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Ask Slashdot: Can You Trust Online Tax Software?
An anonymous reader writes "TurboTax from Intuit and H&R Block's own tax package have been perennial mainstays for U.S. citizens trying to use software to figure out just how much they owe the country, without reading the tens of thousands of pages of IRS forms guidance. With tax season just around the corner, the new online platforms from both providers raise an interesting question: can you trust your return information any more or less to an online platform than you do to the equivalent software on your computer?"
...whose name you know. More than once it incorrectly calculated taxes owed, leading both the Fed and State governments to send me a check, saying, "hey, you way overpaid your taxes."
I'm done with tax software. It's back to a human accountant. Her first consultation with us turned up a $3,400 deduction we had missed a couple of years back. That alone pays for a few years of returns and advice.
I do all my taxes on monkeybagel.com. Monkeybagels will do your taxes in about an hour! Tax-doing monkeybagels!
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
No, probably not.
Given the recent revelations about NSA spying, I refuse to use these services. The risk is simply too high that the government might see my tax returns.
Been doing it for years with government provided software.
Mind you it doesn't say 'cloud' every 5 words, but it submits it all online and even auto fills in a lot of your data from government databases.
Not sure how long it has been available for but many many years without incident.
Oh and its free.
Come on, we all know that if you use online tax software then the NSA can get access to your tax information! They spent BILLIONS of dollars in sophisticated backdoor technology so they can read all of our tax returns!
AntiFA: An abbreviation for Anti First Amendment.
TRUST and TAX... no possible solution found.
With local TurboTax, you're just running closed source software. However, you can quarantine it such that it is unable to transmit anything over the tubes, and print the result, limiting the worst case scenario to incorrectly filled out forms.
With online tax prep, you're sending all your details to some online server somewhere, and hoping that they only do the computations and wipe all the data. But they won't. It'll be stored so next year it'll be "half filled in already for your convenience". If you value your financial privacy, you would not use an online tax service.
I don't keep any tax data on my PC for security reasons. Had an iMac a while ago that blew up and it was a pain to get the drive out before trashing the thing. Easier just to keep the data in the tax cloud.
A friend of mine made an interesting point to me a few years ago, and caused me to switch from online versions to the local ones you install on your system. With the local versions, you get to keep the data files. The online versions tend to purge from year-to-year, or at least after a couple years. If you want to refer to an older return, be it because you are being audited, or just to help figure out something on this year's forms, you'll have everything (worksheets, forms, etc.) with the local version, assuming you back up the software and data files. Online, you probably just have a PDF of whatever finally got submitted to the IRS, and that's it.
So yeah, online versions work, but local ones give you more control.
For attackers trying to collect personal information -- for identity theft, for dirt, for spying -- can you imagine a better target than servers holding everyone's tax returns?
Remember, security needs to make an attack more costly than the data is worth to the attacker. What responsibility / liability do vendors have regarding security for these servers? A breach may not cost them very much.
I file using paper.
I don't think that word means what you think it means. Reliable is probably what you're after.
For security and privacy, I'd say it's about equal. I don't recall any breaches of that data turning up, and if someone had breached it I'd think news would've turned up. That kind of breach is the kind the perps or someone in the know couldn't resist bragging about.
For legal compliance purposes, you have to trust the on-line services less. The IRS puts the obligation to have the information on you, regardless of who you used to prepare your return. You need to make sure you've got copies of both the return and all the supporting information where you can still get at them if the on-line service isn't available, and you need either the software to access the saved information or have the information in a form you can use directly (eg. printable PDFs). Remember when saving things that it doesn't help to just have the final form if the IRS wants you to justify how you got the numbers on the form.
NB: this applies to conventional tax software installed locally too. It doesn't help to have the data files if you've bought a new computer that doesn't have that year's tax software on it anymore and you can't reinstall it. I make it a point to keep one PDF copy of the return itself and one copy of the return including all worksheets and supporting data. Plus I print a copy of the full return and worksheets and file it with the hardcopy of all my documentation (W2s, 1099s, receipts etc.) so I have it if I lose the electronic copies.
If you know the Tax Code ok, or you actually have simple taxes*, software works fine.
