Ask Slashdot: Can You Trust Online Tax Software? 237
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?"
Australia (Score:5, Informative)
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.
As an H and R Block Tax Pro... (Score:5, Informative)
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.
Re:It's the NSA!!! (Score:5, Informative)
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.
Re:It's the NSA!!! (Score:5, Informative)
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.
Re:Local versions give more control (Score:4, Informative)
That'll be effective: http://www.tikkun.org/tikkundaily/2013/07/06/nsa-rejecting-every-foia-request-made-by-u-s-citizens/ [tikkun.org]
Re:I Used a Popular Online Tax Service... (Score:1, Informative)
The janitor my company uses is incorporated, which means we run no risk of having his contractor status challenged, or dealing payroll tax overhead, etc.
For those not familiar with how it works in the US, the "etc." he slides in at the end includes things such as Medical Insurance, Unemployment Insurance, Worker's Compensation, Disability, and a host of other things that they would normally have to pay for if he was on the payroll. Plus, if he does end up getting hurt, sick, or otherwise unable to work their premiums stay low and they can just terminate the contract when he breaches it... or he has to find someone else to pay to cover his duties in which case HE now has to setup payroll for all that stuff.
I'm pretty sure they aren't paying him enough extra to make up for what they're screwing him out of.