Block At Home's higher cost, it might be just right for tax prep whizzes who want to fly through the tax return with few distractions and minimal guidance. If you're on the fence, you can begin a free return online (TaxAct.com) before committing to TaxAct, or any other prep program.

A note on online versus desktop prep: While there's no rule, we tend to think of online tax prep as ideal for those filing individually--it's sometimes less pricey for singles and stores your encrypted return on the provider's server. Linux users may also prefer online prep, since most makers of tax software don't program downloads for the Linux platform. TaxAct does not produce a version for Macs. Desktop prep may be better suited for families, who can file up to five Federal e-files as part of a single software license, or for those who would rather store their data locally on their computers.

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