You have to be somewhat familiar with the tax code because there's no easy way for us to translate tax law into simple English, so it's very easy for people to misinterpret one of the numerous questions the software asks. If you do that you a) don't get a deduction you deserve or b) do take a deduction and get screwed if you get audited. I'm a bit out-of-practice, but the student debt/tuition credit/HOPE credit/etc. nexus of Feds giving people tax breaks for paying for college in particular is very easy to screw up.
*Everyone I have ever met says they have simple taxes. Then they drop the annuity on the table and call it a W2. If you have any income besides interest on a bank account or a W2 you do not have a tax form H and R Block defines as "simple." You really need to read the paperwork that you are sent because many people take a chintzy $350 job helping their cousin cater a banquet, get a 1099, and are then surprised that I am legally required to put that on a Schedule SE and a Schedule C or C-EZ attached to a full 1040, and by the time you pay me for all those forms AND the self-employment tax you're losing money. The really big numbers at the top will tell you exactly what form it is. They'll be 1098, 1099, or W2.
I can no longer login to my Intuit Turbo Tax online account, even after providing my SSN online as an 'added security measure'. I really do not want to be doing entering my SSN on any site on the Internet. Now they are asking for me to e-mail a scanned image of my driver's license. I'm not going to do that. The online chat help that they have uses a URL with a registered domain in some eastern european country. Ok enough. I'm done with Intuit. I'll just have to do my taxes on my own from now on.
I've been using TaxAct.com for 4+ years for personal taxes and it is fantastic. Super cheap and reliable.. All information from previous years is stored on their servers so each year it gets easier to file. Unlike healthcare.gov, I trust their site, it works, is easy to use, cheaper than anything else, and they didn't the taxpayers a half billion dollars on the rollout.
Seems that they might know just a little bit more than doing it online. Honestly, I would trust software over human accountants better in a sense because if done right, it is able to go by the tens of thousands of tax codes rather than a human which probably won't be able to know a quarter of that. Either way, this is probably the last year anyone will be getting anything back from their taxes. In fact, I'm surprised that the return is not taxed as income. hahaha But next year will be a year to talk to real accountants about finances because if anyone skips on an accountant, they might lose a significant amount of money in contrast to the previous years. Just be sure not to be a registered republican / libertarian if you plan on submitting your taxes *cough cough*
I usually hate to do my taxes.
But one year I decided to use a spreadsheet to check some numbers. Next thing you know, I was building a software model of my Form 1040 - line by line. Took me maybe two or three hours - but they were *fun* hours, because I was programming - not doing my taxes.
Finished the model and used it to evaluate several different scenarios. Selected the one that gave me the best return, and filed.
Been doing that ever since.
Anyone who pays for tax software is probably an idiot.
~childo
I have heard circumstances like this multiple times. It really bothers me that we have invented a tax code that is on par with the game "go" as far as its ability to be computerized. There are extremely talented individuals making a living interpreting our tax code. Those same people could be doing something far more useful to society than they are now, but we have created an entire industry that sucks them away from more useful endeavors by cobbling together a tax code that is a mashup of bribes to interest groups, bribes to voters, authoritarian interference with our individual lives, and a glass ceiling protecting the one percent. If any highschool graduate can't just sit down with a calculator and pay the *exact* amount owed, we have done something wrong.
refactor the law, its bloated, confusing and unmaintainable.
It's almost half a year till you have to submit taxes (in the USA anyway.)
... since almost inevitably the final result is e-filed, either by you or by your tax preparer.
YMMV, but a couple of things came to my mind.
First, if you're asking this question it's really likely that doing your own taxes isn't saving you anything. An accountant or similar preparer can do them faster, and almost always finds savings that you won't. Plus, at least in Canada, if the tax people come a knockin' it will be your preparer who deals with them, not you.
Second, if you're one of those people with one tax slip from your employer, and two or three deductible receipts for charities or medical expenses, or if you're the typical student, you should be able to fill out a paper return in about ten minutes, or do it on-line or on your own PC with free software and mail it in. It's dumb to pay HR Block money to do this. The CRA even has a list of companies you can check out, almost all of whom offer free choices for simple returns.
Third, as with anything that could wind up putting you in jail, taxes are one of those things where I like to keep complete paper copies of the entire file. Somehow having it printed and/or copied on paper feels more secure than trusting bits somewhere on the Internet.
