I prepared my taxes a couple weeks ago using my favorite tax software: TaxAct. I threw caution to the wind and only prepared my taxes with one type of software! I ended up getting a larger refund than I expected. As I’ve said before, I try to avoid owing taxes when I file or getting a refund, but because my husband was on disability for four months, we ended up majorly over-withholding.
TaxAct had a few new features that I appreciated, although I did long for the easier H&R Block navigation from last year. Maybe I just couldn’t find it, but in order to review a single tax question, I had to review the entire section.
Still, it got the job done in less than an hour, and was certainly cheap at $17.95 for Federal and State – Deluxe addition.
The interface has been prettied up a bit since I first start using TaxAct several years ago. It’s got a bit of color and more of a “Web 2.0” feel. There are also videos that walk you through several sections. It offers more help than ever for first timers, but some aspects can still be confusing if you don’t know what you’re doing.
The life features section was more robust than last year, and allowed me to review several sections where I needed to pay closer attention.
There are step-by-step questions for W-2s and other forms, but I preferred to use the quick data entry method.
The State Form
I did have a challenge with the state form. Maybe I should have used secondary software as a check, but I didn’t. I’m not sure this is a software problem, so much as a “my state writes terrible instructions” problem. I tried to read the California instructions, which TaxAct provides, for adjustments to Federal deductions, but they were very unclear. Most of the items I’d never heard of, and the instructions provided no insight! Hopefully other states are better than mine at writing their forms.
Filing was super-easy, but that’s true of any software. I did spot one thing that I found annoying. I’m not sure if other companies do the same thing, but I suspect they do. I was given the option of paying by credit card, or of having the fee deducted from my refund. The tax software fee was $17.95. The fee to have the fee deducted from my refund was $16.95! Obviously, I chose the credit card. That’s almost a 100% mark-up!
As usual, I don’t recommend TaxAct for a first-time filer or if you have a complicated tax situation. I was grateful for the H&R Block Online handholding when I itemized for the first time last year. But if your return is relatively the same as last year, or you’ve itemized many times, I don’t see a strong reason to pay more for the same thing.
What I’m Doing with My Refund
The answer is simple: saving it. It replaces the funds we couldn’t save while my husband was on disability. If I’d adjusted our withholding, we would have saved the money earlier in the year. We didn’t even put the money into our budget.
Many people view the refund as a windfall, but remember – it’s your money. If you received a refund and didn’t do anything special this year that would result in a big refund (such as the home buyer tax credit from last year), adjust your withholding to get more of your money during the year. Rather than using a big refund to pay off a big chunk of credit card debt, you can pay it off slower throughout the year, and save interest in the process! The government certainly won’t pay interest on your tax refund.