Tax Preparation Software

Doing your taxes can be so grueling that it's tempting to let software do the hard work, and simply accept the final result.

Be aware: Popular products such as TurboTax and H&R Block At Home can produce errors, particularly if customers use a feature that imports stock information from brokerage accounts. Tax professionals say filers should watch for common errors and know how to fix them.

The bottom lines the software is largely effective, but keeps in mind Ronald Reagan's Cold War-era advice, Trust but verify.

The stock-related errors can arise because of the way brokerages and financial institutions keep transaction records. Most firms can provide a stock's selling price and the date it was sold, but for a number of reasons, not all firms provide the purchase price.

That can lead to errors when the information is imported into tax software. Some taxpayers say the software has interpreted their empty data as a $0 cost price, leading to calculations that are way off.

The major brokerages and tax-software companies don't dispute the problem exists. But since brokerages aren't currently required to provide cost data, and software simply reflects the information it's given, it's up to filers to make sure the results of the import are accurate.

Brokerages don't always provide a cost basis because maintaining the figure can get tricky. Complications arise when a stock split, an investor reinvests dividends or the company gets acquired. So some brokerages leave that information blank.

But some customers say they didn't receive any error messages. Several caught the error on their own, and others found out only after receiving letters from the Internal Revenue Service.

If you suspect you had an error in previous tax returns, you can file an amended return. But don't wait too long amended returns must be filed within three years of the date of the original return or within two years of the date you paid the tax, whichever is later.