Thursday, January 22, 2009
Geithner Blames Turbo Tax For His Tax Troubles
Treasury Secretary nominee Timothy Geithner implied at his confirmation hearing that the mistakes in his tax returns were caused by his use of the TurboTax software program. Of course, as any tax professional knows, TurboTax (and any of the other leading software programs) easily calculates self-employment tax (as well as the disallowance of a dependent care deduction for the cost of your kids' overnight camps). The errors here were entirely Geithner's, not TurboTax's.
Update: Jim Lindgren (Northwestern) installed the 2004 and 2005 TurboTax programs on his computer and conclusively demonstrates that "neither of the two major errors in Geithner’s returns ... would have been covered by interactive prompts in the 2004 or 2005 versions of TurboTax."
Once again, the New York Daily News has the best headline and snarkiest article: TurboTaxed:
Let’s hope the economy is easier to figure out than TurboTax. That’s the software that Treasury Secretary nominee Timothy Geithner used when he failed to pay about $34,000 in taxes, he admitted this morning in a confirmation hearing that was delayed because of his tax flubs. “I used TurboTax to prepare my returns,” Geithner told the Senate Finance Committee, looking just a little embarrassed, and prompting laughs in the hearing room. He wouldn’t blame the software for his errors, but he didn’t say it helped him spot them, either.
See also Wonkette: Turbo Tax Was Fiend Behind Geithner’s Tiny Error!:
Under questioning from Senate Finance Committee Republican member Chuck Grassley, Geithner was very reluctant to disclose which tax filing software he used. He quickly suggested the software wasn’t the problem; he was.
But Grassley pushed back, again asking what software he used. Geithner said, “Turbo Tax.” Grassley then asked if Turbo Tax has brought it to his attention that Geithner needed to pay more taxes. Geithner said, “No.”
Software goblins ate Tim Geithner’s taxes. Why does Turbo Tax want our global economy to fail?
For more, see:
https://taxprof.typepad.com/taxprof_blog/2009/01/geithner-blames-.html
Comments
If a guy in his position (whom I would hope is pretty smart) cannot use Turbotax correctly, how does that bode for the rest of us as taxpayers? Even his tax preparer/accountant missed it? This is ridiculous--do they really think we're that gullible? And, why doesn't he have to pay the fees and interest charges like the rest of us? It's just downright disgusting that such a blatant double standard exists for the haves and have-nots.
Posted by: rEVOLution4truth | Jan 24, 2009 11:35:46 AM
The fact Geithner applied for and received extra pay specifically to compensate for self-employment taxes from the IMF, means he knew about the self-employment taxes. Plus, hey, common sense dictates if your wage and tax situation was the same in 2001-2002 as 2003-2004 from which you were audited and paid, you probably ought to revise your returns for 2001-2002. Seems like one of those, oh the IRS didn't catch 2001-2002, so why bother. He only took responsibility when he was forced to do so when nominated for Treasury Secretary. Duty is doing the right thing when nobody is watching. Do we want to entrust someone who has no sense of duty to run our country's money?
Posted by: Tim | Jan 23, 2009 9:54:06 AM
Prof. Lindgren states that Geithner received a W-2 and not a 1099 or some other statement showing taxable income, which is key to how Turbo Tax would treat it. Can someone confirm that? I understand that foreign embassies are not required to provide any US tax reporting. What does the IMF do?
Posted by: Arthur | Jan 23, 2009 9:12:58 AM
Geithner is absolutely right; furthermore, the USSR collapsed NOT because of any flaws in communism but rather because Reagan's dirty tricks operatives put bugs in TurboGOSPLAN.
Posted by: Alan Furman | Jan 22, 2009 6:19:21 PM
Seems to me that I want Geithner to Sectretary. The next time I tangle with the IRS, I will be able to say: "How can you impose a penalty on me, the Secretary got away with it."
Posted by: Fat Man | Jan 22, 2009 5:19:17 PM
Is everything else on this blog as misleading as the headline of this article?
It sounds like Geithner took responsibility. Whether you believe it was an honest mistake or not is a different question. But to make up statements like "Geithner Blames Turbo Tax" is bull, and I believe you know it.
Shame on you Paul Caron.
Posted by: G | Jan 22, 2009 3:14:18 PM
Anyone else notice the emperor has no clothes on. I used Turbo-Tax until they switched to a web-based system and then started using HR Block software. Never had a problem with either calculating the taxes owned once I entered the "correct" data. So, once again a liberal is going to receive a pass for out and out fraud.
Posted by: Earl | Jan 22, 2009 2:42:32 PM
Anyone else notice the emperor has no clothes on. I used Turbo-Tax until they switched to a web-based system and then started using HR Block software. Never had a problem with either calculating the taxes owned once I entered the "correct" data. So, once again a liberal is going to receive a pass for out and out fraud.
Posted by: Earl | Jan 22, 2009 2:42:07 PM
Geithner specifically said it was his fault and did NOT blame TurboTax. This is a misleading headline.
Posted by: H | Jan 22, 2009 12:11:48 PM
Bullshit. He was reimbursed by the IMF for those taxes, and had to sign a document stating he DID pay those taxes before that could happen. So now he says it was a "mistake"? Bullshit.
Posted by: zipity | Jan 22, 2009 11:46:13 AM
Did he not get documentation to accompany the monies he received that were owed to taxes?
If a 1099, you are obligated to report it whether or not you ar prompted. I would hope a tax expert knew that!
