Do-it-yourself tax prep programs have glitches: report

SAN FRANCISCO (KGO) -- The annual headache known as doing your taxes has many Americans pulling out calculators, scratch paper, and maybe their hair.

It also has millions of taxpayers opening their computers to use those do-it-yourself online tax preparation services. They offer step-by-step guidance, but can you rely on their accuracy?

A new survey by Consumer Reports says, maybe not completely. It found the most popular services can sometimes steer you wrong. And Consumer Reports said it could not fully endorse any of them.

"What we found was, all of them had some glitch,'' Consumer Reports researcher Tobie Stanger said. "Some were minor, some not so minor."

Stanger tested four of the most widely-used computer programs: H&R Block, Tax Slayer, Tax Act and Turbo Tax. She says they can be safe and helpful tools. But she found some problems -- especially related to the new tax reforms.

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"There was non-updated information from prior tax laws,'' she said. "In some cases the software led me through so I would not be eligible for a new $500 tax break that I might be able to get with the right guidance."

She was referring to a new provision in the tax code allowing a $500 tax credit for those caring for an adult dependent. But eligibility depends on the adult's taxable income, and Stanger said all four services gave at least some inaccurate guidance as to who qualifies.

"The point is, you have to be very careful when you use these services,'' she said. "Check your work make sure your input is accurate."

Stanger said all four companies incorporated the new tax laws in their software. But she found some outdated advice on items like personal exemptions and mortgage deductions.

"It gets technical,'' she said. "Which is why we say if you can it may be better if you've got a little complex situation with a small business or a dependent, this may be the year to go to a professional instead of doing it yourself."

7 on Your Side contacted the four tax prep services. All four companies said their products are useful tools for preparing accurate returns, and getting maximum refunds.

Tax Slayer said, "We appreciate the feedback we received from Consumer Reports. When Tobie Stanger reached out to us we corrected the dated content and areas for improvement within 24 hours. We are pleased that we were able to respond quickly to her suggestions. Creating an accurate and easy-to-use product for our customers is our top priority. "

TaxAct said, "We completed a robust implementation of the new tax code... to ensure all calculations are correct, the appropriate forms and schedules populate, and every deduction or credit change is included... we guarantee our software is 100 percent accurate and will get each customer their maximum refund."

H&R Block said: "H&R Block's online tax products offer consumers exceptional value and include guarantees for accuracy, maximum refunds and audit support, all at no additional charge. We continue to improve and update our products and our tax professional training to help consumers get the best outcome for their personal situation."

Turbo Tax disputed findings that it gave incorrect information on tax credits, saying: "TurboTax is a trusted resource with over 30 years in the tax business and we have tax expertise, plus technology, and tools to make sure customers' taxes are done right. Last season we helped successfully file over 30 million customers' tax returns. TurboTax and TurboTax Live also come with our maximum refund guarantee and 100% accurate calculation guarantee."

Take a look at more stories and videos by Michael Finney and 7 On Your Side.