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.)
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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.
-
Is Trump's Tax Plan Speeding Up the Looming Social Security Funding Crisis?Social Security Social Security's combined retirement funds are running out of cash, and its insolvency date is expected to occur in less than a decade.
-
How to Keep Your Work Friends After You RetireWork friendships can boost teamwork, lift your spirits, and make the job more fun. But when you retire, these friendships can fade. Here's a look at why that happens and what you can do about it.
-
Is Trump's Tax Plan Speeding Up the Looming Social Security Funding Crisis?
Social Security Social Security's combined retirement funds are running out of cash, and its insolvency date is expected to occur in less than a decade.
-
New Trump Tax Bill: Five Changes Homeowners Need to Know NowTax Changes Trump’s new tax legislation is reshaping how tax breaks for homeowners work.
-
Is the ‘Pumpkin Spice Tax’ Coming for Your Fall Coffee Budget?Food Taxes Inflation pressures, tariffs, and talk of the so-called 'pumpkin spice tax' have some wondering about rising coffee prices.
-
Will You Get a ‘Surprise’ Tax Bill on Your Social Security Benefits in Retirement?Retirement Taxes Social Security benefit payments might land you in hot water when filing 2025 taxes — here are three reasons why.
-
Ask the Editor, August 22: Tax Questions on What Congress Will Do NextAsk the Editor In this week's Ask the Editor Q&A, we answer questions from readers on what Congress will do next with taxes.
-
Veterans Could Lose Food Benefits Under Trump’s Tax Law: What to KnowFood Benefits Veterans up to 64 years old must work to keep food stamps under Trump’s new tax legislation.
-
Ask the Editor, August 15: Tax Questions on the OBBB, Tax RatesAsk the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the OBBB and changes, if any, to tax rates.
-
How the 2025 Child Tax Credit Rules Impact Single ParentsTax Credits New changes to family tax credits, like the Child Tax Credit, will impact the eligibility of some households.
