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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?"
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.
but legally the government outside the IRS isn't allowed to look at your tax returns
Unless you're buying health insurance in one of the new Obamacare exchanges. Or applying for a FHA mortgage. Or you happen to be the subject of an ongoing criminal investigation. Your State Government can access it too, if they have an income tax and wish to match up your State return to the Federal one. The IRS also shares returns with SSA.
There's also a multitude of Federal and State agencies that can access your tax account, if not your actual returns. The Department of State will check with the IRS before they issue or renew a passport, for the purpose of collecting foreign income taxes and denying passports to serious tax scofflaws. Child support enforcement agencies can seize refunds, so they've got a mechanism of communication with the IRS too.
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.