Three Squirrels
You guys are still paying taxes? Suckers...
Last year, I declared my basement the Sovereign Kingdom of Ratzistan, and myself the Lord High Exalted Mystic Ruler for Life. Not only will I not be paying taxes any more, but I've just sent the US Government a bill for $100,000 for the easement of my front door where they insist on putting their so-called "mail" and "restraining orders" and such. I talked to a lawyer that I met on Craig's List and he says I got a great case and instead of taking a percentage, he charged me a flat fee of $1200 to set me up with all the proper documents. They look really nice, too with a gold foil trim and big official seal.
You laugh now, but when I get that $100,000 (well, it'll be $98,800, after I pay back the nice Italian guy at the bar who lent me the $1200 for the lawyer), I'm gonna buy myself a sweet gaming rig and drop the rest on the Broncos to win the Super Bowl. Then we'll see who's laughing.
You are welcome on my lawn.
This was sort-of my understanding of the big popular tax software also,,,,, that if you use the online services or not, the package is still only going to function for one year. And it's no accident.
A friend spent a number of hours over a few weeks entering tax info into a (big-well-known) program they had purchased the previous tax-year, figuring they'd just print it out and mail everything in, because they couldn't e-file it because it wasn't a current version,,,, and guess what? "Sorry, you need an upgrade to print. Click here to go to our website" -- or something to that effect.
I have never found it challenging to file my taxes using just the information from IRS.gov. IRS documents usually explain things very well.
Simon's Rock College
Retired accountant here. I use Turbo Tax.
For two years I computed our taxes using Turbo Tax and manually. They come out the same, but it takes me a whole day to crank it out manually, and I can do Turbo tax is a few hours.
We have messy taxes, though, with a rental home for an elderly relative and several different types of investments.
"tens of thousands of pages of IRS forms guidance" - I believe it! Besides professional tax preparers, does anyone want the tax laws to be so complicated?
Congress should start over from scratch. For taxes for 2015 and later, they should start with no income tax rules. Then add taxes, exemptions and deductions only on items that Congress specifically votes for.
Have a limit of 1,000 rules, or 10,000 words, in the tax code. If Congress reaches the 1,000 rule limit, and they want to add another rule, they must first remove an existing rule.
We used online TurboTax for the 2011 tax return. At the end, it emailed us a complete PDF of our state and federal returns, with a header saying that they would be filed online on a specific day. Then it failed to file either one. We only found out a year later when the IRS and the state tax board sent us letters asking why we didn't file our taxes. When we called the TurboTax people, they claimed that we had never had any kind of account with them, even though we showed them the email. We had to pay penalties and interest because of their bad software.
So privacy is not the only reason to avoid online tax software. Sometimes it just loses all your information.
One version of TurboTax a couple of years ago transmitted every entry I did on my machine in this software package to some outside entity.
Add a number - firewall comes up asking for permission to connect. Move around - same thing.
May have been some debugging feature but who the hell needs to see every move I do in some debug-log, if this was the case.
Do I trust the Co? Sure no, their attempts to tie you in and milk $$'s out of you are disgusting.
"Hey you not very bright for not downloading the forms and doing it by hand/yourself to make sure"
Yes, there is a lot of tax code. No question there. The other half of that is it doesn't apply to 99% of the US population. Most people have relatively simple returns and software is a reasonably effective way to calculate one's taxes or use as a check after doing them by hand. Most people have a W2 or two, a 1099INT, and a few charitable donations. This isn't difficult to do by hand. And if you make less than 48K, you get H&Rs software free of charge for federal filing. If you own a business or have a lot of investments, then yes, paying a professional makes a lot of sense.
I can't even get the software to file my taxes correctly for two states and you want me to trust that the data that it can't even calculate right is going to keep it secure? I think not.
I'm more concerned about the taxers.
Not sure I trust them to neither waste the money nor do wrong with it.
"can you trust your return information any more or less to an online platform than you do to the equivalent software on your computer?"
Well, the information on your tax return will eventually be sent to the Internal Revenue Service. You may not know this, but the IRS is part of the same United States Federal Government that also has the NSA spying on you. Once the IRS has the information, you are hosed.
