TAXABLE SOCIAL SECURITY DID NOT CALCULATE

[Wanda-Sue]

I have 2 clients (so far) received a letter from the IRS saying there was an error on their return. It seems that the taxable portion of their social security did not calculate. These were e-filed on 1/26/2026 and excepted by the IRS on the same date. After going back and deleting the social security worksheets and then reentering them, they did calculate correctly. Intuit said it must have been a clich. It's an expensive one if that's the case.

[BobKamman]

Why is it expensive?  There's no penalty or interest owed.  Non-monetary costs to your reputation, perhaps, for not reviewing the return.  Was it that much different from last year?  

[sjrcpa]

Also a lesson to review returns thoroughly before completing.

[Wanda-Sue]

Yes. Lesson learned. I've always been able to trust the software. Now I won't.

[Wanda-Sue]

Over$900. I'm a small office so That was a big hit for me. My fault though. Won't trust the software calculations anymore.

[Karl]

Respectfully, while you should be able to trust the software, it is our responsibility as paid preparers to review and check the end returns for accuracy.

My SOP is to populate all the forms in an Excel file first and then separately populate Lacerte so I can cross-check all the income and deduction totals to catch typos, software glitches, overrides, etc. For SS, I enter the SSA-1099 totals, and then have a separate input for the taxable % so I can cross-check the amount that should be taxable, and I have conditional formatting to change the cell color if I haven't put in a percentage so that it REALLY calls it out for me.

[BobKamman]

You're paying the tax for them, that they owed anyway?  Quite generous.  No one else does that. 

On January 26, never trust the software.  By February 26, maybe.  

@Karl I won't criticize all that effort, but I admit to using the eyeball method on Social Security.  It helps that I actually print out returns, but it works just looking at it on the screen too.  (Or does Lacerte give you a look at the form itself?  I always think of Pete Seeger and the song "Little Boxes, Little Boxes," when someone mentions Lacerte.)  If the taxable SS looks like 85%, don't worry.  If it's zero with AGI of 50K, then something is wrong.  Often it is a "sliding scale" percentage, and I might actually look at the worksheet.  And I rely more and more on the "Two Year Comparison," because the numbers don't change much year to year for most of my clients.  

[Karl]

I will absolutely concede that eyeballing it for 85% is an acceptable method. For me, I'm doing that cross-check from the 2-Yr summary report, not the 1040, so the step of putting in the percentage is worth it because it helps me catch a typo in the gross number.

Agreed on the dates. I would try to avoid e-filing anything that early anymore, especially after OBBBA plus a govt shutdown last year. I don't even proforma until late January.

I agree that I wouldn't pay the tax for them. I would pay interest and penalties if I couldn't get it abated, but never their tax. And many tax pros I know wouldn't pay the interest, only the penalties. And always call your professional liability insurance to give them a heads up. If it turns into a thing or claim later, CAMICO reduces my deductible for preemptively reporting it.

[Lee6]

I have received two so far that were filed in March.  Both stating that the social security did not calculate!

[Lee6]

Because clients expect the returns to be correct and I expect the same from the program!

[sjrcpa]

And there is no expectation that you review returns for accuracy before you give them to clients?

[IRonMaN]

"And there is no expectation that you review returns for accuracy before you give them to clients?"

At the risk of being sent back to the principal's office, I have to believe there are a lot of folks that visit this place that don't have the capabilities to review a return for accuracy.   For the record, I'm not pointing a finger at Lee6, it's just a general observation based on what I have seen here since I first started visiting this place in 1961.

[abctax55]

@Lee6 

You are saying you entered a gross social security amount, other income too (enough to make some of the SS taxable), you didn't check one of those weird boxes .... and the program failed to do the computation?  

[abctax55]

My excel for verifying back to software data entry takes gross SS received, by taxpayer, X 85%. Then totals both.  IF those amounts don't match (Total received, taxable portion) then I analyze. Or at least look at the worksheet ;-).

Bob, Lacerte allows an green 'audit' checkmark if a number is verified. Change a number ... the check mark switches to red.

[Accountant-Man]

LALY. Always LALY.

The most important form is the Two Year Comparison. I once had one preparer input the W2s, etc, and another preparer review that input. When I got it I went right to the TYC.

Why were TPs getting a HUMONGOUS refund when they typically do not? On the other hand, why was Federal Income Tax on the W2 entered as $50,000 instead of the correct $5.000? The total Box 1 Wages were $100,000.

On the other hand(we had six hands work on the returns) WHY DID THE REVIEWER NOT CATCH THIS?

LOOK AT LAST YEAR!

[BobKamman]

In another message regarding the same problem, the preparer admitted that the box at the top of the SS worksheet, "check if US citizen residing in Canada, Germany, etc.," was mistakenly checked.  Before deleting the worksheets and reentering them, did you happen to notice if that is what happened?  Don't blame the software if it did what it was told.  

[JRC]

Same problem with me also for 2025 returns. The wording for that should not begin with "check if US citizen..ect" if you ask me....

I tried to catch all of them but missed a few and clients received a correction letter. I just realized how many clients of mine collect social security.

[Accountant-Man]

Hi, Karl. I once taught a 1040 class and one of the attendees did that Excel sheet, so I tried it,too.

My staff made too many errors to rely on it and them.

Many, many moons ago when I cut my teeth on Fast Tax(aka Slo-Tax), the input forms had a special input sheet that was used for cross-checking the return. I also once spent an entire tax season as the firm's OFFICIAL Super-Duper Diagnostic Reviewer who hand checked every single 1040 and those cross-checking sheets FOR THE ENTIRE FIRM when the diagnostic showed discrepancies.

That was also back when we prepared bi-weekly timesheets by hand. I just photocopied timesheets pre-filled with firm codes and my time of 0.1 hours(6 minutes) per return for "Diagnostic Review." Each page had 20 lines all pre-filled. I typically used 20+ sheets per week just for diagnostics.

Fond memories.