Liberty Tax Online is an online tax prep program created and distributed by Liberty Tax, one of the United States’ leading tax prep companies.
It’s backed by a thousands-strong coast-to-coast network of Liberty Tax branches, at least one of which is probably within easy driving distance of your home. If you get stumped at any point during the filing process, you can effortlessly transfer your partway-done return to a physical Liberty Tax office — a nice fallback online-only competitors can’t offer.
Liberty Online is a solid tax filing option for tax situations of virtually any complexity. However, it does have a significant disadvantage that’s worth noting: no free filing option. No matter how simple your tax situation is, you need to pay at least $44.95 for your federal return and $34.95 for each state. Compared to competitors with similar capabilities and features, Liberty Online is on the pricey side.
Liberty Tax Online Plans, Pricing, and Features
If you’ve used eSmart Tax before, Liberty Tax Online‘s plans, features, and overall user experience will immediately seem familiar. The two platforms are quite similar at times. That’s no doubt because Liberty Tax’s parent company owns eSmart Tax.
Initially, Liberty Tax Online takes an interview-style approach to the tax preparation process. It asks a series of questions, such as “Do you own a home?” and “Do you have any dependents?” in a logical order. Liberty Online uses your answers to determine which forms and schedules you need to complete your return and which plan option is appropriate for your tax situation.
Basic
Liberty Online’s Basic plan charges $44.95 for your federal return and $39.95 for each state tax return. It’s ideal for filers with moderately complex tax situations, including itemized deductions and health savings accounts (HSAs). But it isn’t appropriate for business owners and people with lots of investment income.
The Basic plan has simple features and functions appropriate for those without highly complex tax situations, such as:
- Free Chat, Phone, and Email Support. Liberty Online offers free support by phone, chat, and email. Phone and chat support are available during regular business hours. It can take up to 24 hours for someone to answer emailed questions, longer on weekends. These support venues are appropriate for questions about the Liberty Online platform itself, not for detailed questions about tax matters. For that, purchase or upgrade to Pro Tax Support or walk into a Liberty Tax office.
- Prior-Year Return Access. Liberty Online stores all prior-year returns in its database. They’re accessible anytime at no charge.
- Prior-Year Return Filing. If you failed to file a prior year’s return, you can do so using the appropriate Liberty Tax package at the advertised price. Be aware that you forfeit any refund to which you may have been entitled after three years.
- Amended Tax Returns. If you need to change an existing tax return, you can do so for free.
- W-2 Importing. You can import your W-2 directly from your employer rather than entering the information manually.
- Competitor Importing. You can also import prior-year tax returns from competing online tax prep services, provided they are in PDF format.
- Support for Earned Income Tax Credit. If you qualify for the earned income tax credit, you can file Schedule EIC.
- Itemized Deductions. The Basic plan supports Schedule A, which allows you to itemize your deductions.
- Health Savings Accounts. If you have an HSA to supplement a high-deductible health insurance plan, you may qualify for special tax deductions. The Basic plan supports the requisite forms.
- Interest and Ordinary Dividend Income. This plan supports Schedule B, which you need to file if you earned more than $1,500 in interest and ordinary dividend income during the tax year.
Deluxe
The Deluxe plan charges $64.95 for your federal return and $34.95 for each state return. But early filers may qualify for discounted pricing: $44.95 for the federal return (the same as Basic).
Deluxe is appropriate for filers with more complex situations, including self-employed individuals required to file Schedule C. However, it’s not meant for the most complex tax situations, including income from farming or real estate, or for entrepreneurs who need to report capital gains or losses from their businesses.
The Deluxe plan comes with all the features and functions of the lower-price plans, plus:
- Free Pro Tax Support. Liberty Online offers complimentary Pro Tax support for Deluxe plan customers. You’re entitled to unlimited free professional support with this package.
- Sole Proprietor and Independent Professional Forms and Schedules. If you’re an independent professional or small-business owner and need to account for issues that entrepreneurs and freelancers face, such as self-employment income and depreciation, you can do so with this package. You can also file all the forms necessary to claim business tax deductions and credits related to your activities, such as home office deductions.
Premium
The Premium plan charges $89.95 for your federal return and $34.95 for each state tax return. As with the Deluxe plan, early filers may qualify for discounted pricing: $44.95 for the federal tax return.