I would not advise shorting the IRS. That is a very bad idea. They can be downright chippy about it. Protesting the loss of privacy is just going to get you rubber hoses.
The problem is not online systems, it is the the US Government.
In the land of the blind, the one-eyed man is king.
TurboTax or H&R? Turbo Tax all the way .... why?
I filled out turbo tax one year, but did not submit, to see what the return would be. Went over to H&R Block and there was a $5,000 difference ... why? The stupid H&R Block software refused to allow my children to be listed. So we didn't get that "tax break" per child. So we basically paid the idiots $350, told them not to file, and finished filing with Turbo Tax.
After that year ... F U H&R Block.
So I started using TaxSlayer.com because they offer cheap $9.95 federal filing and a discounted state filing and supported multi-state filing. Everything was great and it was a nice web interface, detailed access to the actual forms and good questions asked.
I am familiar with the tax forms enough to do my own semi-complicated taxes for a full time job and a side-business sole-proprietorship that includes complex self-employment schedules and amortization and appreciation of equipment purchases, entertainment expenses, and business usage of your home and car. I would do my own taxes on a custom mulit-sheet and pivot-driven Excel spreadsheet that I created and updated to comply with each year's forms and then fill out my own PDF forms before I would go online to transfer my information to allow me to do e-file. I filed my forms through the online service but afterwards I noticed that a figure wasn't correct on the PDF produced by the online service.
I noticed that my numbers for the carry-over yearly loss of income for my business would not add-up between my own forms and TaxSlayer.com forms. I investigated my spreadsheet, re-checked my PDFs and the instructions, and re-calculated the values and always came up with my own numbers being correct but the online numbers being wrong. After calling IRS to clarify the situation and also TaxSlayer.com's support I realized that the online service had an obvious error where they added instead of subtracted the last-year's carry over numbers.
I informed the online service so they could fix it and informed IRS that my forms had an error and filed a 1040X correction amendment.
Turns out that the IRS didn't really care that this error could affect a decent number of TaxSlayer.com users and the support people from TaxSlayer.com didn't really care about the error and reversal of arithmetic in their forms.
Also getting access to past taxes on the online service start costing you money unless you were smart enough to save your filed PDFs and keep them. Trying to re-do your last year's taxes costs money also.
Basically e-File service is nice and saves you paper and stamps and gives you fast direct deposit or withdrawal of your tax returns. They make errors with taxes and charge you for past access to your own data.
I don't really trust the online service with my data but with such a massive amount of it already being out there available on the web and located in commercial databases such as people search engines and public legal search web sites this is just another one on the pile for hackers to get at.
My taxes are easier to file online electronically so I take advantage of that instead of trying to do it the paper and stamp way.
I tried TurboTax before, granted it was probably a decade ago. After several hours of trying to figure out how to correclty answer questions, gave up.
Just go to an accountant. You can get your taxes prepared and signed for $100-$200. The forms will be filled out correctly. You save a lot of time. You save money by having someone who knows the tax code get you more money back (or pay less taxes).
And spraying my info into the "cloud"? Yeah, no thank you.
Intuit has already proven that you can not trust Turbo Tax installed on your computer.
http://slashdot.org/story/03/02/16/1549232/
Yes (nuff said).
At the end of the day, you need to trust someone in order to do anything other than live 16 feet under the ground in a concrete lead-lined airtight bunker.
You can start off by asking "Can I trust the online tax software?", but to that I ask you, "Can you trust the online tax software that H&R Block is going to use?"
When it comes to security, there is no magic bullet, and there is not one right answer. You need to look at the likelihood of each option causing a problem, then you need to look at the likely cost of consequences in each situation.
At that point, you can look at the likelihood of each thing happening, and the consequences of each thing happening, and ask yourself whether changing is actually going to change anything.
Security is part of my job, and it's always a trade-off. Unless I unplug all my Ethernet switches and disable all connectivity, then you're always choosing an answer that has some risk associated with it. The challenge is to find acceptable risks and balance them with operational needs of your home, of your site, of your organization.
matter, really? American entitlement slaves have already given into government, so just have the govt prepare your return
I heard that in other countries the government calculates the taxes and sends a bill. How can it make sense that the government that makes the rules leaves it to the people to figure out what/if they owe and only look at it after the fact? How does that make any sense at all?
