Using Tax Software to Do Your Taxes?

Using Tax Software to Do Your Taxes?

US Tax Court.

US Tax Court.

According to a US Tax Court case Docket №14085–20S, a taxpayer was using popular tax software to do their taxes. Nothing out of ordinary in this approach to taxes. many people use tax software and do taxes themselves.

As it turned out later when the taxp[ayer entered their mortgage interest expense of $21,201.25, the software processed it as $2, 120, 125, which is over two million higher than their actual mortgage interest amount.

The taxpayer said that they made an honest mistake and are not responsible for the accuracy-related penalty. The accuracy-related penalty is (https://www.irs.gov/payments/accuracy-related-penalty ) 20% of the portion of the underpayment of tax that was understated on the return. If a taxpayer understates their tax liability by 10% or $5,000 (whichever is greater), they will be responsible for the 20% accuracy-related penalty, plus interest.

What did the US Tax Court say to that?

The US Tax Court said that the taxpayer should have been carefully checking their return. An extra two million dollars in mortgage interest deduction is significant to miss.

The US Tax Court ruled in favor of the IRS and kept the 20% accuracy-related penalty.

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