Filing your taxes with online software like TurboTax or H&R Block is convenient and safe — but are they consistent from one program to another?
To be clear, I’m not questioning the validity of these services. Many are approved by and meet the standards of the IRS. I’m just curious if my results would be same from one provider to another. So to get to the bottom of it, I completed my tax return on five different online services, which was both a tedious exercise in data entry, and an eye-opening experience.
For the experiment, I completed my return on CreditKarma, FreeTaxUSA, H&R Block, TurboTax and TaxSlayer, which all offer free federal e-filing for 1040EZ. I went through the motions and added all of my personal information, stopping just before it was time to file.
I expected every program to issue me the same amount of money for my federal and state refunds, but they didn’t.
TurboTax and FreeTaxUSA gave me the same refund amount for both federal and state returns.
H&R Block and TaxSlayer gave me the same state refund as the other programs, but both services gave me $14 less for my federal return. I chalked it up to human error, so I went back through and gave each return a second look. I got the same result.
The real outlier was CreditKarma, which gave me $500 less for my state refund. After picking up my jaw, I looked over my state return, and saw that I had inadvertently opted to itemize my deductions on CreditKarma. The other four providers did the math for me and automatically selected the deduction (itemized or standard) that was best for my situation. CreditKarma lets users choose, and apparently I chose wrong. The second time, through, I chose the standard deduction. After this correction, my state refund adjusted to match the other providers.
What I learned
Some of you may be thinking, “This is your fault,” and I would agree. Like many Americans, my tax knowledge is limited, and it’s clear that human error is likely to blame for the differences on my returns.
After completing my return on five different providers, I was still left with the same federal refund on TurboTax, FreeTaxUSA and CreditKarma, and $14 less on H&R Block and TaxSlayer.
So I jumped on the phone with the IRS, who basically just told me to do my best.
“The IRS encourages people to file an honest and accurate return the first time in order to avoid delays in the timing of your refund,” said Raphael Tulino, a spokesperson for the IRS.
Tulino went on to say that people should make sure they have gathered all of the necessary tax forms and complete their returns as honestly as possible. After you file, the IRS will crunch the numbers and if there is a math error, they will send you a letter asking you to make the correction. Tulino said the IRS sends millions of letters every year for various issues, and in some cases, taxpayers have to file an amended return to make the necessary updates.
At the end of the day, though, he assured me that I wouldn’t land in jail if my math was accidently a little off. “In most cases, your refund will be delayed until it’s corrected that’s all,” he said.
Phew.
I also chatted with Jay Porter, a CPA at Porter and Associates. He knows people who have filed on their own and received letters from the IRS to make changes to their tax return. While he agrees that online services can be cheap and easy, but of course, advocated the use of a CPA for individuals whose financial situations are more complex.
“You may miss deductions that apply to you and you don’t receive the personal service or planning advice that a CPA can provide,” he said. “As your return gets more complicated – say you own rental property or you report your small business income on Schedule C – there is a great deal of value that a CPA can provide.”
My suggestions
For now, my tax situation is pretty straightforward, so I’ve always filed my own return using one of the online services. This hasn’t changed, but from now on I will always complete my return on two different programs before I file – just to double check the results.
If I had just used CreditKarma, I would have filed my state refund and missed out on hundreds of dollars owed to me. In other cases, double checking your results before filing could ensure you’re not paying a higher tax bill than you should.
Filing on your own can be easy, but if you’re worried, it might be worth it to purchase a deluxe or premium package of your chosen online program, which gives you the opportunity to connect with an in-house tax expert for assistance before you file. FreeTaxUSA will let you file your federal return for free, but you can upgrade to the deluxe edition for $6.99 if you want chat support with a tax expert. TaxSlayer’s premium package is $35; TurboTax’s deluxe option is $59.99; and on H&R Block you’ll pay $34.99. CreditKarma does not offer a deluxe package.
For me, I’m going to look over my returns one more time, and will likely file the federal return where I’ll get $14 less for my refund. I always hate to pass up money, but it seems like the best way to avoid getting one of those letters from the IRS.
Have a question about your taxes? Send them to us at moneyquestions@yahoo.com and we may answer it in an upcoming Facebook livestream.
Brittany is a reporter at Yahoo Finance. Follow her on Twitter.
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