I only look human.
My mother is a halfling and my dad is an ogre, so that makes me an Ogreling
Seems to me that the responsibility for supplying tax payment tools - i.e. tax software - should rest with the collection agency. Gripes about government incompetency aside, I'd expect a large majority of cases to be handled with fairly uncomplicated code.
Of course, as one poster mentioned, a lot of lobbying goes on to keep this software in the private sector.
I have used TaxCut for years and have had very few issues with it. The one year I tried the online variant of it was horrible. There was one particularly nasty bug that caused my return to be rejected twice before I had to go over the print out with a fine tooth comb. I found they were inserting a bogus figure into one of the fields instead of leaving it blank. I finally was able to work around the system to get the issue fixed, but it caused way more work and aggravation than it should have. I did try calling their "help" line, but the person on the other end was completely useless.
I use TaxAct too. Not the online version, but the standalone. However the first year I used it I filed online through them after preparing it locally. The following year I went to file online again and found someone else had beaten me to it. Someone who had information that could only have been obtained from access to my prior year's return. Took me most of a year and help from a senator's office to straighten it out.
Now, where did the perp get access? The laptop that I only boot into Windows once a year to do taxes, and then only on a well-firewalled home network (I'm a network engineer, I have confidence in my work here)? From the IRS itself (which, if it were that vulnerable, should lead to far more identity theft even than what we see now)? Or from 2nd Story Software? Odds are it's 2nd Story Software which was compromised somehow. Since then I still use their product, but only file on paper. So this isn't a caution about just preparing returns online. Filing online is similarly dangerous.
Coincidentally, that same year I found a place where they misinterpreted state tax code. Confirmed that with my state's tax office. Contacted 2nd Story about it. Their response was, "We have expert advisors in every state. We trust them over your state's tax office." Fortunately returns are coded by which tax software is used, and the state office assured me they could spot and correct the mistake for all those using TaxAct, now that they knew to look for it.
"with their freedom lost all virtue lose" - Milton
What I can't understand is why the Feds don't have a site where you can just fill in your tax form online. I know the Obamacare fiasco makes it popular to to bash the government on this, but why do I even have to buy H&R Block or TurboTax when all they really do is look up my tax in a table? Why can't the IRS simply provide the forms online and let you submit them.
I happily use HR Block's online service. Never had an issue with it.
My concern with this software is more about privacy protection. As of 2013 TurboTax supposedly encrypts the files on your disk, but how strong is that?
-Bob-
The government might snoop on your tax data. You wouldn't want them to know how much you've paid them... wait a minute...
I've never had any problem with online tax software. I will say, in all fairness, I have a simple return.
We are eternal, all this pain is an illusion.
FWIW, I've gotten a letter saying that the spreadsheet I used added the numbers incorectly. I double checked, and it was the IRS that made the mistake. OTOH, it was only for $10 or so, so I didn't fight it.
I think we've pushed this "anyone can grow up to be president" thing too far.
One of the effects of the extremely complex tax code is that it discourages small businesses. Because they therefore have less competition, large businesses can make more money. The rich get richer. It's an anti-democratic process.
For attackers trying to collect personal information -- for identity theft, for dirt, for spying -- can you imagine a better target than servers holding everyone's tax returns? http://updatemantra.com/
And more to the point: I will fully trust the online tax software if it's free (libre), secure against eavesdroppers, and operated by the tax-collecting government agency itself.
Eh? How is that supposed to work?
Either the online website is operated by the government agency, then you have no way to know that the version of the code they run is the version they make available for download and scrutiny.
Or it's libre, you download and scrutinise it, and run it yourself, in which case it's not operated by the government agency (and isn't particularly online any more).
Also, why would you want libre tax software if you only want a single source to run it?
Isn't the entire point of libre software that it can be modified... by whom, if you won't trust any other service suppliers?
If you want a single, trusted supplier and are only concerned about being allowed to scrutinise the source code, then surely proprietary but gratis and source-available would be sufficient? (Though that still wouldn't solve the problem of proving that the code you see and the code you (implicitly) run bear any relationship one to the other.)
Esli epei etot cumprenan, shris soa Sfaha.