If you watched any football over the weekend, you probably saw this year’s version of the popular tax software maker* touting “free taxes” or some such. Not only was the commercial fairly disturbing (it involves impalement of a person played as a joke), but the underlying message also leaves a little to be desired.
*Name of said software maker withheld for reasons of mercy and not piling on.
The tagline is: at least your taxes are free.
Yes, my writing this week’s Note could easily be seen as self-serving, but that doesn’t keep it from being true. Free doesn’t always mean “free”.
Falling prey to the siren song of “free DIY taxes” is not a good reason to use a particular tax solution. Firstly, we should note that the commercial refers to the filing fees — not the price of the software. How do you think they can afford fancy (albeit disturbing) commercials?
But there are other issues with using these kinds of softwares.
Do you remember when even the former Treasury Secretary, Tim Geithner, testified about tax irregularities in his own personal returns? Do you remember what DIDN’T help him find those irregularities?
Tax Software. (Link to a brief clip of his testimony before the Senate: http://www.youtube.com/watch?v=eKVxGlkPRlo#t=130)
And he’s not alone. But there’s a good way to fix that problem…
… and a BIG incentive to do so, by the way, at the end of my Note.
Are DIY Taxes Truly Free For Southwest Louisiana TaxPayers?
“Even if you are on the right track, you’ll get run over if you just sit there.” -Will Rogers
Did you know that we accountants like to joke to one another about how good these online software programs are for our business? Firstly, they are not as “easy to use” as claimed, and secondly … they cost you an arm and a leg.
You might think they’re cheap. And on the surface, you might be right (though, in the last few years, a $1 Billion class action lawsuit was filed in the federal court in Philadelphia alleging gross misstatement of fees and deceptive standards of the federal “FreeFile” program … so even on the surface, it wasn’t always cheap).
But I’m not referring to the money for the service itself.
Using those programs can end up leaving hundreds, or even thousands of your dollars in the coffers of Uncle Sam … even if you follow all of their instructions to a tee. I see it all the time — frustrated Southwest Louisiana clients bringing in their prior year’s tax return, astonished at all the “hidden money” my staff and I are able to find for them.
Choosing the wrong method, or forms, in filing your taxes can place you directly in the crosshairs for an audit.
Even if you don’t owe a ton of back taxes, you still don’t want your record to show some IRS agent that there has been a discrepancy of some kind in the past, so that red flags begin to fly, and then more bureaucratic people start looking through all of your past tax filings and current income holdings … basically taking your social security number, and poking around in your private life.
They can do a lot of things you won’t want them to do. However, if you keep a clean slate (no IRS correspondence with you, related to filing your taxes incorrectly), the opportunities for them to mess with your personal stuff will be limited.
Here’s another reason why this is so important … now more than ever. New government regulations in 2018, delays in Congressional action (SHUTDOWNS), and issues with adjusting to the tax reform bill are creating a mess in the tax industry… you don’t want to be left at the mercy of a piece of software, or a poorly-trained temp in a corporate tax prep “store”.
Yes, it can be seductive to “go it alone” … to trust a piece of software to point out possible deductions. To trust your work to poorly-trained preparers in a big box office. To protect against your chances of audits through online chat room support or hourly employees.
But it can be a big trap.
Just ask the former Treasury Secretary.
So, let’s get your financial paperwork in the hands of someone who cares.
To your family’s financial and emotional peace…
Joshua L. Ortego
Capital Planning Associates, LLC