6 ms·

TurboTax's offering is not just about literally filing my taxes. It's about managing risk that I'm not botching my filing in the form of missing something entir

by lolsal 6y ago

TurboTax's offering is not just about literally filing my taxes. It's about managing risk that I'm not botching my filing in the form of missing something entirely, mis-filing, or leaving deductions on the table. Even if submitting forms online is entirely free, I'm willing to pay SOMETHING to make sure SOMEONE ELSE is responsible for making sure it goes well. I pay accountants for this for this exact reason. I'm sure I could figure out what boxes to copy where, but I'm not paying an accountant or TurboTax for copying values. edit: I did not mean this to sound like an apology for TurboTax being despicable for other reasons.

ianlevesque 6y ago
I get what you're saying, and I use it for the same reason, but as far as "SOMEONE ELSE is responsible" they do a really great job in the ToS making sure they legally really aren't responsible in any way. It's a great racket.
- lolsal 6y ago
  I understand (and agree that it's a racket), but even so, it was worth something to me even when I was filing 1040EZs.
gugagore 6y ago
This is an honest question: what responsibility does a TurboTax have? How would you find out that they messed up, and how would you react?
- lolsal 6y ago
  I don't know if I can answer that first question - it seems like if they position themselves as providing expert advice and competent filing, and then I pay for it, I should be guaranteed something. But the world does not really operate on SHOULDs. If I used TurboTax, I would expect to find out they messed up by getting some notification from the IRS, or accidentally discovering later that I missed a deduction. If the IRS was reaching out, I'd engage a real accountant ASAP. If TurboTax missed a deduction, I'd vote with my wallet and use an accountant the following year :) disclaimer: I use an accountant because my tax situation is complicated.
trymas 6y ago
It's a racket. Government already knows how much you owe them. So how about US government, like most modern countries, send you a form which says: "we think you owe us xxx$ (because of this and that), if not - provide extra information"?
- lolsal 6y ago
  > It's a racket. Yea, possibly (I agree with you). It is as much a racket as lots of other things. Doesn't excuse it being a racket, but TurboTax is not an anomaly. > Government already knows how much you owe them. This is false. If you aren't taking advantage of deductions, sophisticated tax-deferred vehicles for retirement or tax-advantaged accounts for other investments, you're giving the IRS more than you have to. If that doesn't bother you, that's fine too! > So how about US government, like most modern countries, send you a form which says: "we think you owe us xxx$ (because of this and that), if not - provide extra information"? Cool, sounds great. However, you're over-simplifying things and ignoring the complicated parts. For a lot of people, a simple approach like the above would be totally adequate and I personally completely support a system like that.
  - matz1 6y ago
    Then how do IRS know that the duduction is correct?
    - goatcode 6y ago
      They probably don't, but when something looks suspicious enough, in comes the audit.
    - astura 6y ago
      The companies that you have these accounts with, and your employer have reporting requirements.
      - deleted 6y ago
        [deleted]
projektfu 6y ago
Even CPAs aren't responsible for leaving you exposed to an audit, unless it was through gross incompetence, or if otherwise specified in a contract. TurboTax gives you some feeling that you have exhausted most of the straightforward avenues for reducing your tax liability, but offers no guarantees. Tax preparers are really only liable if they start telling their clients to do grossly illegal things on a regular basis, or if they do shady things to cheat them out of their refund. For example, receiving the refund in their own account and paying the client half.
- lolsal 6y ago
  I completely understand what you're saying. Paying someone who is more of an expert than me is still better than me doing it myself. "Hey I did this in good faith and this company messed up, can we work this out without me going to prison?" vs "I didn't know."
  - projektfu 6y ago
    The good news is that messing up your taxes because you didn't know what you were doing will not land you in prison. The danger is that you made a bad guess that requires you to pay a lot of tax you thought you avoided. For example, you wrote off something big using Section 179 that you shouldn't have. So your tax liability increases by $15,000 or something that you've already spent. Now you need a payment plan. Most calculation or categorization errors aren't "prima facie" evidence of tax fraud. In general they need to show intent to deceive. Most of the cases where I have seen someone being fraudulent they are going somewhat out of their way to do it. For example, not reporting cash receipts, just checks and credit cards. Paying their children as contractors even though they do not do any work. Recording only half of the haircuts they do and none of the tips. Claiming to have an unsuccessful business that doesn't exist yet loses money. People have to go out of their way to make their illegitimate books look legitimate and they usually fail to take into account that the IRS has seen it all before. Unfortunately for everyone, the IRS doesn't catch these things for several years if at all, so some get rewarded, some think they're fine when they're not, and some get hit by a huge tax bill. For the average person, if they make a bona fide attempt at doing their taxes correctly, and they make mistakes because they are not a seasoned tax accountant, the penalty will be back taxes, interest, late fees, and representation costs.