Premium is best for people with complex tax situations, such as those incurred capital gains or losses from small-business activities or property sales or filers who earn income from farming or rental property.
The Premium plan includes all the features and functions of the lower plans, plus:
- Capital Gains and Losses. If you have capital gains or losses from property sales (including the sale of your home) or sales of securities like stocks and mutual funds, you can file Schedule D and all other applicable forms with this plan.
- Business Income. If you’re a shareholder in a partnership or S-corporation, you can file Schedule K-1 to report your business income with this plan.
- Rental Property Income. If you have income from rental properties, you can file Schedule E and the related forms with this plan.
- Income From Farming. If you earned income from agricultural activities, you can file Schedule F and related forms here.
Additional Features
In addition to all the features available through specific plans, Liberty Tax Online has several notable features available to all customers, regardless of plan.
Maximum Refund and Accuracy Guarantees
Like most online tax prep services, Liberty Online has a maximum refund guarantee. If you file an identical return with a competitor and receive a larger federal refund (or smaller federal tax liability), Liberty Online refunds your tax preparation fees.
Also like most competing online tax prep services, Liberty Online has an accuracy guarantee at all price points. If you’re hit with an IRS penalty or interest charge due to a Liberty Online calculation error, Liberty Online provides full reimbursement.
Tax Estimator
Liberty Online’s handy tax estimator is a complimentary simulated mini-return. You can use it to gauge the size of your refund or tax liability before you file.
Real-Time Refund Display
Liberty Online shows your refund or tax liability in the upper right corner of your screen. The amount changes in real time based on the information you input.
Help Sidebar
Liberty Online’s static right sidebar includes buttons for finding and contacting your nearest Liberty Tax office, accessing frequently asked questions (FAQ), starting a live chat session with a representative, and contacting the support team (including tax pros, if your plan allows) by email or phone.
Office Appointments and Double-Check
If you feel stuck at any point during the preparation process, you can schedule an appointment with your nearest Liberty Tax office and complete your return there. It takes just a moment to schedule a time slot online, and there’s no charge to do so.
Liberty Online offers in-office double-checks, or reviews by trained tax preparers, for no additional fees. However, if you complete your return in person, you’re likely to face additional charges at filing time. Liberty Tax’s in-person prep fees range up to $500 out the door for very complicated situations.
Tax School
If you’re interested in learning more about tax law and the tax filing process, sign up for one of Liberty Online’s many Tax School courses. These courses typically run several weeks, with the most involved requiring about 80 class hours online or in person.
Tax School course costs run from $50 to about $250. Some, such as state-specific basic income tax courses, are excellent segues into the tax preparation industry and may help get you a job as an in-office Liberty Tax preparer.
Audit Support
If the IRS audits you, Liberty Online promises to review any correspondence you receive and advise you on how to respond or proceed. This service is free for anyone who files a Liberty Online return. However, Liberty Online stops short of providing representation during the audit process, and there’s no package you can purchase through Liberty Online that confers this benefit.
Enhanced Audit Assistance
Enhanced Audit Assistance is an add-on package through which Liberty Tax professionals take a more hands-on approach to your IRS audit. It includes pre-audit recommendations about the types of documents the IRS might request from you, assistance responding to IRS communications, and advice about your options once the audit process is complete. However, it doesn’t involve actual representation or negotiation.
Refund Advance Loans
Liberty Tax offers small tax refund advance loans for qualifying filers. Loan principals vary, depending on borrower qualifications, but they’re lower than some competitors’ loans. However, funds are typically dispersed within 24 hours of the filer’s federal return acceptance.
Refund advance loans are useful for early filers who don’t want to wait for their tax refunds, which can take several weeks to arrive. Be aware that these loans may carry interest charges and require an underwriting process, so it’s best to inquire with Liberty Tax staff before signing up. Plus, Liberty Tax makes clear that this offer is subject to change or cancellation at any time.
Advantages
Despite being on the pricey side, Liberty Tax Online has a lot going for it.
1. Clean, User-Friendly Interface
Liberty Online’s interface isn’t exactly pretty. The dominant colors are white (background) and black (text), with some flat blues and reds thrown in. But the layout is easy to follow.
