Turbo Tax vs. Licensed Tax Professional - John R. Dundon II, Enrolled Agent
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Turbo Tax vs. Licensed Tax Professional

Turbo Tax vs. Licensed Tax Professional

It is a rare occasion that guests are allowed to write for this blog but when they do it is ALWAYS worth reading. The following is a guest post from my friend and all around great guy, Andy Stadler about the perils some DIYers are facing with TurboTax.

Thursday 5 Feb 2015 state of Minnesota announce they would no longer be accepting Turbo Tax files, state of Utah and Alabama quickly followed by end of the day 13 states stopped accepting Turbo Tax files.  The primary reason all these state stop accepting Turbo is because of fraud issues.  In March 2015 FBI launched an investigation in the security of Turbo Tax and just last week several individuals registered complaints that they did not receive their refund due to Turbo Tax security issues.

TurboTax is a computer program. It does not use intelligent design to pick out credits or deductions that you may be eligible for or to help you in tax planning.  What you put in the computer is what will spit out.  Last year, IRS determined that the average individual refund could have been $800.00 higher if individuals had taken all credits and deductions allowed.

Turbo Tax Security:  Identity fraud and tax fraud is rampant.  Think about this:  If you use Turbo Tax you are willing giving your information: your social security number, address, your children’s names and date of birth, income details to this software company – What are they doing with this info?  Do your really think Turbo tax is free?  Turbo Tax make record profits last year – Billions.

  • 22 year old full time college student comes in, graduates in Sept with 1098- T for $13,000, earns $8,800 after graduation and wants to file.  Income not enough to cover SD & EX, let alone Edu Credit.  I asked about his mother.  He said she already filed on Turbo Tax.  He called mom from my office and I asked what her what her income and tax was, she said $26,500 and $2,003 respectively, enough to give her H of H status (instead of S as she filed), Edu Cr, and EIC.   I of course, asked about support, she said she easily gave him more than $9,000 last year because he lived in an extended stay hotel which she paid for while he attended college.  Long story short.  The amended return for mom is getting her back $4,918 over and above what she already got back.  What’s that old computer adage, garbage in, garbage out.
  • 22 year old full time college student comes in, graduates in Sept with 1098- T for $13,000, earns $8,800 after graduation and wants to file.  Income not enough to cover SD & EX, let alone Edu Credit.  I asked about his mother.  He said she already filed on Turbo Tax.  He called mom from my office and I asked what her what her income and tax was, she said $26,500 and $2,003 respectively, enough to give her H of H status (instead of S as she filed), Edu Cr, and EIC.   I of course, asked about support, she said she easily gave him more than $9,000 last year because he lived in an extended stay hotel which she paid for while he attended college.  Long story short.  The amended return for mom is getting her back $4,918 over and above what she already got back.  What’s that old computer adage, garbage in, garbage out.
  • 22 year old full time college student comes in, graduates in Sept with 1098- T for $13,000, earns $8,800 after graduation and wants to file.  Income not enough to cover SD & EX, let alone Edu Credit.  I asked about his mother.  He said she already filed on Turbo Tax.  He called mom from my office and I asked what her what her income and tax was, she said $26,500 and $2,003 respectively, enough to give her H of H status (instead of S as she filed), Edu Cr, and EIC.   I of course, asked about support, she said she easily gave him more than $9,000 last year because he lived in an extended stay hotel which she paid for while he attended college.  Long story short.  The amended return for mom is getting her back $4,918 over and above what she already got back.  What’s that old computer adage, garbage in, garbage out.

Real Life Testimony what Turbo Tax cost taxpayer:

  • A married couple owned rental property they using Turbo tax for years. Many mistakes on tax return costing them over $21,000.00 in refunds.
  • A mother used Turbo Tax filing her and her daughter’s tax return. Mom asked us to review the tax returns, upon review we discovered several errors resulting in Mom’s refund going from $2,003.00 to $6,921.00
  • Audit/Tax Court: Tax court case Brenda Bartlett vs. Commissioner: Brenda used TurboTax to complete her tax return; she had withdrawn funds from her retirement account and felt that she had input the correct information into TurboTax.  The IRS fined her $8,734 plus tax of $43,668.00 for under reporting her income.  She used the defense that she was relying on professional software Turbo Tax.  Her argument did not hold up in tax court, and she ended up owing the IRS over $52,000.00 plus state income tax over $15,000.00.

Cost:  A company called PC Novis conducted a study a few years ago and found that individuals who used software programs actually paid more for their Tax return preparation due to hidden fees.  They paid more than what it would cost to go to licensed tax professional: an Enrolled Agent – America’s Tax Expert.



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