We file our income tax returns on time. We are scrupulously honest. We pay the taxes we owe.
Up until last year, I have always done my taxes myself, at home on my PC.
Last year I was attracted by the idea that several places online offer free use of their online system, and free eFiling, for members of the military.
I chose TurboTax from among the options, since it was the software with which I was familiar. And everything went smoothly, so I never gave it another thought.
This year, I went willy-nilly to the first place I ran across with that program, and started preparing our return on the TaxSlayer website.
Even though I didn’t have all of the documents yet, I went ahead and put in what was available – Wolf’s income from his “day job,” from the Reserves, and a 1099-R from a Life Insurance policy we had cashed out (long story not relevant here, but while it might sound odd on the surface we believed this was the proper stewardship action in this matter).
I was really exasperated when I saw how things were shaping up. TaxSlayer showed that we would owe the IRS a bit, but would owe Mississippi considerably more – over $600!
Looking through the online payroll information, I was able to determine that we were having the wrong amount withheld overall – since Wolf’s last pay increase, and Nick’s 17th birthday, we have lost ground in several areas.
I never even thought that the withholdings needed to be adjusted – let that be a lesson you can learn from my mistake!
But it also turns out that Mississippi is not the most pleasant state in which to live, in this regard (we’ll leave “in other regards” for another day!). That Student Loan Interest deduction you can take on your 1040? Not a deduction in Mississippi. And so on…
I had to change the withholdings additionally for Mississippi, to account for their, erm, rigid policies.
So, our house will be in better order when the time comes to file our 2012 taxes. But in the meantime, I shared my woes with my Facebook friends.
Several commiserated about Mississippi. But one friend said,
Yeah, I always do it on several of those online sites, to see who gives me the best return!
Um, wait a minute. The tax law is the tax law. If you put the same information in, you absolutely should get the exact same result.
Skeptical, I went and input the identical information at H&R Block and TurboTax.
All showed the exact same number for our Federal Income Tax.
TaxSlayer = WE OWE $600+
H&R Block = WE OWE $300+
TurboTax = Refund of $54
Clearly, the tax code for Mississippi is not as clear, or not as clearly implemented — or both — as its Federal counterpart.
But which of those is right?
Beginning at the beginning, I printed out the blank tax forms from IRS.gov and the MS Dept of Revenue, and worked through the whole process by hand.
As you might expect, the Federal return went smoothly, and I, too, arrived at the answer all three sites had delivered.
One item that came quickly to light was that TurboTax had told me about a deduction that was missed by both other programs — pay earned while serving in the National Guard or any branch of the Reserves may be deducted up to a certain amount. Wow!
TaxSlayer had a mention of this, but stated that it was only for National Guard pay, so I did not believe that we qualified.
H&R Block has no mention of this what-so-ever.
I tried contacting customer service. After chatting, talking, transferring, and teeth gnashing, I was told the matter was being escalated and I would be contacted within 48 hours.
I never heard back from them.
Since there was no way to claim it in their system, they were disqualified from the race with a pointed letter to customer service.
H&R Block, you’re fired! A company honoring the military by offering free filing should give them that deduction, for sure!
Soon I uncovered the second problem:
The Life Insurance income from the 1099 form was reported correctly on the Federal return by all three programs. But only TaxSlayer was showing that income on the Mississippi return.
So the big question: Who is right?
Was TurboTax (and H&R Block, but they’re already fired) simply missing this income in the Federal-to-State transfer? Or did they know something TaxSlayer did not know, making the income not taxable in Mississippi?
After reading through all the information easily accessed through the DOR website (short of starting to sift through the voluminous code itself), it seemed that it was clearly taxable income in Mississippi.
Bad news, TurboTax.
I wanted to give TurboTax the benefit of the doubt, here, since they had been kind enough to show me the deduction for Reserve pay.
After the in-program-chat representative determined that I was not an idiot, they had me call and speak to a “tax adviser.” I worked with a woman in that department for some time, and she agreed with my assessment that the income should be taxable.
She had me call another department, giving me an “Incident Number” so they could find my case. This was the “Working On My Return” Department, who should be able to either explain the situation, or provide a work-around solution.
I called. The Incident Number didn’t work. I walked through a bunch of nonsense again. They finally figured out that I was not an idiot.
I was told that it would be escalated to “Tier Two Support,” and that someone would get back to me within 48 hours. (Wait, doesn’t that sound familiar?)
I never heard back from them. (Wait, doesn’t that sound familiar?)
TurboTax, you’re fired! Not only is there potentially a glaring error in your software, but your Customer Service is worse than nothing!
IN THE HOME STRETCH
So, that leaves the undisputed champion as TaxSlayer!
Except, wait… I’m still not really sure whether that 1099 income is taxable. What if, in spite of all their other issues, TurboTax and H&R Block got this part right (they are the majority opinion, at this point)?
Someone with two clocks never know what time it is.
And apparently someone with two tax programs never knows how much they really owe.