TaxAct Filing Costs: What to Expect This Tax Season

Navigating tax season can feel overwhelming, and understanding the costs associated with filing your taxes is a crucial part of the process. If you’re considering using TaxAct, knowing what to expect regarding their pricing can help you budget and make informed decisions. This guide breaks down the factors that influence TaxAct’s filing costs and provides a clear picture of what you might pay.

Quick answer

• TaxAct offers a range of filing options, from free federal filing for simple returns to paid versions for more complex situations.
• Costs vary based on the tax forms and schedules you need to complete.
• State tax filing is typically an additional fee per state.
• TaxAct provides different product tiers (Free, Deluxe, Premier, Self-Employed) to match your tax needs.
• You can often find discounts or promotional offers, especially if you start early in the tax season.
• Always check the official TaxAct website for the most current pricing and included features.

What to check first (before you file or change withholding)

Before you even look at tax software pricing, it’s essential to have a clear understanding of your personal tax situation. This will help you choose the right product and avoid paying for features you don’t need.

Filing Status

Your filing status (Single, Married Filing Jointly, Married Filing Separately, Head of Household, Qualifying Widow(er)) is the foundation of your tax return. It determines your standard deduction amount, tax brackets, and eligibility for certain credits. Ensure you are using the correct status for your situation.

Income Sources

Gather all documentation for your income. This includes W-2s from employers, 1099 forms for freelance or investment income, Social Security benefits statements, and any other records of money earned. The complexity and variety of your income sources will influence which TaxAct product you might need.

Withholding or Estimated Payments

Review how much tax has already been withheld from your paychecks or paid through estimated tax payments. If too much was withheld, you’re likely due a refund. If too little, you may owe taxes. This is separate from filing costs but is a critical financial consideration.

Deductions and Credits

Identify potential deductions and credits you may be eligible for. These can significantly reduce your taxable income and your final tax bill. Common examples include deductions for student loan interest or credits for education expenses. Knowing what you might claim can help you select the appropriate software tier.

Deadlines and Extensions (General)

Be aware of the general tax filing deadline, typically April 15th. If you need more time, you can file for an extension, but remember that an extension to file is not an extension to pay. Missing deadlines can result in penalties and interest.

Step-by-step (simple workflow)

Here’s a straightforward process for using TaxAct and understanding its associated costs:

1. Assess Your Tax Needs:

• What to do: Review your income documents (W-2s, 1099s, etc.) and identify any deductions or credits you plan to claim.
• What “good” looks like: You have a clear idea of the types of forms and schedules you’ll need to file.
• Common mistake: Underestimating the complexity of your return.
• How to avoid it: If you have investments, rental properties, or self-employment income, you’ll likely need a more advanced version than just basic wage income.

2. Visit the TaxAct Website:

• What to do: Go to the official TaxAct website to explore their product offerings for the current tax year.
• What “good” looks like: You’re on the official site and can easily see the different filing products and their features.
• Common mistake: Clicking on a third-party ad that might not show the most up-to-date or complete pricing.
• How to avoid it: Always navigate directly to TaxAct.com.

3. Compare TaxAct Product Tiers:

• What to do: Look at the descriptions for TaxAct Free, Deluxe, Premier, and Self-Employed. Match your tax situation to the features offered in each tier.
• What “good” looks like: You understand which product tier is designed for your specific needs (e.g., Self-Employed for freelancers, Premier for investors).
• Common mistake: Choosing the cheapest option without verifying it supports all necessary forms.
• How to avoid it: Read the “What’s included” section for each product carefully.

4. Identify Your Cost:

• What to do: Note the price of the chosen TaxAct product for federal filing.
• What “good” looks like: You have a clear number for the federal filing cost.
• Common mistake: Assuming the listed price includes everything.
• How to avoid it: Be aware that state filing is usually extra.

5. Add State Filing (If Applicable):

• What to do: If you need to file a state tax return, select the appropriate state(s) and note the additional cost per state.
• What “good” looks like: You know the total cost for both federal and state filing.
• Common mistake: Forgetting to factor in state filing fees.
• How to avoid it: Most users will need to file in their state of residence.

6. Look for Discounts or Promotions:

• What to do: Check for any available coupons, early-bird discounts, or bundled offers on the TaxAct website or through trusted partners.
• What “good” looks like: You’ve secured a lower price than the standard listed cost.
• Common mistake: Paying the full price without checking for deals.
• How to avoid it: Search for “TaxAct coupon” or check their homepage for current offers.

7. Create Your Account and Start Filing:

• What to do: Sign up for an account and begin entering your tax information into the software.
• What “good” looks like: You’re logged in and can start inputting data.
• Common mistake: Starting too late and missing out on potential discounts or getting overwhelmed.
• How to avoid it: Begin gathering your documents and starting the process as soon as possible.

8. Review and E-file:

• What to do: Carefully review your entire return for accuracy before submitting it electronically.
• What “good” looks like: You’ve double-checked all entries and are confident in your return.
• Common mistake: Errors in data entry leading to rejected returns or audits.
• How to avoid it: Use the software’s review features and cross-reference your entries with your source documents.

