I’m always on the lookout for tools that can help me file my taxes quickly and accurately. One of the products I’ve used recently is eSmart Tax, an online filing service owned and supported by Liberty Tax.
eSmart Tax has a free federal filing option for anyone with a relatively simple tax situation, as well as paid plans that support progressively more complex returns. In fact, eSmart Tax actually reduced federal filing fees on higher-priced plans for the 2015 tax year, and the service is still cheaper overall than some better-known competitors. That change, however, may not make up for the confusing product descriptions on its website. Fortunately, eSmart Tax alerts you if a plan upgrade suits your situation once you begin filing. While not a deal-killer for some, if you have a complex tax situation, the lack of clarity can be frustrating, and may be enough of a red flag to prepare your return elsewhere.
Like most of its competitors, eSmart Tax offers an accuracy guarantee. If you’re hit with an IRS tax penalty or interest charge due to an eSmart Tax miscalculation or software error, eSmart Tax reimburses you for them without limit. This guarantee doesn’t apply to state penalties or interest, however.
eSmart Tax is similar to a number of well-known online filing options, including H&R Block, TurboTax, TaxAct, and TaxSlayer, but it’s different enough – in both positive and negative ways – to warrant a closer, in-depth look.
Plans, Pricing & Features
eSmart Tax uses an interview-style tax preparation process. Your answers to a logical series of yes-or-no questions (such as “Do you own a home?”) are used to evaluate your tax situation and determine what you need to successfully complete your return.
Depending on how you answer these questions (and, therefore, the overall complexity of your tax situation), eSmart funnels you into one of four plans, each of which is offered at a specific price point and comes with a particular set of features and functions. If your return requires something that isn’t supported by your current plan (Schedule C filing, for example), you can upgrade at any time during the process.
The Free plan is only appropriate for simple tax situations that can be completed using IRS Form 1040EZ. Federal returns cost nothing, but each state return costs $25.95 – a major price increase from the 2014 tax year’s $9.95 fee. You can only take the standard deduction (which ranges between $6,300 and $12,600, depending on your filing status), and you cannot file any schedules, except for Schedule EIC (to claim the Earned Income Tax Credit). That said, the site’s home page indicates you can file Schedule B with this plan. However, it seems to be a typo for two reasons. One, according to the IRS, you can only file Schedule B with Form 1040A or 1040 (neither of which are supported with the Free plan). And two, the site’s in-depth description of the Free plan doesn’t reiterate that you can file Schedule B.
Its features include the following:
- Past-Year Importing and Storage. To speed up the filing process and reduce the likelihood of careless errors, eSmart allows you to import last year’s return and automatically overlay your current return’s fields with any information that hasn’t changed, such as your address and Social Security number. eSmart supports returns imported from its own platform, plus any other online tax preparation platform. Note that you have to convert past returns to PDF format before importing them or the transfer won’t take. Also, eSmart Tax stores completed returns and previously imported returns for five years, a useful function for repeat users.
- Past-Year Access. Once you import your past-year return from another tax preparation service, you can access it at any time throughout the tax season.
- W-2 Importing. If your employer provides electronic W-2s, you can upload yours directly to your eSmart account. This saves time compared to manually entering all the information from a paper version.
- Earned Income Tax Credit. If you’re eligible for the Earned Income Tax Credit, you need to file Schedule EIC, which is supported by the Free plan.
- Credit and Deduction Checks. As you fill out your return, eSmart automatically checks for credits and deductions that could apply to your situation. If it identifies one that is potentially relevant, you are alerted and asked if you wish to take it. However, you can’t take itemized deductions with the Free plan – so if you qualify for enough deductions that itemizing makes more sense than taking the standard deduction, you need to upgrade to at least the Basic plan.
- Affordable Care Act Forms. The Free plan supports the filing of all forms related to the Affordable Care Act. This is particularly important if you qualify for health insurance subsidies under the ACA.
- Access to Live Customer Support. eSmart has a live chat feature that’s available during regular weekday business hours outside of tax season (early January to mid-April) and has extended hours (weekends and evenings) as the filing deadline approaches. However, you need to create an account to access this feature. If live chat isn’t available, you can email [email protected] for a response within 72 hours. You can also contact eSmart’s customer service team via Facebook, Twitter, and Pinterest, though there’s no guarantee of a response through these channels.
The Basic plan costs $24.95 for your federal return and $29.95 for each state return. It’s useful for filers who need to file Form 1040, take itemized deductions (Schedule A), who have health savings accounts, or who need to file Schedule B.
