Is your Tax Software Leading you Astray?
Don’t get caught by computer literalism
I’ve never made any bones about the fact that I use a computer program to do tax returns. Every tax preparer who does more than his or her family’s returns does, too. But that doesn’t mean that I simply abide by what the program tells me is right.
Whoa! Not so.
I could not easily find out how to make the program realize its mistake–and it was a mistake–so I told my client I would work on it and fix it before his return was filed.
But what if you were doing your own return? Would you even doubt that you had made the mistake and gratefully accept the program’s solution. “Wow,” you might have said, “that kept me from getting a nastygram from the IRS.” And, let me tell you, the IRS would have had no reason to doubt the mistake either. They would gladly accept your extra tax money.
This is only an example. I have no way of knowing what sorts of assumptions about your personal and unique tax situation the program you are using will make. It might even work the other direction, and you may not report all the tax you owe because you don’t understand a question or a verification that the program makes for you. And, by the way, if you owe them more money, the IRS will certainly come and ask for it. Remember the nastygram I mentioned above.
Generally speaking, your tax return this year should look pretty much like your tax return last year, unless some change occurred. If you get a warning from the built-in review on your tax software package, examine it closely. Make sure you understand where the warning came from, and then explore various means of correcting it. Maybe the program is right, but maybe it isn’t. Research the warning using the program’s own help section. Google the problem the tax program says you have and see what others say about it. Look at IRS.gov for help. Just don’t take the correction offered at face value.
Of course, you can always consult a professional preparer. It will cost you something, but it may be cheaper than the hassle and the penalties of doing it wrong.
Oh, by the way, the solution to the HSA problem was simply to reallocate the contribution limits between the two contributors so neither of them exceeded the 50/50 split that the program assumed.