With tax season in full swing, many brave taxpayers are considering using software such as Turbo Tax to prepare their taxes. The software itself is very easy to use and fairly intuitive. Unfortunately the tax code itself is not that user friendly. The problem with tax software is that people don’t know what they don’t know. Many taxpayers that just have a W-2 will have no problem using software to file their own taxes. Most questions will not apply and the software will calculate the return in minutes and allow it to be electronically filed with direct deposit! So who shouldn’t use Turbo Tax?
- People who are not that good at reading comprehension. Turbo Tax asks a lot of questions. Is the question completely clear? If not, just choosing “next” may skip over some key issues that are pertinent to the tax preparation.
- People who are not that good at data entry. There are many boxes on forms that should be filled out. If a number is transposed, or not entered; the results could be disastrous. Unfortunately, not all errors are caught up front. The return may get transmitted and give the refund amount. But two years later, a letter will arrive that says that an error was made previously. And money plus interest is due back to the IRS.
- People that think because they have a receipt for something, it’s tax deductible. Many people spend hours entering charity receipts and calculating values, and tracking mileage and entering it. But if the total of those deductions don’t exceed the standard deduction that the taxpayer qualifies for, they just go into the Turbo Tax bottomless pit.
Turbo Tax is meant to facilitate tax preparation. It does not trump the tax code. If a question is missed or answered incorrectly, many errors can still occur. The one thing they offer is live support by a tax professional. They can assist with software navigation and tax questions.
Anyone in doubt after reading this should pay a licensed Enrolled Agent or CPA to prepare the taxes. It will be worth the peace of mind and their fee may even be tax deductible!