The Basic plan comes with all the features of the Free plan, plus the following:
- Itemized Deductions and Schedule A Support. If you – and eSmart, based on your answers to its interview questions – determine that it makes financial sense for you to itemize your deductions, the Basic plan allows it. You need to use Schedule A to do so.
- Schedule B Support. If you earned more than $1,500 in taxable interest and ordinary dividend income from all sources during the previous tax year, you need to file Schedule B.
- Support for Filers With Health Savings Accounts. If you have a health savings account, you need to file IRS Form 8889 on your federal return. eSmart makes this form and instructions available with the Basic plan.
The Deluxe plan costs $39.95 for your federal return and $29.95 for each state return. It’s ideal for self-employed filers, including independent professionals and freelancers. The Deluxe plan comes with all the features of the Basic plan, plus the following:
- Schedule C Support. If you’re self-employed or earn a significant amount of your income through what the IRS defines as “business activities,” you may be liable for self-employment tax. If so, you likely need to complete Schedule C or Schedule C-EZ, both of which allow you to take business deductions and credits, such as deductions for your home office. According to the IRS, you’re engaged in “business activity” if the primary goal of the activity is “income or profit and you are involved in the activity with continuity and regularity.” This describes most freelancers, sole proprietors, and independent consultants. However, eSmart can help you make a final determination about your specific situation.
The Premium plan costs $59.95 for your federal return and $29.95 for each state return. With support for filers who have self-employment income or capital gains income, it’s ideal for business owners and investors.
It comes with all the benefits of the Deluxe plan, plus these features:
- Schedule D Support. If you have capital gains income (or losses) from the sale of securities, real estate, or other assets, eSmart can help you file Schedule D and take all related credits and deductions.
- Schedule E Support. If you earned income from rental properties or pass-through entities (such as S-corporations, trusts, estates, and certain types of partnerships), eSmart can help you file Schedule E and take related credits and deductions.
- Other Schedules. Premium offers support for other schedules that may be required in more complicated tax situations, including Schedule F and Schedule K-1.
eSmart Tax has some additional features and functions worth noting. These are available regardless of which plan you select:
- Maximum Refund Guarantee. Like most online tax filing services, eSmart Tax guarantees that you get the biggest possible federal refund with its software. If you file an identical return with another company and get a larger refund, eSmart repays your filing fees. However, it doesn’t say that it pays the difference between the two.
- Price Lock Guarantee. Even if its prices increase midway through tax season, eSmart Tax guarantees that you never pay more than the advertised price at the time you created your account and chose your plan – regardless of how long you take to finish your return.
- Help Resources. eSmart has a pretty comprehensive set of resources for its customers, including a FAQ that covers technical and process-related issues. However, the help database isn’t searchable by topic keyword – if you don’t see your question listed, you need to contact support directly.
- Free Audit Assistance. Anyone who completes a return with eSmart is eligible for free audit assistance from a trained Liberty Tax Service professional. This includes help interpreting any notices you receive from the IRS and advice for preparing for your audit. If you take advantage of free audit assistance, you’re given a direct phone number and email address to communicate with your assigned professional more easily.
- Enhanced Audit Assistance. If you’re concerned you might need more hands-on help during the event of an audit, eSmart offers “enhanced audit assistance” for a one-time fee of $14.95. You need to pay upfront for this option – once you file, it’s too late to add it on. While enhanced audit assistance doesn’t include formal representation during your audit, it does extend the help you get with free audit assistance throughout the entire process. Until your audit is complete, you have on-demand access to a Liberty Tax professional who can help you interpret and respond to requests from the IRS. After your audit, you can sit down with your tax professional and discuss next steps, including possible amendments to past-year returns and penalty payments.
1. Federal Filing Packages Generally Offer Good Value
Pound for pound, eSmart Tax’s federal filing packages are more affordable – without compromising on features or support – than those of its better-known competitors. For instance, its most expensive package (Premium) costs $59.95. TurboTax’s Home & Business package, which has a similar suite of features, including Schedule C and E support, costs $104.99 for federal filing. H&R Block’s Premium package, also quite similar, costs $74.99.
2. State Filing Fees More Affordable Than Many Competitors
eSmart Tax’s state return fees clock in at less than $30. That’s not super-cheap, but it’s definitely less than both TurboTax and H&R Block, which charge $39.99 for each state return.
