Buying guide for Best Liberty Tax tax preparation software
Tax time is never much fun. Preparing tax returns is about as popular as having a tooth pulled with no anesthetic. And until the rise of the personal computer, there were only two choices for preparing your tax returns: do it yourself with arduous paper forms or hire an accountant or tax preparer to do it for you. That’s why tax preparation software like that offered by Liberty Tax became so popular just over two decades ago.
Tax preparation software is now the primary way Americans file their tax returns each year. The software, like that offered by Liberty Tax, makes it possible to fill out and submit tax returns with much less effort and much more accuracy.
But what makes Liberty Tax software a better choice than other tax preparation software? Read on for our buying guide to Liberty Tax tax preparation software in which we describe its benefits and go over key details to help you choose the right version for your needs. We’ve highlighted a few of our favorites too.
Key considerations
About Liberty Tax
Liberty Tax tax preparation software is a straightforward product for preparing annual tax returns, but the company’s history is unique compared to other providers of tax return software like TurboTax.
It’s an international company. In 1997, Liberty Tax Service was started in Canada after acquiring U&R Tax Depot, a Canadian tax franchisor. A year later, Liberty Tax Service opened five offices in the United States.
It started as a brick-and-mortar service. Like its competitor, H&R Block, Liberty Tax initially offered tax preparation services in person in its offices and operated under a franchise model. In-person service is still a core feature of its business model, and the company boasts over 3,000 offices in the U.S. and Canada.
Its software is backed up by live support. Unlike its competitor Intuit, maker of TurboTax, a software-based tax preparation service with additional online support, Liberty Tax has an established support presence. Filers can chat with someone online if they have questions, and they can go into a Liberty Tax office to work directly with a tax preparer if needed.
Choosing the right software
Liberty Tax, like its competitors, offers at least three software packages. These address a range of tax questions and, depending on price, have worksheets and forms that help filers create the most accurate return. We go over the prices below, but for now let’s take a look at which software package best matches common tax situations.
Basic: For those living the Friends lifestyle right now — your job’s a joke, you’re broke, your love life’s DOA — Liberty Tax’s Basic tax preparation software is likely to be the best bet. You could file a simple return for free instead, but walking through the return will help you to maximize your refund. College graduates may not know that they can write off the interest paid on their federal student loans. Others might find out that they are due an Earned Income Tax Credit.
Deluxe: Moving up financially brings a new level of complexity to your tax situation. For example, if you did gig work to supplement your income last year, you might owe taxes on that extra money you earned. If you bought a house — a major financial shift — this factors into your income tax as well. You could be due a big tax break on the interest paid. And if you sold a house, there could be a tax break for you. Liberty Tax Deluxe tax preparation software helps you decide whether to itemize your return or take the standard deduction, and it has the right forms and worksheets for homeowners to fill out so that they get the biggest break possible on their taxes.
Premium: If you made the leap to running your own business, whether you’re self-employed or the owner of a startup or small business, Liberty Tax designed this tax preparation software package for you. Again, it contains worksheets and forms specifically for your tax situation. The Premium tier also includes forms and worksheets for investors who need to accurately report their earnings from a variety of investment areas.
Always download the latest updates to Liberty Tax software before starting a tax prep session.
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Features
Liberty Tax tax preparation software has key features that make it easy to set up and use so you can file your taxes as quickly and (hopefully) painlessly as possible.
Free data transfer
If you filed your taxes using a competitor’s tax preparation software last year, Liberty Tax’s tax preparation software can transfer that data to its interface at no additional cost.
Free audit assistance
One of the biggest benefits of using Liberty Tax is its audit assistance, included with its software at no additional cost. Other tax preparation software providers charge extra for this service. If an audit or inquiry about your tax filing occurs, a Liberty Tax professional will advise you so that you can prepare for the audit or respond to the inquiry.
Free double-check
Participating brick-and-mortar Liberty Tax locations can review your online tax return before you file it to ensure that it is accurate at no additional cost.
Online-to-office transition
If you get stuck or your schedule is too full to finish filing your taxes online, you can transfer the data from your unfinished Liberty Tax tax preparation session to a Liberty Tax professional who will help you finish the return.
Tax advice
For next year’s return, Liberty Tax software offers helpful advice at the end of the filing process to help users determine ahead of time whether they need to adjust their tax withholding, pay taxes in advance, or take other preparatory steps so that they get the most accurate return when it’s time to file again.
Did you Know?
