Mac Forum / Applications / Mac Applications / February 2005

Not a lot at my taxable AGI level, but if they err there might they also
botch a complicated return.  Several years ago, when I switched to TaxCut,
I noted that TurboTax was inflexible with respect to distributing a
dependent's college expenses over the several ways to offset. The tax
code, as I confirmed with IRS, allows you to offset the capital gain on US
Savings bonds with college expenses. Further, one can take advantage of
one option during a student's first 2 years or another option for the
second 2 years (Pell & Lifetime Credit). TurboTax would allow only one
option - but the tax code says you can use as many options as you have
allowable expenses - its just that you can use each dollar just once.
TurboTax did not understand this, but TaxCut did. In my daughter's last
year the new line 12, is it, option became available and we had large
enough expenses to use all three. I only came back to TurboTax this year,
because I could not find TaxCut out here when I was buying. The HR Block
web site did not indicate a Mac product, so I thought I was stuck. I
wanted to get an early start because I knew I had a refund coming and I
might as well get the bank interest. So my advice is; if you have any sort
of complications, like partnerships, property inversions, stocks and bonds
activity, etc you had best look at what TurboTax is doing with flinty
eyes.

One last TurboTax gripe. We cashed some mutual fund shares to pay for our
daughter's last semester and of course we got a 1099B requiring filing
Schedule D. Because my wife's mutual fund holdings come from pay period
deductions, comparable shares were bought both before and after the
redemption (tax code specifies a 61 day window), which qualifies the
redemption was a 'wash sale' for which not 100% of any loss is allowable.
There is a complicated tax code treatment of wash sales to assess any
disallowable loss.  Brokerage houses are highly expert at doing the wash
treatment and our 1099B specified exactly how much of our loss could be
claimed on Shedule D (there were both short and long term amounts). You
guessed it; TurboTax disallowed all the losses which tells me they do not
have the foggiest knowledge of how to handle wash sales. Now our bucks
were not large, but I pity the hapless guy who has large bucks involved in
Schedule D.

Both the handling of education expense offset options and the wash sale
issue, convince me that the writers of TurboTax do not know what they are
doing. A friend of mine, who quite a few years ago had a small partnership
business on the side, never filed TurboTax's returns directly but used
their printouts as a way to organize his data for the convenience of a
professional tax accountant, schooled in the tax code. Year after year, my
friend would bring back the side-splitting revelations of TurboTax
mistakes by his accountant. So choose your weapons, but be sharp.