Posted by: lonetown | Jan 22, 2009 9:49:38 AM
I have been self employed several times in my life. During one stint I used Turbo Tax (formerly Parsons) to fill out my taxes. I filled in the blanks as it relates to 1099 wages; unfortunately never, and I mean never, did it neglect to tell me how much I owed. I suspect one could use the overrides to reduce taxes, but overrides are intentional, not accidental. Further more, after the first year, I was required to fill out quarterly statements and payments.
Posted by: Al | Jan 22, 2009 9:34:19 AM
As a tax cpa, I can tell you I use tax preparation software. I believe the term is GIGO, garbage in garbage out. Geithner has signed off that he understands the "HE" is responsible for his self employments taxes and his W-2 has been "grossed up" for the income tax on the self employment tax that he was paid by the IMF. He prepares his return and looks at his Form 1040 and does not "SEE" any self employment tax. Sorry, does not pass the smell test. I call this tax payer a tax cheat. If you think he made an "innocent mistake", I have some "mortgage collateralized securities" to sell you.
Posted by: mike | Jan 22, 2009 8:57:26 AM
To be slightly fair, TurboTax did screw up my return a couple of years, when I had multiple W2s and changes of address in NYC.. It had a bug whereby it only took the state and city taxes paid from the first W2 entered, and not the following W2s.. I almost stroked out the first time I saw it, and had to go into full-return-view mode to find the discrepancies.. Now that I've fled NY, I don't have that problem anymore ;)
But yeah, Caveat Emptor is the motto they proudly stand behind :p
Posted by: Dr. Kenneth Noisewater | Jan 22, 2009 8:24:32 AM
I've never used Turbo Tax, but I strongly suspect that Geithner took his Form 1099-MISC from the IMF and entered the gross income in the last income line (Miscellaneous income) of the Form 1040. Because some types of self-employment income (for example, an executor's fee received by a non-professional fiduciary) are not subject to SECA Tax, I'm certain that Turbo Tax gives the taxpayer the ability to suppress the application of SECA tax to that income.
Given Geithner's receipt of the tax gross-up and his signed statements that he understood his SECA Tax obligations and would fulfill them, his tax return preparation is the last step in a deliberate effort to avoid paying the tax. Years ago, I doubt he anticipated being vetted for a cabinet-level position, so he rolled the dice in the hopes of flying under the radar.
Sorry, no dice. In a country of 300 million people, we have to have someone equally as capable, if not more capable, and much more honest.
Geithner is a lying sack.
Posted by: SAM | Jan 22, 2009 7:00:33 AM
Let's be clear folks. Blaming an "error" or Turbo Tax or any other explanation other than "I thought I could get away with it" is bullshit. He signed a document when the IMF REIMBURSED him for the taxes he DID NOT PAY, stating that he had in fact PAID them. Not really possible to spin that, unless of course you are in the business of making sure nothing ever points to a possible flaw in the Obamessiahs judgement...
Posted by: zipity | Jan 22, 2009 7:00:04 AM
Actually, Geithner didn't blame Turbo Tax. In the video, he explicitly accepts responsibility and is reluctant to even name TT.
Posted by: gribini | Jan 22, 2009 6:01:20 AM
Clearly TurboTax needs a new prompt:
"Have you ever worked for the International Monetary Fund?"
Impacts lots of people, right?
Posted by: Rusty | Jan 22, 2009 5:11:43 AM
IMF provides guidelines explaining that SETA taxes are required... AND IMF reimburses the taxes!
The "little people" are penalized for such evasion but some insiders get rewarded.
Posted by: Steve | Jan 22, 2009 4:54:52 AM
I just retired from the IRS this past summer. I can verily state we would have been fired on the spot if unreported income was discovered on our tax return. It is shocking that Timothy Geithner would head the IRS, the same organization that would have fired me for ANY unreported income. I am sure shock waves are rippling through my former IRS office right now to think that the new head of the IRS failed to pay $30,000 in taxes. Turbotax? Apparently, he was guided by his attorneys to state this to shift responsibility. Turbotax is the most user-friendly software program available. It was not the mistake of Turbotax. It was the mistake of Timothy Geithner, and this mistake would have cost any other IRS employee their job.
Posted by: Gay Stebbins | Jan 22, 2009 3:43:29 AM
Actually, when using TurboTax one can override and enter wage income from a W-2 directly on Line 7 of Form 1040 and the override will not be indicated during the error checking process.
I am still waiting for someone to provide a coherent explanation of the exclusion of ALL tax refunds entered on lines 10 and 21 of Form 1040 from alternative minimum taxable income (see line 8 of Form 6251 for 2008) and the inclusion of tax refunds entered on those same lines in the detemination of taxable Social Security benefits. Think about the possibility of double or nothing taxation! See sections 56(b)(1)(D) and 111(a) of the Internal Revenue Code. So much for TurboTax producing a return that conforms with the Internal Revenue Code. TurboTax follows IRS instructions - BIG MISTAKE.
Where is the Congressional oversight of IRS? I wonder how many members of the Senate Finance Committee have benefitted from the exclusion of all tax refunds from AMTI.
WDK
Posted by: WD Kebschull | Jan 21, 2009 10:56:14 PM
What software did he use to do his taxes? Unbelievable. All these criminals are all in bed together. As long as the American sheeple continue to buy into the big bs lie dog & pony shows, they will continue to make the presentation. The hits just keep on comin.
Posted by: Stupid Amerkin | Jan 27, 2009 8:51:30 PM