2nd Story Software TaxAct Deluxe

TaxActDeluxe has been the budget tax-software option for some time now, but can it handle business taxes? The answer is yes -- but only if you don't need a heap of guidance and you can make do with limited data-import features.

Nevertheless, TaxAct Deluxe remains the biggest tax-software bargain on the market, costing a mere $13 (or $22 if you need a state return, too; prices as of February 15, 2011). Note, however, that unlike competitors that let you use desktop software for five free e-files, TaxAct Deluxe pays for just one federal e-file; additional e-files cost $8 apiece, and you must also pay $8 for each state e-file.

TaxAct Deluxe offers an unusual but quite effective interface: The bottom of each screen is a partial forms view, showing how the software will fill out your forms based on information you provide--or, if you're collecting data from a form (such as a 1099, for example), the form itself, so you know where to look. Intuit TurboTax Home & Business and H&R Block at Home provide form-view buttons that let you toggle between questions and forms, but I like the way TaxAct combines the tax interview with the form view.

One key difference between TaxAct Deluxe and the free version of TaxAct is that the free version does not support any data-import features. TaxAct Deluxe's import features are a mixed bag, however. You can import last year's tax data from a file created in TaxAct 2009. TaxAct says it can also import data from a PDF of a 2009 return prepared in most other commercial programs, but when I tried to import a PDF I prepared in TurboTax 2009, some business-expense data was missing.

You can import stock-trading data only from Websites that will export it in a .csv file, or from the GainsKeeper commercial service for tracking stock trades. And TaxAct supports W-2 data import only from a third-party service called Talx W-2 Express.

TaxAct walks you through its questionnaire in a pleasing interface that's somewhat similar in overall design to H&R Block at Home's. It has decent navigation features for moving around different areas of your return. You really don't get much in the way of guidance, though; in many cases the questionnaire simply states what's on the IRS form. This is particularly true for the Schedule C area, where newcomers especially might feel stymied. For example, just tracking down a business-activity code can be a challenge if you don't have help, since TaxAct merely provides the IRS list of general categories in a drop-down menu. I found it difficult to find a code for my own profession, freelance writer, which finally turned up in the 'Arts & Entertainment - Performing Arts, Spectator Sports and Related Industries' category.

The right-hand pane in TaxAct includes links to popular related help categories and a Tax Tutor Guide (produced by tax experts J.K. Lasser) that contains some detailed explanations for a range of topics. But it would be a lot more helpful to get appropriate explanations as you fill in the form: The Tax Tutor link simply points to the entire guide, and you're on your own for finding the topic you need help with.

TaxAct doesn't offer help from a tax pro, nor would I expect it to given how inexpensive it is. But I would recommend it for business use only to people who are looking for a simple, user-friendly way to fill in IRS forms and perform calculations. If you're in need of actual guidance and advice, I'd opt for the more full-featured H&R Block at Home or TurboTax competition.

Editor's note: 2nd Story Software also offers a Free Edition that includes one free federal e-file (state software costs $15, and a state e-file costs $8), and a Deluxe & State version ($22, including the Deluxe version reviewed here plus one state program; a state e-file costs $8).