As someone who used to work in tax preparation, I think one of the most overlooked aspects of tax software is security and audit protection. With all the sensitive financial information we're entering, tax software security features should be a top priority.
I'm planning to do a series of professional tax software reviews focusing on different aspects. For this thread, I want to discuss tax software with audit support and overall security.
Which tax software companies actually provide meaningful audit support? I'm talking about real representation, not just a booklet telling you what to do. And what about data encryption, two-factor authentication, and other tax software security features?
I'd love to hear experiences from people who have actually had to use audit support or have specific security concerns.
This is such an important topic that doesn't get enough attention. I've been using TurboTax for years and always wondered about their audit support. They offer Audit Defense" as an add-on, but from what I've read, it's basically insurance that pays for representation if you get audited.
What I want to know is: which tax software with audit support actually provides the service themselves versus just selling you insurance from a third party? And do any of them include it in their base price, or is it always an extra cost?
As for tax software security features, I assume all the major players use encryption, but I'd love to know if some are better than others. Two-factor authentication would be nice to have.
I got audited a few years ago (random selection, not because I did anything wrong). I was using H&R Block software and had purchased their Peace of Mind" audit protection.
The experience was... okay. They connected me with a tax professional who handled communication with the IRS. It definitely reduced my stress, but the process still took about 6 months to resolve. The protection didn't cover everything - I had to pay for some additional documentation preparation.
For tax software security features, I now use a password manager and enable two-factor authentication wherever it's offered. Not all tax software offers 2FA though, which is concerning given the sensitive data involved.
Security is a big concern for me too, especially with investment account information. I've noticed that some tax software companies have had data breaches in the past, which makes me nervous.
What I look for in tax software security features:
1. Two-factor authentication (not all offer this)
2. Encryption of data both in transit and at rest
3. Clear privacy policy about data usage
4. Option to delete my data after filing
As for audit support, I think it's mostly insurance. The software companies aren't law firms, so they partner with third parties to provide the actual representation. The value is in having someone to call who knows the process.