by lolsal 6y ago

ianlevesque 6y ago

I get what you're saying, and I use it for the same reason, but as far as "SOMEONE ELSE is responsible" they do a really great job in the ToS making sure they legally really aren't responsible in any way. It's a great racket.

lolsal 6y ago
I understand (and agree that it's a racket), but even so, it was worth something to me even when I was filing 1040EZs.

gugagore 6y ago

This is an honest question: what responsibility does a TurboTax have? How would you find out that they messed up, and how would you react?

lolsal 6y ago
I don't know if I can answer that first question - it seems like if they position themselves as providing expert advice and competent filing, and then I pay for it, I should be guaranteed something. But the world does not really operate on SHOULDs. If I used TurboTax, I would expect to find out they messed up by getting some notification from the IRS, or accidentally discovering later that I missed a deduction. If the IRS was reaching out, I'd engage a real accountant ASAP. If TurboTax missed a deduction, I'd vote with my wallet and use an accountant the following year :) disclaimer: I use an accountant because my tax situation is complicated.

trymas 6y ago

It's a racket. Government already knows how much you owe them. So how about US government, like most modern countries, send you a form which says: "we think you owe us xxx$ (because of this and that), if not - provide extra information"?

lolsal 6y ago
> It's a racket. Yea, possibly (I agree with you). It is as much a racket as lots of other things. Doesn't excuse it being a racket, but TurboTax is not an anomaly. > Government already knows how much you owe them. This is false. If you aren't taking advantage of deductions, sophisticated tax-deferred vehicles for retirement or tax-advantaged accounts for other investments, you're giving the IRS more than you have to. If that doesn't bother you, that's fine too! > So how about US government, like most modern countries, send you a form which says: "we think you owe us xxx$ (because of this and that), if not - provide extra information"? Cool, sounds great. However, you're over-simplifying things and ignoring the complicated parts. For a lot of people, a simple approach like the above would be totally adequate and I personally completely support a system like that.
- matz1 6y ago
  Then how do IRS know that the duduction is correct?
  - goatcode 6y ago
    They probably don't, but when something looks suspicious enough, in comes the audit.
  - astura 6y ago
    The companies that you have these accounts with, and your employer have reporting requirements.
    - deleted 6y ago
      [deleted]

projektfu 6y ago

Even CPAs aren't responsible for leaving you exposed to an audit, unless it was through gross incompetence, or if otherwise specified in a contract. TurboTax gives you some feeling that you have exhausted most of the straightforward avenues for reducing your tax liability, but offers no guarantees. Tax preparers are really only liable if they start telling their clients to do grossly illegal things on a regular basis, or if they do shady things to cheat them out of their refund. For example, receiving the refund in their own account and paying the client half.

lolsal 6y ago
I completely understand what you're saying. Paying someone who is more of an expert than me is still better than me doing it myself. "Hey I did this in good faith and this company messed up, can we work this out without me going to prison?" vs "I didn't know."
- projektfu 6y ago
  The good news is that messing up your taxes because you didn't know what you were doing will not land you in prison. The danger is that you made a bad guess that requires you to pay a lot of tax you thought you avoided. For example, you wrote off something big using Section 179 that you shouldn't have. So your tax liability increases by $15,000 or something that you've already spent. Now you need a payment plan. Most calculation or categorization errors aren't "prima facie" evidence of tax fraud. In general they need to show intent to deceive. Most of the cases where I have seen someone being fraudulent they are going somewhat out of their way to do it. For example, not reporting cash receipts, just checks and credit cards. Paying their children as contractors even though they do not do any work. Recording only half of the haircuts they do and none of the tips. Claiming to have an unsuccessful business that doesn't exist yet loses money. People have to go out of their way to make their illegitimate books look legitimate and they usually fail to take into account that the IRS has seen it all before. Unfortunately for everyone, the IRS doesn't catch these things for several years if at all, so some get rewarded, some think they're fine when they're not, and some get hit by a huge tax bill. For the average person, if they make a bona fide attempt at doing their taxes correctly, and they make mistakes because they are not a seasoned tax accountant, the penalty will be back taxes, interest, late fees, and representation costs.