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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.
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.
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 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.
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.
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.
The fact that you couldn't get the drive out isn't a security issue, it's an Apple engineering issue.
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.
You are going about the secure data destruction business all wrong... Once the computer is toast, anything between you and the platters is just 'collateral damage'. A rifle, angle grinder, or cutting torch will go right through an iMac without much difficulty.
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.
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.
I don't buy this.
Title 26, United States Code, Section 6103 states:
(i) Disclosure to Federal officers or employees for administration of Federal laws not relating to tax administration
(1) Disclosure of returns and return information for use in criminal investigations
(A) In general
Except as provided in paragraph (6), any return or return information with respect to any specified taxable period or periods shall, pursuant to and upon the grant of an ex parte order by a Federal district court judge or magistrate judge under subparagraph (B), be open (but only to the extent necessary as provided in such order) to inspection by, or disclosure to, officers and employees of any Federal agency who are personally and directly engaged in—
(i) preparation for any judicial or administrative proceeding pertaining to the enforcement of a specifically designated Federal criminal statute (not involving tax administration) to which the United States or such agency is or may be a party,
(ii) any investigation which may result in such a proceeding, or
(iii) any Federal grand jury proceeding pertaining to enforcement of such a criminal statute to which the United States or such agency is or may be a party,
solely for the use of such officers and employees in such preparation, investigation, or grand jury proceeding.
(4) Use of certain disclosed returns and return information in judicial or administrative proceedings
(A) Returns and taxpayer return information
Except as provided in subparagraph (C), any return or taxpayer return information obtained under paragraph (1) or (7)(C) may be disclosed in any judicial or administrative proceeding pertaining to enforcement of a specifically designated Federal criminal statute or related civil forfeiture (not involving tax administration) to which the United States or a Federal agency is a party—
(i) if the court finds that such return or taxpayer return information is probative of a matter in issue relevant in establishing the commission of a crime or the guilt or liability of a party, or
(ii) to the extent required by order of the court pursuant to section 3500 of title 18, United States Code, or rule 16 of the Federal Rules of Criminal Procedure.
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.
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.
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
Anyone who pays for tax software is probably an idiot.
Or doesn't know how to program. Not saying I'm one of those, but there is a place in this world for nurses and cooks and carpenters who know their trades quite well but not how to construct an algorithm in a computer.
Or were you trolling?
"We can categorically state we have not released man-eating badgers into the area." - UK military spokesman, July 2007
Tax code changes year to year. It would have been irresponsible to allow you to do that.
That said, it sure was awfully nice that they waited until the end of the process to tell you that...
For large sets, this will be our guide even unto death, for the LORD will work for each type of data it is applied to...
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
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
"Anyone who pays for tax software is probably an idiot."
I guess you do your own dental cleaning, oil changes, plumbing, etc? You'd be an idiot otherwise, right?