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 seamlessly transfer your halfway-done return to a physical Liberty Tax office – a nice fallback that online-only competitors can’t offer.
Liberty Online is a great tax filing option for tax situations of virtually any complexity. However, it does have a significant disadvantage that’s worth noting: Though Liberty Tax dropped its prices a bit for 2017, there’s still no free filing option. No matter how simple your tax situation is, you need to pay at least $14.95 for your federal return and $31.95 for each state. Compared to competitors with similar capabilities and features, including TaxHub and TaxPoint, Liberty Online is on the pricey side.
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.
Plans, Pricing & Features
Initially, Liberty Tax Online takes an interview-style approach to the tax prep process. You’re asked 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.
Then, after you’ve selected a plan, you can choose which forms and schedules to fill out, leaning on the “Learn More” buttons next to each item for explanation and guidance on tricky topics. Throughout the filing process, you can move back and forth between sections at will using the tabs at the top of your screen.
If you’ve used eSmart Tax before, Liberty Online’s plans, features, and overall user experience will immediately seem familiar. That’s because eSmart Tax is also owned by Liberty Tax’s parent company. Though the two platforms are eerily similar at times, Liberty Online’s higher prices make it impossible to forget which is which.
The EZ plan is only appropriate for tax situations simple enough to be handled with IRS Form 1040EZ only – basically, situations that don’t involve itemized deductions, investments, or self-employment income. It costs $14.95 for your federal return and $26.95 for each state return.
The EZ plan’s features include:
- Free Chat & Email Support. Liberty Online offers free support via online chat and email. Chat requests typically produce a response within 30 minutes during extended business hours (8am to 2am Eastern, Monday through Saturday; 9am to 2am Eastern, Sunday), while emailed questions can take up to 24 hours to answer. Both chat and email support are appropriate for questions about the Liberty Online platform itself, not for detailed questions about tax matters.
- Pro Tax Support for a Fee. Liberty Online makes on-staff tax professionals available to provide accurate, detailed answers about your taxes via email. This service carries a one-time fee of $4.95 for EZ filers. During tax season, queries can take up to 72 hours to produce a response.
- Prior Year Return Access. Liberty Online stores all prior year returns in its database. They’re accessible anytime at no charge.
- 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 here.
- Affordable Care Act Support. This plan includes full support for Affordable Care Act documentation, including Exemption and Hardship forms.
- Amendments & Prior Year Return Filing. If you need to amend your current year (if already filed) or prior year return, or need to file an entirely new prior year return, Liberty Online allows you to do so for free.
Liberty Online’s Basic plan charges $19.95 for your federal return and $26.95 for each state return. It’s ideal for filers with moderately complex tax situations, including itemized deductions and health savings accounts, but isn’t appropriate for business owners and people with lots of investment income.
The Basic plan has all the features and functions of the EZ package, plus:
- Itemized Deductions. The Basic plan supports Schedule A, which allows you to itemize your deductions.
- Interest & 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.
- Support for Health Savings Accounts. This plan supports all forms related to Health Savings Accounts (HSAs).
The Deluxe plan charges $39.95 for your federal return and $26.95 for each state return. It’s 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, nor 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-priced plans, plus:
- Free Pro Tax Support. Liberty Online waives the $4.95 Pro Tax support fee for Deluxe plan customers. You’re entitled to unlimited, free professional support with this package.
- Sole Proprietor/Independent Professional Forms/Schedules. If you’re an independent professional or small business owner and need to file Schedule C, 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.
The Premium plan charges $69.95 for your federal return and $26.95 for each state return. It’s marketed to people who incurred capital gains or losses from small business activities or property sales, filers who earn income from farming or rental property, and others with complex tax situations.
The Premium plan includes all the features and functions of the three lower plans, plus:
- Capital Gains/Losses. If you have capital gains or losses from property sales or sales of stocks, mutual funds, and other securities, you can file Schedule D and all other applicable forms with this plan.
- Business Income. If you are 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 related forms with this plan.
- Income from Farming. If you earned income from agricultural activities, you can file Schedule F and related forms here.
- 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 inputted information.
- Help Sidebar. Liberty Online’s unchanging right sidebar includes buttons for finding and contacting your nearest Liberty Tax office, accessing standard questions (the system’s FAQ section), starting a live chat session with a representative, and contacting the support team (including tax pros, if your plan allows) by email or phone.
- Maximum Refund Guarantee. 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.
- Refer a Friend Bonus and Discount. You get $10 for each referral who completes and files their taxes with Liberty Online. Each referral gets a 50% discount on their filing fees. If you refer a friend who subsequently files at a physical Liberty Tax office, your per-person referral bonus jumps to $50.
- Office Appointments. 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 (though, if you complete your return in person, you’re likely to face additional charges at filing time).
- 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. Offered in partnership with the University of Phoenix, these courses typically run several weeks, with the most involved requiring about 80 class hours online or in person. Course costs run from $50 to about $250. Some, such as state-specific Basic Income Tax Courses, are great segues into the tax preparation industry and may help get you a job as an in-office Liberty Tax preparer.
