Taxes are all filed, and the IRS letters are rolling in. I received a call from a new client yesterday. He has a PhD, had a distinguished career, and has traveled the world. With a PhD in Biochemistry from a top university, an impressive resume, and an IQ to back it all up, he actually is a genius. At least he was, until he believed the TurboTax advertising that he had more than adequate horsepower to use their software to file his taxes.
He does have adequate horsepower, but there is no substitute for understanding the laws and WHY certain questions are being asked in TurboTax. Why does it matter if dividends are Qualified or not and who really cares?Answer one way, and TurboTax spins out rainbows. Answer another, and the result is a 9 page letter from the IRS with a huge tax bill because certain data wasn’t correctly identified. The result is an honest, upstanding citizen who is into his 80s with a fixed income, trying to figure out how to fix this problem. He’s already paid TurboTax, and now he is going to have to pay me to make sure he does NOT pay the $5,400 bill that arrived like a stinking piece of excrement in the mailbox.
TurboTax has a place, to be sure. My daughter, with her one W-2, no dependents, and no investments, could use it and get accurate results. My new client, with multiple sources of retirement income, investments, and two rental properties really needs more than a piece of software that performs nothing more than rudimentary logic checks on the data that’s entered. He might as well be using an abacus.
After our conversation, I think the realization that dung begets dung took on a whole new meaning. I will fix this and make it go away. I will also be preparing the tax returns for this client for a long time to come.