Liberty Tax Service Review
If you ever drive around your town near tax time, you’re probably familiar with Liberty Tax Service. These franchised tax preparation offices are known for hiring young men and women to stand outside their offices dressed as the Statue of Liberty or Uncle Sam, waving signs intended to lure you into their offices. The company opened their first U.S. office in 1998 and have since expanded to nearly 5000 offices nationwide. Liberty Tax Service is said to provide a great business opportunity for those who are interested in buying a franchise, and they offer both in-office and online tax preparation services. If you’d like to have your taxes prepared for you, they have thousands of offices to help. If you would prefer to do the work yourself online, they can help you with that, too, for a modest fee. An added bonus to Liberty Tax Service is that you can get the help from real people should you find yourself having problems with their online software. As their in-person tax preparation services are similar to those offered by other companies, we’ll offer a Liberty Tax Service review of their online software.
Liberty Tax Service Overview
As with most tax preparation software, Liberty Tax Service offers multiple versions of the product in order to suit the various needs of their customers.
The free edition of Liberty Tax Service is a basic, no-frills version intended to be used by taxpayers who would ordinarily file a 1040 EZ form. You won’t be able to claim deductions or business expenses using this version, but it does include:
Affordable Care Act forms
Free tech support via e-mail and chat
Access to prior years’ returns
Download of W2 forms
Child and Dependent Care
Earned Income Credit
As with most similar software products, there is an additional charge for filing state tax returns.
Liberty Tax Service Basic Edition
The Liberty Tax Service Basic Edition includes everything in the Free Edition, along with the ability to itemize deductions, handle health savings accounts, and the ability to handle self-employment income and business expenses. The cost for this version was most recently $19. As with the free version, state tax returns include an additional charge.
Liberty Tax Service Deluxe Edition
The Liberty Tax Service Deluxe Edition includes everything listed above, but is tailored for homeowners and investors. Those who purchase this version of the software will be able to file returns that include interest income, sole proprietor income, home office deductions, and depreciation on business equipment. The cost for this version of Liberty Tax Service was most recently $29; state returns include an additional fee.
Liberty Tax Service Premium Edition
The Liberty Tax Service Premium Edition includes everything listed above, but is best used by those who own small businesses. This version of the software handles rental income, S Corporations, gains, profit and loss, the sale of a home, and sales of business assets. The price for this version was most recently $39, with an additional fee for state tax returns. This version of the Liberty Tax Service software also comes with audit assistance; if you are audited, Liberty Tax Service will correspond with the IRS on your behalf.
State returns were recently priced at $39, regardless of which version of the software you use.
Liberty Tax Service Pros and Cons
The online Liberty Tax Service is easy to use; you simply create an account, log in and choose your version.
The service is online, so there’s nothing to install. Many taxpayers will be able to use the free version. Liberty Tax Service has thousands of offices nationwide, so if you get into a bind, you can talk to someone in person for help. Additional support is available online.
On the downside, the software is online. You’ll have to have an active Internet connection to use it. Many homeowners and people with small businesses will need to use the paid versions of the software. In addition, the fee of $39 for filing a state return is somewhat high when compared with other comparable pieces of software.
The biggest problem taxpayers may face when using Liberty Tax Service or any other software isn’t a problem with the software itself. It’s something to do with tax preparation in general. Most tax software is quite good at handling basic deductions, but the U.S. tax code is incredibly complex, running tens of thousands of pages. The code has numerous changes every year. While most tax software keeps up with the changes, it can’t know everything. Few taxpayers realize that there are hundreds of ways to save money on taxes by way of legal deductions that most off-the-shelf tax preparation software knows nothing about. That’s fine, if you don’t mind paying hundreds, or even thousands of dollars in extra taxes every year. Most people don’t want to do that, but don’t realize that they are paying too much in taxes.
Tax software isn’t enough. You need a tax preparation strategy that will help you save the most that you can legally save on your taxes. You could buy books that help you do that, but books become obsolete as soon as they’re printed. That’s because the changes in the tax code are so numerous. What you need instead is a way of continually keeping up with the changes and deductions that will help you save the most money that you legally can. In some cases, that could be thousands of dollars, each and every year.
There are ways of staying on top of the changes and keeping track of how they affect you, so that you can save money, not just this year or next, but every year. For that, you don’t want automated software, you want help from someone who knows how the system works, keeps up with the changes, and can share that with you, not in legalese, but in plain English that makes sense.
You’re not going to get that from Liberty Tax Service or other tax preparation software.