TaxAct

TaxAct. It is a prominent American provider of tax preparation software for individuals, small businesses, and tax professionals, owned by Blucora through its Avantax subsidiary. The platform enables users to prepare and electronically file their federal and state income tax returns, offering a range of products from free basic filings to comprehensive packages for complex financial situations. Since its founding, it has positioned itself as a cost-effective alternative to competitors like H&R Block and Intuit's TurboTax, emphasizing accuracy and a streamlined user experience.

History

The company was founded in 1998 by a group of CPAs and software developers in Cedar Rapids, Iowa, initially operating under the name 2nd Story Software. Its early focus was on creating affordable, desktop-based tax preparation solutions for the IRS filing season. A significant milestone occurred in 2005 when it was acquired by H&R Block, a move that expanded its distribution but later led to its divestiture in 2011. Following this, the firm was purchased by Blucora, a financial technology company which also owned Avantax (formerly HD Vest), integrating its services into a broader financial ecosystem. Throughout the 2010s, it aggressively expanded its online presence and mobile capabilities, competing directly with Intuit and TaxSlayer.

Products and services

Its portfolio is segmented into distinct product lines catering to different taxpayer needs. For individual filers, offerings range from a free version for simple Form 1040 returns to premium editions that handle investments, rental property income, and freelance business deductions. For small business owners and self-employed individuals, it provides dedicated solutions for S corporations, C corporations, partnerships, and sole proprietorships, including support for Schedule C and Schedule E. The company also maintains a suite for enrolled agents and other tax professionals, featuring tools for client management, IRS e-filing, and practice management, comparable to offerings from Drake Software and ProSeries.

Features and capabilities

The software is designed with a question-and-answer interview format that guides users through the tax preparation process, importing data from prior years and from major financial institutions like Fidelity Investments and Charles Schwab. It includes a robust calculation engine that ensures accuracy across numerous tax forms, from Schedule A for itemized deductions to complex forms like Form 8949 for capital gains and losses. A standout feature is its extensive audit support, which provides guidance and representation services in the event of an IRS inquiry. The platform also supports various filing methods, including direct IRS e-file, and offers year-round access to tax calculators and planning tools via its mobile applications.

Pricing and editions

Its pricing strategy is tiered, typically offering a free edition for federal returns that covers simple situations involving the Earned Income Tax Credit (EITC) and Child Tax Credit. Paid tiers, such as Deluxe and Premier, add functionality for mortgage interest, stock sales, and rental income, with each state return requiring an additional fee. The most comprehensive Self-Employed edition addresses needs for self-employment tax, business expenses, and industry-specific deductions. Throughout the tax season, it frequently offers promotional discounts and guarantees, such as maximum refund and accuracy assurances, competing on value against TurboTax and Credit Karma Tax.

Reception and reviews

The service has generally received positive evaluations from major software review publications and consumer advocacy groups for its affordability and straightforward interface. It has been consistently rated highly by organizations like PC Magazine and The Balance, often noted for its strong performance in accuracy testing conducted by independent tax preparer associations. However, some critiques from sources like Consumer Reports have pointed to upsells for state returns or more complex forms as a potential drawback. It maintains strong ratings with the Better Business Bureau and has been recognized for its customer support, though it occasionally faces broader industry scrutiny alongside Intuit and H&R Block regarding lobbying efforts related to IRS Free File programs.

Category:Tax preparation software Category:Software companies based in Iowa Category:Blucora