- Audit Support. If you’re audited by the IRS, Liberty Online promises to review any correspondence that 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. This is an add-on package through which Liberty Tax professionals take a more hands-on approach to your IRS audit. Enhanced Audit Assistance includes pre-audit recommendations about the types of documents the IRS might request from you, assistance responding to IRS communication, and advice about your options once the audit process is complete. However, this doesn’t involve actual representation or negotiation.
- Easy Advance. Through February 28, 2017, Liberty Tax offers tax refund loans (known as Easy Advance) for filers who qualify for Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC). Funds are typically dispersed within 24 hours of the filer’s federal return acceptance. This is a useful option for early filers who don’t want to wait for EITC or ACTC refunds, which can take until the second half of February to arrive. However, Early Advance loans may carry interest charges and require an underwriting process, so it’s best to inquire with Liberty Tax staff before signing up.
1. Refer a Friend Bonus/Discount Can Add Up
If you know a lot of people who still need to file their taxes this year, Liberty Online’s refer a friend bonus can put real cash in your pocket. And, if you’re lucky enough to be referred to the service by someone else, your savings could be even bigger – the 50% discount comes to about $50 when applied to the Premium package (assuming federal and one state). No other online tax prep program has such a generous referral deal for referrers and referees alike.
2. 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 super easy to follow. Each item is clearly laid out on pages with other 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 succinct pop-up explanations that disappear when you click “OK.”
3. Comes With 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, as well as 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 and when you decide to make the switch. Most of Liberty Online’s cut-rate competitors, including TaxAct and FreeTaxUSA, don’t offer in-person support.
4. Easy to Move Back and Forth Within Return
It’s easy to go back and forth through your Liberty Online return. Importantly, you can skip ahead to sections that you haven’t yet completed at any time. This allows you to prepare complex returns over a period of days or weeks, completing each form and schedule once you receive the documents necessary to do so. By contrast, H&R Block requires you to complete your return in order, and only allows you to skip around to sections that you’ve already completed.
5. Long Customer Service Hours
Liberty Online has super-long customer service hours – 8am to 2am most days. That’s much better than competitors such as TaxSlayer, which stay open into the evening (Eastern time), but not long enough to help West Coast taxpayers preparing their returns after dinner.
1. No Free Filing Option
Liberty Online doesn’t have a free filing option. The cheapest plan sets you back $41.90, assuming one state return. That’s considerably more than FreeTaxUSA, whose cheapest plan costs $12.95, and infinitely more than TaxAct, whose bare-bones plan costs nothing.
2. Costs More Than eSmart Tax
Liberty Online strongly resembles eSmart Tax in look, feel, and function. That’s not entirely surprising, given that the same company owns them. What is surprising is the fact that most Liberty Online federal plans cost double the equivalent eSmart Tax plans (state returns cost about the same at both platforms). eSmart Tax customers enjoy the same perks as Liberty Online customers, including access to physical Liberty Tax branches, so the price discrepancy is puzzling.
The only difference that’s immediately obvious to me is Liberty Online’s interface. It’s cleaner in subtle ways and devoid (in my experience) of programming issues. eSmart Tax has a choppier interface and presented me with some vexing errors.
3. Low-Priced Plans Have Limited Capabilities
Liberty Online’s low-cost plans have very limited capabilities. The EZ plan, for instance, is only appropriate for 1040EZ filers, with no support for any major schedules. That’s a big drawback relative to budget-friendly filing services such as FreeTaxUSA, whose free plan supports most major forms and schedules.
4. Odd Default Selections for Bulleted Questions
Liberty Online’s multi-choice bullet lists come with a highlighted default selection. This would be convenient if the default choices so 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, and so on. The default choices for these questions were “No” and “Yes,” respectively.
In other words, the software assumed that we had lived apart for part or all of the year – certainly a possibility, but one that only a minority of married couples face. Had I been rushing through my return, I might have failed to notice and change these selections, creating problems down the line. While it’s important to take care at every step of the tax prep process, no matter how complicated your situation is, it’s also reasonable to ask your tax prep software to put the onus on filers with less common situations, rather than require the majority of filers (as in this case) to change questionable default bullet settings.
5. Super-Short Timeout Fuse
Liberty Online’s 10-minute timeout fuse is among the shortest of any tax prep software program I’ve ever used. At several points during the prep 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 “Learn More” content, don’t reset the timeout clock – so you can be logged out of your account while actively using it.
Roughly 50 years ago, everyone prepared their taxes by hand – either by themselves or with professional help. Today, millions of taxpayers complete their returns online, without ever talking to another human. Most of the time, and particularly in simple tax situations, this works just fine.
On the other hand, it’s nice to have the option to do things the old-fashioned way. Liberty Tax Online isn’t the only tax prep program that’s backed by a network of physical branches staffed by real, live humans. eSmart Tax, H&R Block, and Jackson Hewitt Online also have vast branch networks in reserve. If you value the ability to change course during the tax prep process, one of these options is calling your name.
For more options, check out our full list of Top-Rated Free Online Tax Preparation Services.