Friday, January 23, 2009

Turbo Tax vs. Tax Professional

Treasury Secretary nominee Tim Geithner blames Turbo Tax for his failure to pay the proper amount of tax. Jim Geraghty wonders exactly how this could have happened:
In today's confirmation hearing, Treasury Secretary nominee Tim Geithner said he used TurboTax to prepare his returns for the years in question where he failed to pay self-employment taxes — even though he collected reimbursement from his employer, the International Monetary Fund.

Senator Chuck Grassley, R-Iowa, asked, "Did the software prompt you to pay those taxes?"

"Not to my recollection," Geithner answered.

Do any TurboTax users know otherwise from experience?

This professional's answer: this couldn't have happened. Tax software isn't flawless but it's surprisingly accurate and nearly 100% spot when information is entered correctly. Geithner knew what he was doing when he entered the information and if TurboTax failed, it's because Geithner purposely input the information incorrectly. He got caught and only came clean on the other years out-of-statute because of this nomination.

What surprises me is that someone in his position doesn't use a professional. Sure, he probably knows enough to prepare his tax return but clearly he needs outside assistance to keep honest. That's worth more than the money he saved by doing it himself. (Not that he actually saved anything - the interest alone on the additional assessments far exceeds any fee a professional he would have paid.)

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