Liberty Tax has been in business since 1997, and currently has 4,000+ locations throughout the U.S. and Canada. Like H&R Block and Jackson Hewitt, it offers DIY online tax preparation with the option to obtain additional support and guidance from its financial professionals. We reviewed Liberty Tax Online Basic, which is designed for individuals with W-2 and interest/ordinary income who want to itemize deductions. You can also enter your health savings account information on the site. Liberty’s midrange offering performed well for us, though its user experience and help tools could be improved. Consider using Editors’ Choice TurboTax Deluxe instead for all your tax filing needs.
Pricing and Versions
There are four versions of Liberty Tax Online. EZ ($14.95 federal, $29.99 state) supports the 1040EZ and the Schedule B (interest and ordinary income). Basic ($24.95 federal, $35.95 state), the version we reviewed, adds the Schedule A (itemized deductions) and Form 8853 (health savings accounts). Deluxe ($44.95 federal, $35.95 state) also supports the Schedule C (self-employment income) and depreciation. And Premium ($69.95 federal, $35.95 state) covers everything, including rental, real estate, and farm income, as well as capital gains/losses.
Personal tax preparation websites work much like their desktop predecessors, in that they break down the complicated IRS forms and schedules into much smaller chunks. You don’t see those official documents until you finish and print them out, though some sites provide you with sneak previews. Rather, these sites take on the digital persona of an in-office tax preparer and ask you a lengthy series of questions about your tax-related situations.
They do this in one—or both—of two ways. They all display lists of the income, deduction, and credit items that the IRS wants to know about, like your W-2, mortgage interest deduction, and child care credit. You select the topics that apply to you one at a time and work your way through multi-step wizards.
Some sites offer you another option; they provide one giant wizard that visits every possible topic. You provide answers in a variety of ways, such as by entering data in fields, choosing options from drop-down lists, or clicking buttons. The sites do all the necessary calculations and deposit your answers on the correct lines on the correct, official forms. Relevant data is moved over to any state returns you must file.
Along the way, you can access a variety of help tools, including searchable article databases, context-sensitive Q&As, hyperlinked explanations, and chat, phone, and email support. Occasionally they direct you to IRS publications, but these sites’ tax experts have written and rewritten simplified versions of the agency’s complex language to help you make sense of everything. After you finish entering information, they run your answers through a review process, and alert you of any errors or omissions before you e-file and/or print your completed return.
There are tremendous differences among these sites in terms of the user experience they offer, the tax situations they support, and the quality, quantity, and accessibility of help they provide.
A Straightforward Approach
From start to finish, Liberty Tax Online Basic makes it clear what information it requires. It takes care of housekeeping tasks first, helping you create a username and password, setting up security questions, and importing your 2016 return from Liberty or a competitor.
Then, it’s on to personal contact details, standard pre-prep questions, and information about your 2017 income and residences. The final step is to provide your filing status and information about any dependents. In contrast to sites like TurboTax Deluxe that go out of their way to add a little friendliness, Liberty Tax takes a straightforward, facts-only approach.
Once you edit and/or approve your personal information summary, it’s on to the meat of the site: entering your tax-related information. Liberty Tax Online Basic does not offer a comprehensive, all-inclusive wizard like TurboTax Deluxe does; instead, you select the topics that apply to you from lists of options. It displays all possible tax topics no matter what version you use, but it does notify you if you stray into areas that require more premium versions.
In the Income section, for example, it presents you with a variety of income types, divided into categories: Employment, Investments, Retirement, Business and Rental, and Other Income. A column to the right displays the total of any data you entered for that item. To the right, you either see an Add or Edit button, depending on if you entered anything in the section. If you click the Add button next to Wages, salaries, and tips, for example, the next screen provides a list of options for your W-2. You can provide the data manually on a digital W-2, import it from ADP or Equifax, or indicate that you haven’t yet received the form.
