Did you know that we tax people sometimes joke to one another about how good these online software programs (TaxSlayer, TurboTax, TaxACT, FreeFile, etc.) are for our business? First, they are not as “easy to use” as claimed, and second … they cost you an arm and a leg.
You might think they’re cheap. And on the surface, you might be right (though, in the last few years, a $1 billion class action lawsuit was filed in the federal court in Philadelphia alleging gross misstatement of fees and deceptive standards of the federal “FreeFile” program … so even on the surface, it wasn’t always cheap). But I’m not even talking about the money for the service itself.
Using those programs can end up leaving hundreds, or even thousands of your dollars in the coffers of Uncle Sam … even if you follow all of their instructions to a tee. I see it all the time — frustrated clients bringing in their prior year’s tax return, astonished at all the “hidden money” my staff and I are able to find for them.
And then there are audits. Do you remember when the former Treasury Secretary, Tim Geithner, testified about tax irregularities in his own personal returns? Do you remember what DIDN’T help him find those irregularities?
Turbo Tax. (Link to a brief clip of his testimony before the Senate: http://www.youtube.com/watch?v=eKVxGlkPRlo#t=130 )
Yes, it can be seductive to “go it alone” … to trust a piece of software to point out possible deductions. To trust your work to poorly-trained preparers in a big box office. To protect against your chances of audits through online chatroom support or hourly employees.
But it can be a big trap.
Just ask Tim Geithner.