Why Your Tax Return is Probably Wrong

taxes wrongOkay – before I get started, let me just say that I am not totally against paying taxes. I believe there are public costs associated with having roads, municipal buildings, cops on the street and other conveniences which we should all pitch in to pay for.

But what I am against – and what I'll be against until I hit the grave – is the process of figuring out our taxes. It just isn't fair.

The problem

Now, I've had this theory for quite some time (and maybe you have too). That if you were to take your tax return to 10 different tax preparers, you'd get 10 different results.

Turns out, there was a report commissioned by the US Government’s Accountability Office in 2006 to do just that. They brought the same taxes to 19 different preparers and found that “all 19 tax returns were wrong to some degree and that only two preparers correctly calculated the proper refund amount“. Pretty sad, huh?

To further prove this point, our local news station did a recent story comparing 3 leading tax preparation services. They got a guy with a wife and small child to fill out his taxes on each program. Guess what happened?

Every single return was different.

The solution

Now, I am no genius when it comes to this stuff. But, come on. In this day, there is no excuse for not having a process in place that makes paying taxes easy.

I know – we have TaxAct and other tax software programs. These are great. I actually just used TaxAct to do mine this year. But, even after using it, I typically get the feeling like I have done something wrong and cheated myself OR the government (if you can believe that). I’m serious though – I think the last time I felt I had done my taxes right I was in junior high and I filled out the 1040EZ!

This just shouldn’t be.

So, what are you to do? How do you make sure your taxes are right?

Here’s my suggestions:

  • Obviously, the more complicated your taxes, the harder they'll be to get right. This is why it is vital to know what you can deduct and keep accurate records. If you own a rental home like we do, you need to keep track of all expenses related to it. This includes driving to the property, cleaning it, etc, etc. I have an Excel doc that is solely dedicated to keeping these expenses.
  • Two sets of eyeballs is always better than one. If you do your own taxes, have your spouse check em over when you’re done. Perhaps they have knowledge about something that can be deducted or another charity you’ve given to.
  • Use a pro. Obvious no-brainer here. But they will have knowledge of more deductions and tax law than you. I think the programs are going to be more pure with getting it all right than a person – but I still think they're good, because they give you another set of eyeballs (again). Note: they are probably going to be more expensive than any other preparation methods.
  • Here’s my last suggestion. Write a note to your legistrator telling em  you want tax reform. I’m all for a flat tax where everyone pays a fair share (I don’t use the roads more or less than a wealthy person and vice versa). Let em know that preparation is out of hand and there are too many inconsistencies.

Well, that’s my rant for this tax season. I’m sure you’re just as frustrated with taxes as I am.

What do you think? How do you make sure your taxes are done correctly? I’d love to know.
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  1. I watched the video and I have to say if I was tax slayer — I would be probably be gunning up legally. Too vague of information and not to mention I wonder what the TurboTax return was after he added in the mileage?

    Regardless it is a very interest video.

    The more moving parts your return has, the quicker it becomes for errors.

    • Hey Drew. Yeah, the video certainly didn’t put Tax Slayer in a very good light. They did mention that Slayer doesn’t “ask as many questions” as the other programs, so that could be reason why they came out so differently.

  2. I obviously know that this isn’t the case for most people, but my mom is a CPA and this is one of the perks! I get my taxes done correctly and do not have to worry about it at all!! People need to trade family members/friends for services – cheap and everyone gets something they need/want in the end!

    • Ah – what a great perk!

      Charlie wrote a great post on utilizing friends/family to save money

  3. I agree that keeping meticulous records is the best way to ensure your taxes are correct. You want to make sure you’re starting with the right numbers at tax time, or you have no hope.

    I always try to file as early as possible (normally early February). This helps prevent criminals from stealing my identity and claiming my refund.

    Finally, reduce your withholding at work to minimize the size of any refund you might get. No sense in giving the gov’t an interest-free loan!

    • Great advice. I think the best is to not even have a refund, as you say, make sure you are minimizing size of refund through withholdings.

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