Each item is clearly laid out on pages with like items, maintaining a sense of cohesiveness as you progress through your return. You don’t have to click through an excessive number of pages, as is the case with TurboTax.
And in addition to a right sidebar with useful help resources, most items have Learn More tags that, when clicked, deliver brief pop-up explanations that disappear when you’re ready.
2. Access to Physical Branches
Liberty Online customers enjoy access to more than 4,000 physical Liberty Tax branches. That’s a big help for novice filers who need more guidance than an online support interface can provide and more experienced filers who decide they want the peace of mind that comes with an in-person prep process.
It’s easy to transfer a partly completed return to your local Liberty Tax office, so there’s little friction if you decide to make the switch. Most of Liberty Online’s cut-rate competitors, including TaxAct and FreeTaxUSA, don’t offer in-person support.
3. Easy to Navigate Your Return
It’s easy to go back and forth through your Liberty Online return. You can skip ahead to sections you haven’t yet completed at any time. That allows you to prepare complex returns over days or weeks, completing each tax form and schedule once you receive the documents necessary to do so.
Some competing platforms, including H&R Block, aren’t quite as flexible.
4. Refund Advance Loan Available
Liberty’s refund advance loan has lower limits than some competitors’, so it’s nothing to write home about, and the offer is subject to change or cancellation at any time. But it usually comes through within 24 hours, making it an excellent payday loan alternative for filers who need fast cash. (That said, there are plenty of reasons to be wary of tax refund advance loans.)
Disadvantages
Liberty Tax Online has many user-friendly advantages, but it doesn’t come without its drawbacks.
1. No Free Filing Option
Liberty Online doesn’t have a free filing option. The cheapest plan sets you back $44.95, assuming one state return. That’s considerably more than both FreeTaxUSA and TaxAct.
2. Low-Priced Plans Have Limited Capabilities
Liberty Online’s low-cost plans have limited capabilities. For instance, the Basic plan is only appropriate for the most straightforward tax situations, with no support for major schedules.
That’s a big drawback relative to budget-friendly filing services like FreeTaxUSA, whose free plan supports most major forms and schedules.
3. Odd Default Selections for Bulleted Questions
Liberty Online’s multiple-choice bullet lists come with a highlighted default selection that would be convenient — if the default choices often didn’t make sense.
For instance, when I indicated that I was married, the next set of questions asked whether I lived with my spouse at the end of the tax year and whether we had lived apart for more than six months during the tax year. The default choices for these questions were no and yes, respectively.
The software assumed things that, while possible, still only affect a minority of married couples. Had I been rushing through my return, I might have failed to notice and change these selections, creating problems down the line.
It’s important to take care at every step of the tax prep process, no matter how complicated your situation is. But it’s also reasonable to ask your tax prep software to put the burden on filers with less-common situations to change default bullet settings rather than require the majority of filers to do so.
4. Super-Short Timeout Fuse
In my experience, Liberty Online’s timeout fuse is among the shortest of any tax prep software program on the market. At several points during the filing process, I walked away from the computer for a short break and returned to find my account logged out.
Worse, certain account activities, such as maneuvering through help content, don’t reset the timeout clock. That means you can be logged out of your account while actively using it.
5. Limited Customer Service Hours
Liberty Online’s customer service team is available during regular business hours Eastern time. That’s problematic for the millions of taxpayers who prepare their returns in the evenings and on weekends when they’re not at work.
What’s particularly frustrating about it is that Liberty Online’s customer support availability used to be expansive: 8am to 2am Eastern most days. TurboTax and H&R Block both still have longer live-contact windows.
Final Word
Liberty Tax Online is one of several online tax prep programs backed by a network of physical branches staffed by real, live humans (who work for its sister company, Liberty Tax Service). H&R Block, eSmart Tax, and Jackson Hewitt Online also have vast branch networks.
But that’s not the only feature that sets Liberty Tax Online apart from online-only competitors like TurboTax and TaxAct. Liberty Tax Online offers reasonably priced tax prep for people with relatively complex tax situations, including small-business owners and self-employed individuals. That’s rare these days.
For more tax preparation software options, check out our full list of top-rated free online tax preparation services.
Source: moneycrashers.com