The Lie of “Do-It-Yourself” Tax Software
Do it yourself! It’s so easy!
The advertisements make it all sound so simple. Just click here, type some information there, click again here, type a little more there. Presto! You’re finished, and it’s accurate!
Yea, right.
Go to Amazon and read the reviews for different software packages. If you analyze them, you may notice that there are two types of users: one that loves it, another that complains about it. The complainers can be further split into three groups: those who are upset over paying extra to e-file, those who have tech-support or installation issues, and those who are upset because the program calculated their taxes incorrectly.
I want to discuss those in the last group. You might be one of them, and not even know it.
At the risk of stating something painfully obvious, I’d like to point out that tax software is not human. This means that it doesn’t have a set of trained, human eyes to recognize when things just don’t look right. You know what I’m talking about. It’s the human ability to make a judgement call, the human ability to extrapolate information, the human ability to sense, not on a mental level, but deeper than than, when something is wrong. This ability would have served that last group mentioned above.
From my own practice, I had two clients this season with errors on their 2004 returns. One used software, and the other used an online service.
The first one owned rental property, and therefore had to show the income and expenses for it. Accidentally, he entered the wrong amount for the income, a very wrong amount, way too low for the amount of time the property was rented. Did the software recognize it? No. He filed the return, and this year paid me to amend it after I discovered the error.
The second one entered the wrong amount on an important depreciation form, causing the software to calculate the depreciation incorrectly. Did the software recognize it? No. She filed the return, and this year paid me to amend it after I discovered the error.
These two clients share a characteristic of some of the complainers on Amazon: they are not good candidates for do-it-yourself tax preparation. Their situations are just too complex, and they would have benefited greatly by having a trained set of human eyes examine the return.
If your tax situation is even slightly complex and you use software, you run a risk of paying an incorrect amount for taxes or filing incorrect returns than if you found a competent tax preparer.
America is full of do-it-yourself ideas, and mostly it’s a great thing, but not if your returns are incorrect; not if you pay something other than what you actually owe.
Regarding reviews on sites such as Amazon: I generally disregard one line reviews that basically say, “It’s great,” or, “I hate it,” especially when written by people who have no other reviews to their credit. Just looks fishy to me.
About the Author:
Jennifer A. Thieme, owner of Solid Rock Accounting Services, is a Certified QuickBooks Advisor and a Registered Tax Preparer. She has been in the bookkeeping and tax field for nine years. She considers the diagnosis and resolution of accounting-related problems her specialty. Her articles have appeard in the Intuit ProConnection Newsletter. Contact her via http://www.jenniferthieme.com with your accounting related questions.
