OnLine Taxes (OLT.com) is part of the Free File program, an alliance between tax software providers and the IRS that offers many taxpayers free tax filing options. It's web-based software that you can use to prepare federal tax returns, but you must qualify. With no price tag for many filers, it's one of the best values available.
The IRS has indicated that 70% of Americans are eligible to use Free File even with the qualifying restrictions.
About the Free File Alliance
Your income must be $72,000 or less in the 2020 tax year to qualify for the federal Free File Alliance program. This is the income you'll report on the tax return you file in 2021.
You can print out your tax forms on a link provided on the IRS's Free File website if you earn more than $72,000 in 2020, and they're free as well. You'll have to complete them on your own rather than with the help of software, but the site does offer some minimal guidance.
The IRS partners with the Free File Alliance software providers to offer this service. The providers are free to adjust their income requirements downward, and some do, but OLT adheres to the $72,000 figure. This is your adjusted gross income (AGI) after various deductions, not your overall gross income.
Your AGI must be at least $16,000 to qualify with OLT unless you're on active duty in the military.
Some providers also impose age and state restrictions, but OLT doesn't do that. And OLT includes a free state return if you qualify for the free federal return.
Navigation and User Interface
The software's interface consists of a series of data input worksheets. Users first have the option to select their tax return type by choosing from Form 1040, Form 1040NR, and Form 1040-SS.
The NR return is for nonresidents, and the SS return is for residents of the U.S. Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, and Puerto Rico to report self-employment income if they're not otherwise obligated to file a tax return.
The IRS changed things up with tax return forms beginning in 2018. Forms 1040EZ and 1040A are no longer available as of the 2018 tax year.
The software alerts users to the many changes resulting from 2018's Tax Cuts and Jobs Act (TCJA), and it also provides an icon with pertinent information throughout the filing. It gathers a range of personal and family information before beginning the tax-preparation process.
The Data Entry Portion
A variety of headlines and help notes provide guidance when you get into the data entry portion of the program. The process flow appears at the top of each screen, including income, deductions/credits, health care, other, and review.
Users can also go to the federal, state, file, view return, preferences, and account tabs at the top of the screen when information has been input. A box providing help for the page’s topic appears on the right side of each page.
Beginning with income, the software allows for a multitude of earnings data in numerous sections, including:
- Wages and salaries
- Interest and dividends
- Investment income
- Retirement and pension income
- Miscellaneous income
- Self-employment income
- Other investment income
- Gambling income
- Other income types
All of these include the necessary addendum forms that apply to each income type.
Deductions and Credits
The software moves to deductions and credits after income. The user begins with an outline in this section, including adjustments to income, deductions, qualified business income deductions, credits, payments, and refundable credits.
OLT accommodates claiming the earned income tax credit as of the 2020 tax year, the return you'd file in 2021. This credit can provide a good bit of tax relief to low-income families.
The Final Two Sections
The final two sections include healthcare and "other." You'll be required to provide information on your health plan for the year and information from your Form 1095-A in the first section. Users can choose from various forms in the final section. They're grouped by taxes, other taxes, and miscellaneous.
Each page displays the required payment or available refund in the top-right corner.
The software provides a review after all sections are completed. Users can return to double-check items. They can also navigate to suggested areas where additional information might be required.
Users can view PDF copies of their federal returns when they're satisfied with the information they've provided, and they can then move on to the state return.
The state return process follows the same procedures. The software walks the user through income, deductions and credits, healthcare, and other issues. It also provides a review of the state return and a PDF copy when it's completed.
OLT offers a variety of direct help options with its Free File version, which are expanded in the OLT Premium offering. Users can get contextual help from the Comprehensive Knowledge Base, FAQs, Federal Error Code Help page, and the OLT Top 10 Tax Tips page. OLT also provides help-line information for the IRS.
The free file OLT version also offers live chat and email responses seven days a week during tax season. Users who email questions will usually receive a response within 24 to 48 hours.
Overall Experience of the Software
OLT offers everything a user would expect in an online tax-preparation service. It also seems to go above and beyond the necessary data entry by requesting an additional layer of personal information along with a broadened array of addendum form options in the income and credits sections.
Taxpayers with just a little tax savvy might fare better than those who need a bit more guidance, however. Some users have reported that they were left to determine which corresponding form or schedule they were supposed to complete and submit with their returns. The help features will answer your questions but might take a little more time.
The OLT Paid Service
Beyond the Free File option, OLT also offers an attractive OLT Premium upgrade for only $7.95 per federal return, plus $7.95 for a state return. You can check out the OLT software for yourself at OnLine Taxes Free File Edition.