David Knoble, CPA, PLLC

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Penalties From Using Tax Software

A fre­quent ques­tion we are asked is “Why can’t I do my own taxes on Turbo Tax® or Tax Cut® soft­ware?”  We came across a Tax Court case in which an indi­vid­ual was assessed a 20% penalty even though she used tax soft­ware to pre­pare her taxes.  The indi­vid­ual argued she should not have to pay a penalty since she used the soft­ware.  The IRS showed her mis­take was from inputting infor­ma­tion incor­rectly, not a mis­cal­cu­la­tion through the soft­ware (Lam, TC Memo. 2010–82).

With increas­ing com­plex­ity of the Tax Law, per­sonal tax soft­ware must also become more com­plex.  A sin­gle type of income or deduc­tion may be input in to three or four dif­fer­ent areas with com­pletely dif­fer­ent out­comes.  Thus, our answer to ques­tion about prepar­ing taxes on one’s own is sim­ple — you get what you pay for.  As a CPA with trained tax pro­fes­sion­als, our job is to stay informed about the tax code and apply it to your facts and circumstances.

Be sure you talk with your CPA before mak­ing a tax based deci­sion in your per­sonal or busi­ness finances.

© 2010, david.knoble
by David Kno­ble, CPA, PLLC
Serv­ing Non-Profits, Busi­nesses & Indi­vid­u­als
Rock Hill, SC

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