As you go along, entering your new data, a sidebar tracks how much your refund should be at that point. At the end, you get a sidebar, that, in my case said “$-817 Due By 04/18/16”
If I didn’t examine my withholding and calculated taxes closely, I would have expected to receive a refund of $817…
Same with the state return, I Owe the state a negative amount…
Look out. I have no idea of other software packages are similarly math challenged, but I suspect not. Can anyone chip in information about ‘TurboTax’, for example?
I used TurboTax and owed a depressingly large amount of money. The sidebar displayed the total sensibly (i.e. positive with an appropriate “you owe” message).
Turbo Tax says you owe or says you have a refund. It also changes color. The figure is in red if you owe and green if you’re getting a refund. Actually it updates as you go along with a figure at the top of the screen and since you enter your income first (if you go in the order it does things), you get to watch what you owe decline as you enter deductions.
I had an unusual case last year where one of my dependents had made a lot of money on the sale of a gifted stock. I did Turbo Tax adn H&R block filing all income under one return vs. splitting my kid out as her own return. So 4 scenarios- Turbo tax came back with $450 and 550 refund and H&R block came up with paying $4000 and 6500. I did it by hand as well (months earlier to get an estimated payment etc. in place) and TurboTax was spot on my number.
I couldn’t for the life of me figure out how H&R got such high numbers- it was certainly derived from the investment income, but the income would have been taxed at something like 140% if I recall. So I just stuck with TurboTax.
I wonder about the legal implications of that. If you just go through one program, and miss some detail of tax law and so end up paying less than you should, then I can imagine the IRS being lenient on you if it comes to light. But if you use two programs, and one says that you owe the money and the other doesn’t, and you therefore choose to use the one that says you don’t owe it, could that be construed as tax fraud if the other one turns out to be right?
When home tax software first came out it was easy to use, and because it was more or less just helping you do your taxes, it was easy to see what the program was doing. The software basically just helped you fill in the blanks and did the math. As the software has tried to become easier and easier to use, they have so insulated the users from the tax form that you have no idea where the numbers are coming from.
I had a situation where the program was clearly not giving me credit for my mortgage interest. Took me longer to figure out why then it would have to redo them by hand.
Now I have a tax lady. Doesn’t cost much more and I don’t have to worry.
We started using H&R Block last year when TurboTax did the Schedule C screw, and have no problem with it. We get money back, but wouldn’t the final summary screen be the thing you go by? We “owed” money before we entered our deductions and estimated tax payments, and I didn’t have an issue, but the side bar isn’t anything I’d depend on.
The IRS (and courts) have pretty thoroughly dismissed the argument that “the software should have done it right” or “the software should have warned me” excuse for people trying to blame software for their mistakes. What people are usually looking for is an abatement of penalties. The tax law and IRS regulations define when penalties can be abated, such as for “reasonable cause” and one cause is reliance on professional advice. So the rulings are that software is not equivalent to professional advice and since the taxpayer didn’t rely on a professional, they are responsible for the error.
The second example you give, that of picking the result you like best wouldn’t generally be any different. There’s still no reasonable cause for abatement. If the second scenario is different, it’s because the IRS might have a case for tax fraud. Fraud isn’t the same as negligence because it requires criminal intent to obtain the favorable tax results. Intent is a much higher standard to prove than negligence, though, and the IRS might not bother if there isn’t a lot of money at stake.
I respectfully disagree. Had the sidebar phrased it as “Your refund is…” $-842, I would understand immediately that not only was I not receiving a refund, I was obligated to send them $842 to make the government whole. If it said, "you owe " $842, then, of course, clearly I would send them 842. But to say "You owe..." -842…means, very clearly to me, that they owe me, rather than the other way round.
Very respectfully, Were I to send you a bill for my professional services teaching you arithmetic for “$-100”, would you send me money, or would you regard the statement as you having a credit of $100 coming?
Where does the ‘intent to defraud’ come to play? Sure, the IRS could look at what information you provided the preparer and conclude that the preparation was faulty and there could be no ‘intent to defraud’ on your part. You’d pay the added tax, or appeal to their kangaroo court, but you shouldn’t be subject to a penalty.
I’ve used TaxCut for years, never had a problem. This year, we had a professional do our taxes, due to an inheritance issue. Will probably return to TaxCut in future years.