Does Tax Preparation Software Really Get You More Money Back?

Each year, right about this time, I receive quite a few inquiries from people asking which tax preparation software will get them the largest refund.

Just the other day, I had to referee an emotional exchange between two siblings who were having a very passionate discussion – to put it lightly – about this particular issue. Sibling A would have received a larger refund if she had utilized Sibling B’s recommended software. Or was it the other way around? Regardless of who won the day, I must tell you, it was quite interesting and amazing to hear their contrasting views.

Throughout the Year Is What Matters: Tax law is tax law, PERIOD! So allowable deductions, exemptions, and/or credits will be the same, regardless of whether you use the latest software or do it the old-fashioned way, using a little piece of software I call a pencil. What is critical – and what I believe most are overlooking – is that once December 31st passes, there is absolutely nothing you can do that will get you a bigger refund than you are legally due. That’s right! No tax expert, guru, software, or CPA for that matter, can improve your refund after the fact.

In effect, if your tax guy or software company claims responsibility for your refund but does not instruct you in how to structure your affairs between January 1 and December 31 of the prior year – other than simply punching your information into a software program – you probably are not receiving any valuable tax assistance anyway.

Please GET THIS: No software has magical powers that enable it to pull more refund dollars out of thin air. The only possible way I can think of to get a bigger refund than you legally deserve is to cheat on your returns, and I’m sure you’re not interested in going that route, are you?

What about the “Maximum Refund Guaranteed” Claims? If you pay close attention to this claim that every software company makes, technically, they are NOT saying that if you use something else you’ll receive a lesser refund, even though your mind might interpret it that way. It’s simply an effective marketing technique. They know you’ll fall for the message, and they know they can get by with it, so they use it. It really means that you’re guaranteed the maximum (legally permissible) refund – based on your situation.

The more fascinating part is that over the years, I’ve examined returns that were software prepared and spotted areas where money was being left on the table – missed credits or selecting a less favorable credit/deduction mechanism. In one such instance last year, the filer was able to improve her software refund by more than $1,500.

Three quick points in closing: First of all, give yourself a break and do your tax planning during the year, instead of after the fact. Secondly, to all those who may be debating the relative merits of one software package vs. another, relax! And finally, to the software marketers creating the illusion of a magical refund, I have a one-word response: Puh-lease!
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Samuel N. Asare is the senior strategist at Laser Financial Group. His practical, straight-forward, and superb ability to simplify often-complex strategies has made him a regularly featured expert in various regional and national media outlets, including TV and radio. Samuel is the celebrated author of four personal finance books and the acclaimed Proven , Common-Sense Wealth Building blog.  He holds an MBA and is a Chartered Retirement Planning Counselor, a Charted Mutual Fund Counselor, a Certified Treasury Professional, and a Certified Business Manager. For more retirement insights, visit LaserFG.com, or connect at facebook.com/LaserFG

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Samuel Asare MBA, CRPC, CMFC, CTP

Samuel Asare MBA, CRPC, CMFC, CTP

Samuel N. Asare is the senior strategist at Laser Financial Group, a regular columnist/commentator for various national and regional publications, author of Proven , Common-Sense Wealth Building blog, and four personal finance books. He holds an MBA and is a Chartered Retirement Planning Counselor, a Charted Mutual Fund Counselor, a Certified Treasury Professional, and a Certified Business Manager. To get more straight-forward retirement insights, visit LaserFG.com, or connect at facebook.com/LaserFG.

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