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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?"

3 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: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 :-)