Warning: Tax Software Programs Could Cost You Thousands!

I’ll admit that my thoughts on this topic are probably a bit biased.  However, I hope this article provides some thoughtful information that everyone should consider when purchasing a tax software program versus using a professional.

Here’s a True Story  

A year and a half ago I had a client come in to see me – I’ll call her Amy.  Amy had tried to prepare her fiancé’s taxes on her own using a tax software program.  However, she couldn’t figure out why it showed her fiancé having to pay over $11,000 in taxes.  She knew this couldn’t be right based on his income.  Amy told me that she had gone through the program several times over a couple of hours and couldn’t figure out what was happening.

Amy called me and asked if I wouldn’t mind looking over the return for her.  When we finally met, we quickly figured out the problem.  I could easily see why Amy was getting frustrated.

She was answering the questions correctly in the tax software program, she was even inputting the correct numbers, the problem was, it was the wrong question!

There really was no way for Amy to know she was answering the wrong question.

The good news is, once we corrected everything, Amy’s fiancé went from owing over $11,000 to just a little over $2,700.

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Obviously this was an extreme case, and I was happy that I was able to help Amy and her fiancé, but it got me to thinking.  What if Amy’s program showed her fiancé owing $3,500?  Would she have checked to make sure that was accurate?  Would any of us?

How do we really know that the refund amount shown on the tax software program is really the highest amount to which we are entitled?

How do really know that the amount due shown on the tax software program is really the lowest amount to which we should be paying?

There really isn’t any way of knowing without talking to an experienced tax professional.

Many of the tax software programs will guarantee the lowest refund, but how on earth do you know you have the lowest refund if don’t talk to a professional?

Unfortunately our tax code has gotten far too complicated and confusing.  Congress passes laws changing the tax code all time and it really can become very difficult to keep up with all the changes.

I encourage everyone to educate themselves as best as they can in all areas of taxes and finance.

I also encourage people to seek out expert advice with a professional that you trust.

If you feel you could use some assistance with preparing your 2010 Tax Return, feel free to comment below, email me, or call me anytime.