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Liberty Tax Online Review – State & Federal Tax Preparation

At a Glance
3.6 / 5
Rating

Start Your Taxes Now

Liberty Tax Online

  • CPA Involvement: Optional; available to lower-priced plans for $4.95 surcharge, free with higher-priced plans
  • Plans: EZ, $14.95 for 1040EZ situations only; Basic, $19.95 for moderately complex situations; Deluxe, $39.95 for Schedule C filers; Premium, $69.95 for most complex situations
  • State Returns IncludedNo; $29.95 to $35.95 for each state return
  • Pay With Your Refund: No
  • Audit Defense: Basic audit assistance (informational only) free for all users; advanced audit assistance available for a fee; no audit representation available
  • Mobile Capabilities: Limited (mobile-responsive website)

Liberty Tax Online made our list of Top-Rated Free Online Tax Preparation Services. And for good reason.

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: 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 $29.99 for each state. Compared to competitors with similar capabilities and features, such as TaxHub, 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 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.

1. EZ

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 $29.95 for each state return.

The EZ plan’s features include:

  • Free Chat, Phone & Email Support. Liberty Online offers free support by phone, chat, and email. Phone support and chat support is available during regular business hours (9am to 5pm Eastern, Monday through Friday). Emailed questions can take up to 24 hours to answer, 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, you’ll need to purchase or upgrade to Pro Tax Support (see below) or walk into a Liberty Tax office.
  • 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.
  • Prior Year Return Filing. If you failed to file a prior year return, you can do so using the appropriate Liberty Tax package at the headline price. Be aware that you’ll forfeit any refund to which you may have been entitled after three years.
  • Amended Tax Returns. If you need to make a change to an existing tax return, perhaps because of an erroneous entry or missing form, 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 here.
  • Affordable Care Act Support. This plan includes full support for Affordable Care Act documentation, including Exemption and Hardship forms. Be aware that the Affordable Care Act remains in flux with the elimination of the tax penalty for no health insurance, known as the individual mandate. Check with the IRS for up-to-date guidance about your obligations.
  • 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.

2. Basic

Liberty Online’s Basic plan charges $24.95 for your federal return and $35.95 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.
  • Health Savings Accounts. If you have a health savings account to supplement a high-deductible health insurance plan, you may qualify for special tax deductions. The Basic plan supports the requisite forms.
  • 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).

3. Deluxe

The Deluxe plan charges $44.95 for your federal return and $35.95 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.

4. Premium

The Premium plan charges $69.95 for your federal return and $35.95 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 (including the sale of your home) 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.

Additional Features

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.

 

Office Appointments & 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 end up completing 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 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, 2018, Liberty Tax offers tax refund loans (known as Easy Advance) for qualifying filers. Loan principals range up to $3,250 for filers with expected refunds less fees greater than $5,095. Lesser amounts are available to filers expecting smaller refunds.Funds are typically dispersed within 24 hours of the filer’s federal return acceptance.

Easy Advance loans are useful for early filers who don’t want to wait for their tax 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.

Advantages

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 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.”

2. 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.

3. 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.

4. Generous Refund Advance Loan
Liberty’s Easy Advance refund advance loan is unusually generous by online tax prep standards: up to $3,250 with an expected refund less fees greater than $5,095. The loan comes through within 24 hours, making it a great payday loan alternative for filers who need fast cash.

Disadvantages

1. No Free Filing Option
Liberty Online doesn’t have a free filing option. The cheapest plan sets you back $44.90, assuming one state return. That’s considerably more than both FreeTaxUSA and TaxAct.

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 about 50% more than the equivalent eSmart Tax plans. (State returns are comparably priced). 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 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.

6. Short 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 on evenings and weekends, when they’re not at work.

What’s particularly frustrating about this is that Liberty Online’s customer support availability used to be expansive: 8am to 2am, Eastern Time, most days. TurboTax and H&R Block both still have longer live-contact windows.

Final Word

Not too long 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.

Verdict
3.6 / 5
Rating

Start Your Taxes Now

Liberty Tax Online

Liberty Tax Online is ideal for filers who value a flexible preparation process, multiple layers of support, and the option to fall back on in-person preparation if necessary. It’s not ideal for people with very tight budgets (due to the lack of free option and poor pricing relative to competitors).

Great user interface, flexible movement within returns, ample refund advance, and physical branch access are great. High cost relative to the competition (including the very similar eSmart Tax), lack of free option, and super-short timeout fuse all hurt. All in all, not a bad option for people who want an in-person fallback.

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Brian Martucci
Brian Martucci writes about frugal living, entrepreneurship, and innovative ideas. When he’s not interviewing small business owners or investigating time- and money-saving strategies for Money Crashers readers, he’s probably out exploring a new trail or sampling a novel cuisine. Find him on Twitter @Brian_Martucci.

Comments Disclosure: The below responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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