When you finish the income section, you move on to deductions and credits, health insurance, and some miscellaneous (but important) tax-related topics. Liberty Tax Online Basic moves relevant information into any state return you must file and completes its review of your return before you pay your fees and get ready to file.
Liberty Tax offers an excellent review process that works better than most competitors. It found four errors on our return. When we clicked to see the first one, it took us directly to the offending page. After we fixed that first omission, we could either return to the full list of errors or proceed to the next one. We chose the latter and it neatly walked us through the rest. The site then displayed a pie chart illustrating our audit risk, with an explanation of the score. Bravo.
A Smart Feature
Liberty Tax Online Basic’s Credits section offers a unique feature that we’ve never seen on a personal tax preparation website. The home page for this section lists all IRS credits that are covered by the site and notably uses the data you already entered to tailor the experience. For example, the column to the right of Earned Income Credit on our return didn’t contain a dollar amount (or, $0), as usual. Instead, it said “Not Qualified,” with a hyperlinked “Why?”
When we clicked on the link, it explained that our investment income was too high to qualify for the EIC. And because we had indicated on an earlier screen that we had college-related expenses, the middle column read “Information Required” next to the Form 1098-T entry. Instead of saying “Add” or “Review,” the column to the right read, “Investigate,” with a big red hand pointing toward it.
There’s nothing difficult about following Liberty Tax Online Basic’s navigation structure. A tabbed toolbar at the top of the screen divides the site into four sections: Personal Information, Federal, State, and Finish. When you click on one, a menu opens below it with the relevant subsections. You can access these areas at will, but it’s safer to just follow the site’s sequential order. As you go through each section, you use the Back and Next buttons to advance or move to the previous screen. Unfortunately, there’s no comprehensive topic-and-form outline like TaxAct Online Plus offers, so you can’t see the site’s topics in their entirety.
TurboTax Deluxe sets the bar high for online tax preparation when it comes to the user experience. Liberty Tax Online Basic’s interface might have been leading edge several years ago, but now it looks a little dated. The site uses the entire screen and then some, yet there’s often a lot of white space, and the text and buttons on the screen are on the small side. There are very few graphics as well and the layout isn’t compelling.
A persistent pane on the right-hand side breaks up the monotony. It’s filled with colorful rectangular buttons that are used for both navigation and support resources. The top right has a Save & Quit button and one that alternates between Home and Uprade. Below that is a real-time total of your refund (or funds due). If you want to find a Liberty Tax Office, you click that button. Everything below that takes you to housekeeping screens or a help section. Links include Support (opens a screen containing options), Chat Live, My Account, Common Questions, My Documents (anything you uploaded), and My Forms (a list of all forms and schedules you visited). Click on any of the forms to see a copy of the official IRS document.
Basic Help Options
Liberty Tax could take a page from when it comes to the on-site help it offers. You can chat with or send email questions to support specialists. The Common Questions button on the right often displays context-sensitive questions and answers (especially on section home pages), but sometimes it’s blank. Click on it, though, and you can enter a search word or phrase to get clearly-written explanations. In fact, it displays a list of possible matches as soon as you start typing.
But the interview pages themselves don’t contain any hyperlinked terms that open guidance windows. There are no deeper explanations within them that might keep someone from needing to visit the help pane. This is an unfortunate shortcoming since Liberty Tax Online Basic certainly has that information available. Enhancing the help section would improve Liberty Tax’s usability and help speed up the process.
Middle of the Road
Liberty Tax Online Basic falls about in the middle of the sites we reviewed. It would rank higher with better-integrated help and a more aesthetically-pleasing user experience. If you’ve used it before and liked it, there’s no reason to change—unless your tax return is going to suddenly get more complex this year. Then, TurboTax Deluxe, with its more engaging user interface and skillfully-employed guidance system, is a better option. You pay more, but it can be risky to pinch pennies when dealing with forms that require the utmost accuracy.