Tax Error? Can't Blame the Software
The “Tim Geithner Defense” is rejected by the tax court.

Software programs may make doing your taxes easier, but they don’t offer legal protection. If you make a mistake while using one of the increasingly popular tax software packages to prepare your return, the Tax Court won’t let you off the hook for a penalty.
One taxpayer found that out the hard way when she tried to blame errors on the TurboTax software program that she had used to prepare her returns over the years. Unfortunately for her, the IRS audited her returns for two of the years and found a number of mistakes in how she handled rental properties she owned. Among them: She reported losses from sales of securities on Schedule C, which is used for business income and losses, instead of Schedule D, which is for capital gains and losses. And she claimed a loss on a property where her father lived rent free.
The IRS sent her a bill for unpaid taxes -- and assessed penalties on top of that. She argued before the Tax Court that use of a tax software program insulated her from any penalty. She pointed out that Treasury Secretary Timothy Geithner also used TurboTax and made some very well-publicized errors on his tax returns that almost derailed his nomination. (After first appearing to blame the program for his misreporting of his income, he later took full responsibility for the mistakes.)

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The Tax Court gave her argument short shrift, finding that the additional taxes she owed were caused by her own input errors, not by a flaw in the TurboTax program. It upheld the IRS’ imposition of penalties against her. Had Geithner made the same argument in the Tax Court, he would have lost, too.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

-
How Five States Are Worse Off After Trump’s Cuts to SNAP and Medicaid
State Tax Due to Trump's new tax law, some states will experience a greater impact than others.
-
Ask the Editor, August 1: Tax Questions on Standard Deductions
Ask the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on claiming standard deductions on your tax return.
-
Tariff Stimulus Checks Coming? New Proposal Seeks Tax Rebates for U.S. Workers
Tax Breaks A new GOP bill proposes to send $600 in tariff rebate checks to eligible taxpayers. Is there a catch?
-
Biggest Winners and Losers in Trump's New Tax Plan
Tax Law Trump’s mega tax overhaul, known as the ‘One Big Beautiful Bill,’ has distinct winners and losers. Which group do you fall into?
-
Trump Calls for Cane Sugar Coke: Will You Pay Higher Prices and Soda Tax?
Food Taxes The debate over cane sugar vs. corn syrup is heating up, raising questions about cost, policy, and, in some cases, soda taxes.
-
Ask the Editor, July 25: Questions on Four New Tax Deductions
Ask the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on four new tax deductions in the "One Big Beautiful Bill."
-
No Capital Gains Tax on Home Sales Coming Soon? What You Need to Know
Tax Policy Capital gains taxes are back in the spotlight. This time, the chatter on Capitol Hill has to do with rising home prices.
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)
Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund, a smaller one or something in between next year. Here are five ways the new law could impact your bottom line.