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Ask Slashdot: Can You Trust Online Tax Software? 237

Posted by Soulskill
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?"
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Ask Slashdot: Can You Trust Online Tax Software?

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  • by DexterIsADog (2954149) on Tuesday November 19, 2013 @08:06PM (#45469013)
    ...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.
  • Re:It's the NSA!!! (Score:5, Interesting)

    by kamapuaa (555446) on Tuesday November 19, 2013 @08:18PM (#45469093) Homepage

    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.

  • by ShanghaiBill (739463) on Tuesday November 19, 2013 @08:21PM (#45469123)

    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.

  • Re:Australia (Score:4, Interesting)

    by stinerman (812158) <nathan...stine@@@gmail...com> on Tuesday November 19, 2013 @09:13PM (#45469439) Homepage

    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.

  • by Anonymous Coward on Tuesday November 19, 2013 @09:36PM (#45469517)
    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.
  • Re:go (Score:5, Interesting)

    by Anonymous Coward on Tuesday November 19, 2013 @10:01PM (#45469621)

    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 :-)

  • by mjwx (966435) on Tuesday November 19, 2013 @10:55PM (#45469829)

    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.

  • Re:Australia (Score:2, Interesting)

    by 10101001 10101001 (732688) on Wednesday November 20, 2013 @12:29AM (#45470177) Journal

    I'm not saying the system isn't with its flaws, but saying you'd rather have the government do it for you "for free" just shows that 1) you're ignorant of how things work in the real world,

    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.

    and 2) you don't have a firm grasp on why barriers to government involvement in private industry exist (hint: anti-totalitarianism).

    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.

    Most people don't have a good grasp on 1) or 2) anyways so your comment doesn't surprise me. And if you're going to argue against 2), why not take it to the next level and just nationalize any industry that bridges the private/public gap - which is pretty much where we're going anyways.

    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.

    The false dichotomy that is this thread ignores the really obvious solution: don't have a tax code so damn complicated.

    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.

    The right doesn't want that because they want to funnel gov't money to their buddies in private industry and the left doesn't want that because a population not dependent upon them is much harder to control. I haven't heard anyone say we need a complicated tax code to protect the free market and capitalism, but the Feds have a track record of using the tax code as a weapon of last resort against citizens it finds uncooperative

    Uh, no. The right uses the tax code to social engineer families to stay together, to reward ce

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