TaxAct Warning

TaxAct provides a Tax Calculator that I have used to help determine estimated taxes for the coming year.
I recently input the numbers for a client with a large capital gain.
He questioned the tax liability, it seemed very high.
I discovered that the calculator taxed long term capital gains at ordinary rates. I filed a report with TaxAct. Here is their response:

As the tax rate for capital gains and dividends depends on many variables (including whether the capital gains are treated as ordinary income) the Tax Calculator will use the tax rates for ordinary income when completing the scenario.

Screen door in a submarine?

I guess you get what you pay for!

Oh so true. Fortunately I don't often have to project $600K capital gains.
I responded to support and told them I posted their reply on a widely used tax professional forum. Maybe that'll get their attention.

Howard S - I noticed that a couple of days ago. It used to work it out roughly right. Not any more.

This report and the MFS v MFJ report have been major weaknesses of TA for years. I have asked for improvements for at least the last six years with no joy. In my opinion it is lazy programming as most of us on this forum could rustle up the reports in Excel if we had to.

At least I know where the bugs in both of these reports are located so I can override them when I use the reports. I pity all the preparers both pro and self who use these reports not knowing they sometimes produce garbage.

If you guys already know that TA is creating an erroneous report then you can't possibly give that to your clients. It looks unprofessional

If TA is NOT willing to fix it get another tax prep software or stop using that report.

ATSMAN - I have never given these reports to the client. The TA formatting of the reports is not professional enough to give to a client even if they worked straight out of the box.

As I mentioned I know where the bugs are and over ride them when I use the reports. I use both reports on every return as part of my review process and for planning.

No need to change software. I have looked at others and all had issues that made changing not worth it. Plus a lot of TA is good particularly for small practices like mine.