3. Access to a Network of Physical Liberty Tax Branches
eSmart Tax is backed by the 4,000-strong physical branch network of Liberty Tax Service, plus the human capital (accountants and trained tax preparers) at those offices. These professionals are available to answer questions during the filing process, help you fill out your return onsite if it becomes too overwhelming to do so online, and provide assistance and support in the event that you’re audited. Many other online tax filing programs, including TaxSlayer and TaxAct, don’t have offices that you can call or walk into if a problem arises.
4. Importing Capabilities Have Vastly Improved
Prior-year versions of eSmart Tax had very limited importing capabilities across all versions. You couldn’t import W-2s or past-year returns from other tax filing services. This problem no longer exists, putting eSmart on par with H&R Block and TurboTax, and ahead of TaxSlayer, whose W-2 importing capabilities are severely limited.
5. Free Federal Filing Is a Plus
Though many of eSmart’s competitors offer free federal filing for straightforward tax situations, many smaller, newer services do not.
6. Price Lock Guarantee Is Useful If You Don’t Finish Your Return Right Away
eSmart’s price lock guarantee is straightforward: Once you create your account and choose a plan, you’re guaranteed to be charged no more than the advertised price for that plan if eSmart’s prices rise during tax season, regardless of how long you take to complete your return. In other words, if you create your account in January and come back to your return in April to find that your plan’s cost has risen, you are only charged the January price. You don’t even have to start filling out your return to get the price guarantee, as long as your account is in the system before any price increase goes into effect. Other filing services, including TurboTax and H&R Block, don’t make such a guarantee.
1. No Free State Filing Option
eSmart doesn’t offer free filing for state tax returns with any of its packages. You have to pay $25.95 to $29.95 for state returns, including your first, though you aren’t required to file one along with your federal return.
According to the IRS, a number of state tax authorities offer free state return filing, though you need to check with your state to determine if you qualify based on income or membership in a favored group (such as active-duty or retired military). You can also file state returns for free using TurboTax’s Free Federal or TaxAct’s Free plans, both of which support 1040EZ/A filings.
2. Website’s Help Section Has Some Functionality Issues
The eSmart Tax website’s overall functionality is significantly improved from prior tax years, when it failed to accommodate basic requests (such as password changes) without glitching. However, the site’s help section remains sub-par, with a nonexistent search function and very poor navigation.
3. Customer Service Isn’t as Robust or Readily Available as Some Competitors
eSmart has a useful live chat feature, email support, and an attentive social media team, but its customer service is lacking in some key respects. First, it can take three days to receive an email response, which may be unacceptable if you need to file your taxes quickly or are rapidly approaching the filing deadline. Employees aren’t available around the clock via live chat, as they are at H&R Block. And eSmart doesn’t have a central office or customer support center reachable by phone – you have to find and call your local Liberty Tax office, which may not be open in the evenings or on weekends.
4. No Refund Bonuses
If you’re keen on maximizing your refund’s purchasing power, eSmart may not be your best option. The service doesn’t offer bonuses or incentives for taking certain actions with your refund or accepting it in a certain form, and you never get more than the face value of your refund. By contrast, H&R Block adds up to 10% to the total value of your refund when you accept part or all of it as a gift card from one or more major retailers, such as Amazon and Target.
5. You Need to Upgrade to Access Many Basic Forms and Schedules
eSmart’s free filing option doesn’t offer access to many basic IRS forms or support for filing any schedules. You need to upgrade at least to the Basic plan, and possibly pricier plans, to access more forms and schedules. By contrast, all three versions of TaxSlayer, including the free plan, offer access to every common IRS form and schedule.
6. Not Very Mobile Friendly
Despite its recent website redesign, eSmart Tax’s website isn’t particularly mobile-friendly. This is a pretty glaring omission in light of the fact that many people only use mobile phones or tablets for computing – including critical functions such as online tax preparation. eSmart’s competitors are years ahead of it in this regard – for instance, H&R Block offers a mobile app that lets you upload documents to your return and check its status after filing, among other functions, while TurboTax’s powerful mobile app is nearly identical to its desktop filing software.
Though eSmart Tax might not have the name recognition of H&R Block or TurboTax, it’s backed by Liberty Tax, a bona fide tax preparation company. Liberty Tax appears to have fixed many of the limitations that plagued earlier versions of eSmart Tax, suggesting that it’s fully invested in the product.
However, lingering functionality issues – particularly the difficulty I had with something as simple as creating an account – left a bad taste in my mouth. With so many proven alternatives out there, I’d definitely recommend shopping around before settling on eSmart, and you may want to jump ship at the first sign of trouble.