Comparison: TaxAct vs. TurboTax Free Online Versions

It is clear that TurboTax has dominated the tax software market for quite some time. But in recent years, the tax giant has met some fierce competition, especially in the internet space. In this review, we look at a dominant player in the online space - TaxAct. How does their free online tax return software compare to TurboTax's free version? You might be surprised!

Computer Requirements

Both TaxAct and TurboTax online free versions support Windows and Macintosh systems. System hardware requirements are the same. However, TaxAct does work on older versions of the operating system and browsers as well - Windows 95, Mac OS 9.0, Internet Explorer 5.0.
Edge: Even

Functionality

TurboTax's free version is only for the 1040EZ while TaxAct's free version is fully functional for the 1040, 1040A, and 1040EZ. This is a major difference since most filers must use the standard 1040 tax return. Both systems offer step by step questions and guidance to make filing easy. They both also flag warnings when an input is incorrect or missing information.
Major Edge: TaxAct

Safety and Security

Both TurboTax and TaxAct use HTTPS connections to provide a secure and safe session. They also both have nice functionality that "locks" you into the user session so you do not inadvertantly browse off the page.
Edge: Even

Accuracy

Both TurboTax and TaxAct guarantee an accurate return. Calculations are made at each input to verify accuracy.
Edge: Even

Technical Support

TaxAct offers free technical support by email and over the web (FAQ based). While TurboTax has online FAQs, you will need to pay $14.95 to get normal technical support.
Edge: TaxAct

User Base and Adoption

In terms of sheer numbers, TurboTax's user base cannot be beat. Users give TurboTax (if you are using the 1040EZ) high marks. TaxAct has been in the tax business over 10 years and has a loyal user base as well.
Edge: TurboTax

Data Backup

Both TurboTax and TaxAct allow you to backup your free online return to your local computer hard drive. However, TaxAct does offer a very nice option for $5.95 that allows you backup your tax return online at their servers for 3 years. This is a nice feature.
Slight Edge: TaxAct

The Verdict

We have to declare TaxAct the 2007 winner of free online providers. If you are longtime TurboTax user and can use the 1040EZ (i.e. very simple taxes), TurboTax is obviously an acceptable free online solution. However, if you want a free version that completely supports the normal 1040 and 1040A tax returns, you get a lot more functionality choosing TaxAct.