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Ask Slashdot: Can You Trust Online Tax Software?

Posted by Soulskill on from the how-to-win-the-audit-lottery dept.

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?"

6 of 237 comments (clear)

  1. I Used a Popular Online Tax Service... by DexterIsADog · · Score: 5, Interesting

    ...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.

    1. Re:I Used a Popular Online Tax Service... by ShanghaiBill · · Score: 5, Interesting

      I'm done with tax software. It's back to a human accountant.

      Are you aware that most human accountants use ... tax software?

      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.

      Most likely she found that deduction by running tax software. I use Turbo Tax, but I also keep up on tax law, and changes to the software, so that helps me find deductions a less informed person using the same software, would miss. Software is a tool, it can do more in the hands of a skilled user.

      If you spend a day studying tax law and reading your software's manual, you will save more money than you earn at your job in a month. It is time well spent.

    2. Re:I Used a Popular Online Tax Service... by mjwx · · Score: 3, Interesting

      Totally disagree. You will save far more by doing it yourself. The reason is that you will save little by finding a deduction here or there. You will save far more by actually understanding the tax law, and restructuring your financial life to take advantage of that knowledge

      Fine, let me know when you finish that 4 year degree and become a CPA (and how much it cost you). Then tell me how long it takes for you to become intimately familiar with the tax code and then tell me how long you spend keeping up on the changes to the tax code.

      Meanwhile I'll continue to spend a whopping $140 per year (which I claim on next years tax return, as well as the petrol I used getting from my home to his office) to have someone who does this for a living do it all for me and spend my time doing something I'd like to.

      So you think it's worth a 4 year degree, to save $140 a year... I'm sorry but after that I dont think it's a good idea to take tax advice from you.

      BTW: $140 p/a is expensive for a personal tax return in Oz, but this guy is brilliant.

      --
      Calling someone a "hater" only means you can not rationally rebut their argument.
  2. Re:It's the NSA!!! by kamapuaa · · Score: 4, Interesting

    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.

    --
    Slashdot: providing anti-social weirdos a soapbox, since 1997.
  3. Re:Australia by stinerman · · Score: 3, Interesting

    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.

  4. Re:go by Anonymous Coward · · Score: 5, Interesting

    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 :-)