When people hire me as their tax attorney to fix their IRS tax problem one of my first steps is to research what caused the problem in the first place. You may be surprised to hear that it’s not the tax payer’s ignorance, negligence or fraud that are the top sources of my client’s tax problem.
Let me put it this way, if it wasn’t for popular tax return software, and other problem areas I’ll discuss later this week, I might not be able to make a living as a tax attorney.
Tax Return software
Most of the tax return preparation programs today use an interview format to make it easier on you to complete your taxes. Sounds great, but in practice this leads to one of my client’s biggest problem areas.
The interview based approach favored by tax software can lead to double counting in areas like your expenses. In other words, it looks like you owe less tax than you really do. The minute you submit this inaccurate return you’ve potentially triggered an IRS audit flag. Ultimately, you’ll also owe back taxes and interest on the tax amount you should have paid.
You’d think by the tone of my comments that I was selling tax return preparation but I’m not. I just fix the problems once they’ve already happened.
What’s the solution to avoiding tax problems with Tax Return Preparation software?
Double check your completed tax return – look out for double counting
With tax software you need to thoroughly check each page of the final return that you are submitting. That sounds obvious enough. But, checking your numbers to make sure you’re avoiding the double counting I mentioned earlier is a worthwhile endeavor. A little extra time spent in checking your return before it’s finalized can save weeks of time and thousands of dollars in interest and attorney’s fees, never mind your peace of mind.
I also advise my clients that have used tax return preparation software to start using an experienced tax preparer for all but the simplest of returns. Many of my clients are using tax software despite complicated tax needs, even for their business taxes. And who can blame them, that’s the sales pitch that the tax return software company’s all make.
But wait, am I just blaming Tax Return Software Providers?
Tax return software companies make claims like ‘Easy, cheap, saves time’ – that’s how the promise goes. For that, I do take issue with their promises because it can lead to unjustified confidence in the tax software. But ultimately, it’s our complex tax laws and hard to discern guidelines that are the real root cause. And you. No software can replace your common sense and saving enough time in your tax planning to thoroughly check your return and properly research your tax issues.
The bottom line is that the IRS doesn’t care what caused the error, you are the one held accountable – not the tax software company. So it’s up to you to make an informed decision when it comes to preparing and filing your taxes. Tax software can’t save you from what you don’t know.
If you think you might have submitted an inaccurate tax return in error, one of my trusted staff can help answer some basic questions (plus we have a multitude of tax resources on our Tax Attorney website at www.taxhelpattorney.com). If you’ve already got an IRS tax problem that needs the expertise of a tax attorney, I’m here to help at 1-(800) 509-2770 or email us here.
Jeff Fouts, Tax Attorney
Look for my next post on this topic tomorrow.