That's a really good point I hadn't considered. How would I check if my software is using the most current tax rules? Is there some version number or update date I should look for?

Most tax software will show the tax year version somewhere in the settings or about section. Look for something that says "Tax Year 2025" or "Updated for 2025 tax law changes." Some will even show the specific update date. If your software offers a way to view the actual IRS instructions they're using for calculations, that can help too. The most reliable way though is to check the preview of Schedule 8812 from both software programs - they should both reference the same tax year and use identical calculation methods for the Child Tax Credit.

The IRS calculator is decent but it doesn't handle some of the more complex situations. I'd also suggest running the numbers quickly through a third software like Cash App Taxes (formerly Credit Karma Tax) which is completely free regardless of income. Having a third calculation might help show which of your current ones is more likely correct.

How does either handle QBI deductions from the rental properties? That's been a confusing part for me when deciding which software to use.

TurboTax handles QBI deductions pretty seamlessly. When you enter your rental information on Form 8825, it automatically determines if your rental activities qualify as a trade or business for QBI purposes. It asks specific questions about time spent, services provided, and other factors to make the determination. TaxAct also calculates QBI but the interface isn't as clear. You have to manually indicate whether the rental activity qualifies as a business under Section 199A, which requires you to understand the requirements yourself. The software doesn't guide you through that determination as thoroughly as TurboTax does.

That price is a bit steep for me since this is my first attempt at doing it myself. I was hoping to keep software costs under $500. Is Drake significantly better than TurboTax for someone who's not a professional preparer?

Interesting point about international competition. Do other major economies like the EU, Japan, etc. also use flat corporate rates? Or are there any examples of major economies successfully using graduated corporate rates?

Yes, almost all major economies use flat corporate rates. The UK, Germany, France, Japan, Canada - all flat rates with various deductions and credits. China has a flat 25% standard rate with reductions for certain industries or regions. There are very few examples of graduated corporate rates in major economies. South Korea has a modestly graduated system with three brackets (10%, 20%, 22%), and the US actually had a slightly graduated system before the 2017 tax reform with brackets of 15%, 25%, 34%, and 35%, though with income phaseouts that effectively flattened it for many corporations. The trend globally has been toward flatter systems with targeted incentives rather than graduated rates.

Your facts about Amazon aren't quite accurate. While they did pay little federal income tax in some years (2017-2018 notably), that was because they used legal deductions for R&D, stock-based compensation, and carried-forward losses from earlier years when they weren't profitable. They've since paid billions in taxes. The tax code incentivizes certain behaviors like R&D and investment. That's by design, not cheating. And corporate profits that go to executive compensation get taxed as personal income at graduated rates. Stock buybacks now have an excise tax specifically to address that issue.

What kind of penalties are we talking about if someone gets audited and the IRS rejects their claim? Is it just paying back the money or are there additional fines?

If the IRS determines an ERC claim was improper, they can require repayment of the full credit amount plus interest (which is currently at a high rate). In cases where they determine the claim was recklessly or intentionally improper, they can also assess accuracy-related penalties of 20% or even fraud penalties of 75% of the underpayment. There's also the cost of defending an audit, potential damage to banking relationships if a large repayment is suddenly required, and the business disruption of dealing with an extended examination.

Thanks for sharing this - this is exactly what I'm worried about. I keep trying to explain the risks to my client but he only sees the dollar signs and not the potential consequences. Did your brother's business have any specific government orders that restricted their operations, or was it purely the "supply chain" angle that the ERC company used?

He had to close for about 3 weeks in early 2020 like most retail, but reopened with masks/distancing requirements. The ERC company focused mainly on "supply chain disruptions" claiming his inability to get some inventory items qualified as a partial suspension. The IRS disagreed completely. Their position was that since his overall revenue increased and he found alternative products to sell, he clearly wasn't significantly impacted in a way that qualified. The business had its best year ever during COVID because people were shopping locally instead of at malls.

Isn't there something called "innocent spouse relief" that protects you in situations like that? I thought the IRS had procedures for when one spouse didn't know about the other's tax shenanigans?

Yes, there is innocent spouse relief, but it can be extremely difficult to qualify for and prove. You have to demonstrate that you had no reason to know about the underreporting or false deductions, which is a high bar to clear especially for married couples who live together. The process is lengthy and stressful, often requiring professional help. In my experience, it's much easier to just file separately from the start if you have ANY concerns about your spouse's tax situation. Prevention is better than trying to fix things after the fact with the IRS.

Wow this is really good to know! I'm on IBR for my loans and didn't even think about how filing status would affect that. Does this work for all income-based repayment plans?