This tax season, accountants are double-checking their software
Share Now on:
The other day, Andrea Parness, a CPA in Queens, New York, was working on a tax return. She was trying to figure out whether her client, a business owner, would qualify for a 20 percent tax deduction created under the new tax law.
Parness did the numbers with paper and a calculator. “And then I looked at the version on the computer, and the software came up with something completely different,” she said. She then phoned a friend. Two, actually. Both CPAs.
“They both said, ‘I think you’re right. I think the software is wrong,'” she said.
These days, accountants and tax preparers use software to prepare and file your taxes. It allows them to do the calculations faster and to file online with the IRS. Parness didn’t want to say which tax software she uses, but she says it’s been wrong several times this year. I’ve been hearing that a lot.
“We put all our businesses on extension,” Jeff Levine, another CPA in New York, told me. “Because we just are not confident that the software has handled everything correctly.”
The Tax Cuts and Jobs Act became law at the end of 2017. But for the companies that make professional tax software — TaxAct, Intuit, Wolters Kluwer, Thomson Reuters — there was a lot information they still needed. The IRS had to come out with new forms and rules. “Then states had to figure out what they’re doing. Do we follow the changes that happened at the federal level, or do we start doing our own thing?” said Mark Jaeger, director of tax development at TaxAct.
Swati Garodia, head of products for the tax professionals unit at Thomson Reuters, said a lot of these changes came down to the wire.“Every time they change the guidance, we need to go ahead and update the software,” she said. “Those updates from local authorities are [still] coming in, even today.”
That means software companies have been in constant update mode, and accountants have been holding off on filing because those updates could apply to their clients. Worse, all those updates can lead to glitches in the software — like the one Andrea Parness noticed.
TaxAct and Thomson Reuters, the two software companies we spoke to, wouldn’t say how many glitches they’ve had this year.
The scary thing, according to Parness, is that if she hadn’t known the law well, she might not have noticed the error. “What about the people that aren’t, you know, going to seminars and really up on what the laws are, and what the answer should be? What about people who are just relying on their software to come up with the right answer?” she said.
Parness says, especially in a year like this, that accountants have to remember the software is just a tool, and they can’t let it do all the work for them.
Correction (Apr. 3, 2019): The original audio version of this story misstated where Andrea Parness lives. The audio has been updated.
As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.
Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.
Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.
Flaunt your Liquid Assets.
Donate $60 to get our new mug as a