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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 realize it's a joke, but legally the government outside the IRS isn't allowed to look at your tax returns. If you are a pimp or a drug dealer, you must file taxes with your correct occupation, however these taxes are not admissible as evidence against you, and law enforcement doesn't have access to it to point you out as a drug dealer.
Theoretically anyway.
There's been some funny side effects to the law, such as a prostitute who argued that her services weren't as much as the government claimed and she didn't owe so many back taxes. Congress passed a law that only the cost of goods sold count against revenue for dealing drugs (you can't include the cost of advertising) - however breast implants are a legitimate tax deduction as long as they're so large that they're purely for professional good and not personal enjoyment. And of course Al Capone going to jail on tax evasion, of all things.
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Yeah, I mentioned that at work once. That in foreign countries your return is pretty much done for you, and you just sign off on it. If it isn't correct you provide proof and then send that amendment back in. I got an incredulous stare and an "Oh, that'd be great for the government. They could say whatever they wanted and people would just pay up."
*sigh*
A good many people have no idea that the IRS already has all your W-2s and could fill out a simple 1040-EZ on your behalf. Sure, when you're itemizing it would get a bit more complicated, but for the vast majority of folks who don't itemize, there is no reason that the IRS can't have everything filled out for you, and all you need to do is sign and return.
The official policy of the IRS is that if you follow the advice of an IRS employee and that advice is incorrect, you are at fault.
It's not an accident that tax codes are as complicated as they are. My company (one of the two mentioned) spends a ton lobbying Congress to keep the tax laws complicated enough that people cannot reasonably do it with pen and paper without missing something or spending far too long doing it. Yet they don't want to make it so complex that you have to seek professional help. It's a tricky balancing act and it tends to tip towards being too complex because, in that case, they can then direct you to their CPAs that use their expensive tax product and charge a referral fee on top of that. From the CPA perspective, the referral comes with a ton of the information already entered into the system, so they can complete more returns. I find it funny that I've had conversations with the CEO where he talks about how excited he is that his company can so radically simplify the tax experience with software while, at the same time, he's employing lobbyists to make the tax software necessary in the first place.
However even if there weren't intentional efforts to complicate the tax code, it would still be a lot more complex that you want it to be. Just like computer code that starts off elegant and simple and, through bug fixes, optimizations and new features becomes a tangled web of spaghetti code, the tax code will get more and more changes to close loopholes (bugs) and add new taxes/credits for various things (features). And business tax codes are even worse.
I'd be more upset about it if I didn't now have a ton of stock in a company that benefits from making the process simple for those willing to fork over ~$100 each year. That, and we get the software for free :-)
The point isn't about it being "for free" per se or not. It's that to get to the point of accepting a tax return online and reviewing its accuracy at a fundamental level, the IRS already has to (or at least, should be) correlate all the known information about the filer in the first place. Ie, you're already 99.9% of the way there of just automating the rest and filling in the spots calculated for exemptions, adjusted income, etc. So to specifically exempt this rather obvious option seems to be of specific design.
Nope. See, the tax code is already pretty damn simple for the vast majority of people. That's precisely why the 1040-EZ form was created. It's the claim of anti-totalitarianism that's used to justify a way to "funnel gov't money to their buddies in private industry" when it misses the point that nothing about the above of *allowing* government involvement inherent leads to totalitarianism--inherently is the point since the whole tax code is a government construct which makes the whole idea of government totalitarianism against its own tax code is circular.
Because the private/public gap in the tax code exists (1) for people who actually need to utilize features of the tax code involving areas of dispute (figuring out if an item is an asset or a liability, if it's income or not, if its cost can be spread out over multiple years, etc) especially to ease all the fundamental concerns of businesses which deal in much larger dollar values and hence have to be either (a) a separate tax code for businesses (which is more or less the effect of different forms) or (b) simply no taxes on businesses (which is enough of a loophole that the tax code becomes meaningless) or (2) to prop up previous, pre-digital tax services that did all the above mentioned auto-calculate stuff that now can (and likely must) be trivial done by the IRS's online services anyways. And since a vast majority of people so heavily fall into (b), there's good reason why the IRS should be a directly available option.
That's pretty much impossible. Yes, the tax code has been made intentionally more complicated to the ends of social engineering, but putting that aside and you're still left with trying to define "income" in some fashion that can't be somehow fundamentally worked around without crippling the ability of businesses to function. The general solution for most people is obvious: they're employed by someone else and are paid wages, of which all details of such have to be reported to the IRS. Hence, they functionally already live in a bubble of an uncomplicated tax code.
Uh, no. The right uses the tax code to social engineer families to stay together, to reward ce
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