When you self-prepare a tax return using software or a web-based program such as TurboTax, you continue to be responsible for the output on the return. You cannot claim that mistakes are the results of the program because it reflects only the information that you choose to input.
Take the following situation where a taxpayer underreported retirement income by more than $100,000 and was assessed a negligence penalty. She claimed that she was not responsible for the error because she used the “audit check” on the program to look for such errors. The Tax Court rejected this claim.
As the court said: “TurboTax is only as good as the information entered into its software program. Simply put, garbage in, garbage out.” Because she failed to input the correct information about her retirement income, she could not escape the penalty.
Brenda Frances Bartlett v. Commissioner; T.C. Memo. 2012-254