9. Confirm Payment or Refund:

• What to do: Once filed, confirm whether you are due a refund or need to make a payment.
• What “good” looks like: You understand your tax outcome and know how to proceed with payment or expect your refund.
• Common mistake: Not having a plan for tax payment if you owe.
• How to avoid it: If you owe, set up a payment plan or have funds ready.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Choosing the wrong product tier	Paying for features you don’t need or missing forms required for your situation.	Review your tax documents thoroughly before selecting a product; upgrade if necessary.
Forgetting to file for state taxes	You’ll likely receive a notice from your state taxing authority.	Always check if you have a state tax liability and select the correct state filing option.
Not checking for discounts	You pay more than necessary for the filing service.	Search for promotional codes or early-bird discounts on the TaxAct website before purchasing.
Incorrectly entering personal information	Your return may be rejected, or you could face penalties.	Double-check your Social Security number, name, and address against official documents.
Missing tax deadlines	Penalties and interest charged by the IRS and state agencies.	File on time or file an extension; be aware that extensions are for filing, not for payment.
Not understanding “free file” limitations	You might start with a free version but be forced to upgrade for necessary forms.	Read the fine print on “free” offers; they often apply only to very simple tax returns.
Overlooking potential deductions/credits	You pay more tax than you legally owe.	Use TaxAct’s interview process carefully and consider consulting a tax professional if unsure.
Incorrectly reporting investment income	Underpayment penalties, interest, or an audit from the IRS.	Ensure all capital gains, dividends, and interest are reported accurately from your brokerage statements.
Failing to review the return before filing	Errors leading to rejection, delays, or incorrect tax liability.	Use TaxAct’s built-in review features to catch mistakes before e-filing.
Not having a payment plan if you owe taxes	Significant penalties and interest accrue on the unpaid amount.	If you owe, arrange payment through the IRS or state agency, or use TaxAct’s payment options.

Decision rules (simple if/then)

Here are some decision rules to help you choose the right TaxAct product and navigate potential costs:

• If your tax return is very simple, with only W-2 income and no dependents or major deductions, then TaxAct Free Edition might be sufficient because it’s designed for straightforward returns.
• If you have income from investments (stocks, bonds, mutual funds), then you will likely need TaxAct Premier because it supports Schedule D and related forms.
• If you are self-employed, freelance, or own a small business with significant expenses, then TaxAct Self-Employed is the best choice because it handles Schedule C and related business expenses.
• If you are married and filing jointly with common deductions like mortgage interest or student loan interest, then TaxAct Deluxe is a good fit because it covers standard itemized deductions and credits.
• If you need to file taxes in more than one state, then expect to pay an additional fee for each state return filed through TaxAct because state filing is typically separate from federal.
• If you are looking for the lowest possible cost, then start with TaxAct Free Edition and only upgrade if the software indicates you need a more advanced product for your specific forms.
• If you are unsure about a particular deduction or credit, then use the guided interview process within TaxAct and consider consulting a tax professional if the software’s guidance isn’t clear enough.
• If you qualify for the IRS Free File program (income limitations apply), then check if TaxAct is a partner provider for that program, as it may offer free federal and state filing for eligible taxpayers.
• If you are a first-time user and have a moderately complex return, then consider TaxAct Deluxe or Premier and look for introductory offers to reduce the initial cost.
• If you need to amend a previously filed return, then ensure the TaxAct product you choose supports amended returns (Form 1040-X), as this might be an additional step or require a specific product.
• If you are expecting a large refund, then consider how you want to receive it (direct deposit or check) and factor in any potential fees associated with refund anticipation loans if offered, though these are generally not recommended.

FAQ

Q: Is TaxAct truly free for everyone?

A: TaxAct offers a Free Edition, but it’s generally for taxpayers with very simple returns, such as those with only W-2 income and standard deductions. More complex returns requiring additional forms will necessitate an upgrade to a paid version.

Q: How much does it cost to file state taxes with TaxAct?

A: State tax filing with TaxAct is typically an additional fee per state. The exact cost can vary by state and may be listed on their website when you select your state for filing.

Q: Can I upgrade my TaxAct product if I realize I need more features?

A: Yes, you can usually upgrade your TaxAct product mid-process if you discover you need a higher tier to accommodate specific forms or schedules. The difference in cost will be charged at that time.

Q: Are there any hidden fees with TaxAct?

A: TaxAct is generally transparent about its pricing. The main additional cost beyond the product tier is for state filing. Be sure to read what’s included in each product to avoid surprises.

Q: When is the best time to buy TaxAct to get the lowest price?

A: Often, purchasing and starting your return earlier in the tax season (late January or February) can yield better prices due to early-bird discounts. Prices may increase closer to the April deadline.

Q: Does TaxAct offer a discount for military personnel?

A: TaxAct sometimes offers discounts or free products for active-duty military members. It’s best to check their website or contact customer service for current military-specific offers.

Q: What if I made a mistake on my tax return after filing with TaxAct?

A: If you discover an error after filing, you’ll need to file an amended return (Form 1040-X). TaxAct supports the process of filing amendments, which may require using the same or a similar product tier.

Q: How do I know which TaxAct product is right for me?

A: The TaxAct website provides a comparison tool and descriptions for each product tier. By understanding your income sources, deductions, and credits, you can match your needs to the features offered in TaxAct Free, Deluxe, Premier, or Self-Employed.

What this page does NOT cover (and where to go next)

This guide focuses on understanding TaxAct filing costs. It does not delve into:

• Specific IRS tax laws or regulations.
• Detailed advice on tax deductions and credits beyond general identification.
• Comparisons with other tax software providers.
• Investment advice or financial planning strategies.

Where to go next:

• Explore the official TaxAct website for current pricing and product details.
• Consult the IRS website for information on tax laws, forms, and deadlines.
• Consider speaking with a qualified tax professional for personalized advice.
• Research resources on maximizing tax deductions and credits relevant to your situation.