Thursday, April 14, 2011

Very Close to Giving Up on TurboTax

I mentioned last year that TurboTax pulled a Geithner on me (although not in my favor) by pulling in my Schwab statement's interest and dividends for the year--but leaving the previous year's data in place, more than doubling my interest and dividend income.  I was able to fix this manually, but it was a good thing that I checked it carefully, and did not just trust the software to do the right thing.

Guess what?  Exact same mistake this year.  It left 2009's interest and dividend income in when it imported the 2010 data.  I'm not a liberal, so a mistake like this isn't going to put another million dollars in the IRS's pocket, but still, this is a non-trivial amount of extra tax it computed.

If you use TurboTax, and have interest and dividend income being automatically imported from your broker, I would encourage you to verify that you are getting what you are supposed to be getting.

UPDATE: That does it.   Form 1099-B from Schwab had three bond sales on it--but TurboTax repeated one of those sales.  As it turned out, it had no impact on my taxes because there was no capital gain on it.  (It was a Fannie Mae bond that I had bought at par, and which was called at par.)  But if this had been something with a capital gain on it, it would have increased my taxable income. 

I am small fry: a few bond transactions each year, so it is pretty easy to verify the accuracy of this stuff, but imagine if you were a progressive or Marxist, and had hundreds of bond transactions a year.  How would you know that TurboTax had screwed up?


  1. I help do tax returns and we type all that stuff in and tie it to the 1099's because it's a nightmare. Can't trust the imports cause something always goes wrong. What's turbo tax cost these days? Just seems easier to me to get a decent accountant and pay the 200-300 depending on your return. Granted, I have a vested interest and wouldn't want to waste three hours doing my own taxes if the difference is 100 bucks and I save time. If its just a w2 and mortgage interest though. Save your money. hard to screw that up.

  2. This is a scary bug. Thanks for pointing it out. I've used TurboTax (TT) online since '99. I've never closely compared my broker accounts with the TT data and have no idea how much extra I might have paid through the years.

    Two questions: 1. What did TT say when you reported it? 2. Trying to cover all possibilities...Could the Schwab server have duplicated data in the download?

  3. I always enter that data manually. As far as I can tell there is no standard protocol for exchanging data from the various financial institutions so whatever kludge TurboTax has thrown together is prone to errors.

  4. I did not report it to TurboTax last year, figuring that they were going to get plenty of complaints about it. But I guess not. I certainly let them know this year--and that I would not be renewing.

    I am pretty sure that Schwab did not duplicate the data--last year, the previous year's data was left in by TurboTax.

    TurboTax is about $63 for federal and state returns--and because I have two Schedule C businesses, and considerable interest, dividend, and capital gains activity, it is a bit more than just filling in a 1040. And most of the work on this is stuff that I would still have to organize to have a CPA do it.

  5. What I found is that if you are using quicken and have two views of your Schwab accounts. Mine and My wives Turbo Tax will down load once for each view. You need to manually un-check and duplicates.

  6. Clayton, what I found is that ir you have two views of your Schwab accounts. Turbo-Tax will download once for each view. My wife and I each have our own IRA and a joint investment account. This causes Turbo-Tax to download our joint account data twice. I need to uncheck this account on one of the down loads or the same thing will happen to me. I hope this helps.

    This is why I am a Fair Tax proponent. As a country we need to collect revenues but we no not need to do it is such a inefficient way. It was only last year that I was able to get rid of the basis information on the house I bought in 1971 and sold in 1975. That is insane.

  7. "As a country we need to collect revenues..."

    Our country doesn't need to collect nearly as many revenues as it currently does. It just needs to get out of the retirement, medicine, and safety businesses (among other things). It needs to stick to things like "Common Defense".

    It's for this reason that I don't support the so-called "Fair Tax". We are currently taxed far more than necessary. Any tax that calls for "revenue neutrality" cannot, therefore, be fair.

    And we shouldn't be expecting a "simplified" tax system by switching to a sales tax, anyway: it will get just as complicated as the income tax is, when special interests call for exemptions because their business is "special". That is how we got our current mess in the first place!