If you gather all the necessary documents and receipts before starting your tax preparation session, you can be finished in as little as an hour.
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Accessories
Tax preparation software is just one piece of the tax return pie. You’ll have a much better experience if you organize all your materials before starting your tax return, and these tools may help.
Expandable file: Smead All-In-One Income Tax Organizer
Use this expandable file to sort your paper records and receipts into common deduction areas, such as vehicles, charitable donations, expenses, and income.
Organizer envelopes: PocketCPA Receipt Organizer & Expense Envelopes
Quickly separate receipts and record expenses for the year in these 12 envelopes, a great organizing tool for small business owners and independent contractors.
Planner: Clever Fox Bi-Weekly Budget Planner
Plan your household expenses and track spending in this handy planning notebook. Includes colorful stickers for highlighting entries, and the leather cover comes in eight colors.
File box: Bankers Box File Box
Store years of tax returns and records in this climate-resistant heavy-duty plastic storage container that holds either legal- or letter-size folders.
Shredder: Bonsaii Cross-Cut Paper Shredder
Quickly get rid of unneeded papers that have personal information on them by feeding six documents at a time through this small but mighty shredder. The window shows you when the 3.4-gallon basket is full.
A tax return is only as accurate as the information you put into it. Have all your documents and receipts on hand before preparing your tax return.
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Pricing
The prices listed below are for federal tax return filing software; additional Liberty Tax products, such as state returns, typically cost extra.
Inexpensive: Liberty Tax Basic, at $45, offers Forms 1040 and 8854 as well as Schedule A and B worksheets. It’s good for filers who simply need to file an accurate return and don’t have complicated financial issues like a real estate purchase, investments, or a business.
Mid-range: Liberty Tax Deluxe, at $65, was developed with the new homeowner in mind. It has forms and worksheets for life’s more complex issues like child care, home ownership, investments, and college expenses or loan repayments.
Expensive: Liberty Tax Premium, at $85, is aimed at self-employed filers and those who have less common forms of income. It includes all major forms and schedules needed for business owners and investors to file accurate returns.
Tips
- Use tax prep software all year. Liberty Tax tax preparation software can be used at any time of year, both to file taxes in the spring and to plan for next year’s return.
- Use tax prep software to estimate your taxes. You can use it to check well before the IRS filing deadline to determine how much you’ll owe or how much of a refund to expect.
- File taxes online. Filing your taxes online is more secure and more accurate than filing paper returns.
- Use tax prep software to check your work. You can double-check all figures that you entered manually into tax preparation software before completing and filing your return. The pre-filing check of your return by Liberty Tax software can catch many common mistakes that individuals make when filling out their return or worksheets.
FAQ
Q. I bought a house last year. Will I be able to work out the complexities of the purchase using Liberty Tax software?
A. Opt for the Liberty Tax Deluxe solution from its range of tax preparation software products. This mid-range software addresses more complex financial activities like buying or selling a home. It provides additional advice and information as well as the requisite forms and worksheets that apply to reporting a home purchase.
Q. If a mistake is made on my Liberty Tax-prepared tax return and I have to pay a penalty, will that penalty affect my credit score? Should I get a higher-priced Liberty Tax software product to prevent this?
A. In 2018, all three major U.S. credit bureaus — Equifax, Experian, and TransUnion — removed tax liens (debts owed to the IRS) from credit reports, due to unspecified problems with accuracy about those liens. That means your credit score won’t be affected by what you owe to the IRS. (Keep in mind that this may not apply to any state taxes owed.) Whether to get a higher-priced Liberty Tax tax preparation software product or stick with a lower-priced one is up to you. However, the more complex your tax situation, the better it may be to upgrade your product to Deluxe or Premium. Also keep in mind that Liberty Tax offers support as part of its preparation software package if you’re audited by the IRS.
Q. My tax returns aren’t very complex right now. Do I really need to pay for tax prep software?
A. All tax preparation software providers, including Liberty Tax (and the IRS itself), offer a free option for preparing your tax returns. This allows users to fill out a form 1040 and report their income. Filing online may cost extra, and if you live in a state where you must file state taxes, you’ll still need to file a state return, which is not offered for free.
Q. What if I filed last year’s taxes with a competitor? Can I transfer that data into the Liberty Tax tax preparation software?
A. Yes. Liberty Tax software is set up to allow the importing of data from competitors’ programs at no additional cost. This can knock off 15 to 30 minutes of time because you won’t have to hunt for last year’s W-2 form.
