I gotta say I have a love-hate thing with Turbotax. I hate the company and its influence peddling, lobbying, and near monopoly status, but Turbotax itself is a very well designed product with a great intuitive experience that has done a great job filing taxes.
So it's a rare case of a sleazy state-sanctioned (via refusal to simplify the tax code) monopoly with a decent product. Usually such monopolies have complete shit products because they don't need to care.
TurboTax works great, until things get a little too complicated, and it quickly becomes terrible. What is needed is a strongly typed DSL where you can copy and paste your entire tax return as a single text document/spreadsheet.
I pay for a stand-alone and the only upsell I can recall seeing over and over again is "audit protection" for ~$59 or so. Is the free version filled with add-ons?
And the state efile (but since there's the "free" alternative to print out forms and mail in that's not a big deal, and it's relatively cheap anyway). I've also always used the desktop/standalone version, great time saving compared to doing it on my own.
You don't notice the dark patterns because they are dark. Are you sure you haven't paid TurboTax for an upsell when they have a free or cheaper alternative they never mention?
Before Turbo Tax I sheepishly headed down to H&R Block and got reamed.
Besides understanding my taxes (and taxes in general) better, I almost enjoy the process using Turbo Tax.
If there is a better Turbo Tax product out there, it would have to be very compelling to get me to switch. Besides familiarity with Turbo Tax, it pulls in last years data and saves me the more tedious steps.
Like you though I feel like I am locked in at this point.
H&R has a similar desktop product. The prices are in the same range and the lockin feels the same. Not sure what I am locked into though both products never find my W2s correctly anyway and import my stock divs wrong.
That's odd, I consistently have problems with it. It's fine if you add some W2s and work straight through to filing. But navigating back and forth through different sections never behaves the way I'd expect.
Things like brokerage transaction imports were simply broken while I was trying to file last year (which, incidentally, is the only reason I pay for it).
And their "UIs" for dealing with forms like K1s are often more confusing (to me at least) than the underlying IRS form.
Hard disagree, I've had numerous problems with their app and they constantly try to upsell you even after extracting their egregious yearly fees. There has been no innovation or even noticeable change to their product in years.
I've been using TurboTax desktop version (the Premium edition) for 10+ years and never ran into any issues (and I have relatively complex income situation) except for one bug they have always had about incorrectly summing up the mortgage loan amounts of the same loan that you refinance or transfer in the same year (so it ends up looking as if you had 2 loans that year and consequently can miss out on large deductions). But this is relatively easy to observe and workaround. Compared to spending weeks doing my own taxes (I did them for 3 years) it's a total bliss.
I feel that a lot of people complaining about TurboTax upselling or anything like that are attempting to use the online version. I am very much opposed to giving some online site all my tax information so I will always keep using the desktop version for as long as I can. It includes 5 free federal e-filins and have to pay extra (about $30) for state filing (but can always just print out the filled forms and mail them in if you don't want to). And when I did the taxes on my own I had to print and mail them anyways.
Unfortunately TurboTax falls flat if you have a complex return. They "support" forms 1116 and 2555, but it's clear that they didn't put any real time into making sure they do the calculations correctly. Long story short, I got a check from the IRS for almost $1000 because TurboTax computed what I owed incorrectly.
Turbotax’s website commits all the web sins we condemn regularly on here. They hijack the back button, change your scrolling, don’t allow tab-spacebar-enter navigation, don’t allow pasting in some fields, and load buttons on a fixed resolution so you can’t see everything if you aren’t on a hires monitor. It’s really not a good product.
It is an unclassified federally-funded document -- as I understand things, it is therefore in the public domain.
Because many eyes often make bugs shallow, there is a pretty good chance that a public release of the code will find errors that both find funds that are owed to the government and exonerate people who have been incorrectly billed.
This can’t possibly be true, in general. Work products produced by a contractor from a federally-funded project are not automatically in the public domain. Government-held, unclassified data can be sensitive, proprietary, confidential, or contain private information about citizens. None of this is public domain.
The lobbying push from companies that would rather it wasn't (because it could erode their market position by lowering the entry bar for competitors) is stronger than any current push in the other direction, would be my guess.
However, that doesn't necessarily mean they're public domain. Trademark law still applies, for example.
Additionally, not everything the government uses, even exclusively, was produced or is owned by the government. Often, government contracts allow the contractor to retain control and ownership of the intellectual property. The government may also have copyright transferred to it and retain that copyright. A legal issue I haven't researched is the line between a work that is a government work under work-for-hire principles, and therefore is ineligible for copyright protection, and a work for which the government contracts and for which copyright is subsequently transferred.
Before attempting to FOIA the source code of a piece of government-exclusive software, I would first FOIA all government contracts for the creation of that software. Then you'll have something to go on when crafting the FOIA request you really want.
lots of vague stuff, but looking at the Google result, I noticed some differences. Ah, the meta description of the page reads:
Open source software, while it can be useful in many instances and appear to be cost effective, may present a security risk because open source developers don’t typically follow security best practices when developing their software.
It wasn’t FOIAd, etalab is a government department (they’ve done a few cool things, there’s also an interactive map of property transactions with surface and price
How useful is the computation code though? The computations themselves for the cells on a 1040 form are not that complicated and well documented in the instructions. The hard part is getting all the right numbers into the source boxes.
Somehow, the IRS compares the tax return I submit with what they expected. It is that entire machinery that is in the public interest to be visible and audited by the public.
Agreed, but one ought to be able to FOIA the entire pipeline that handles the data. This is especially so given that the results of the pipeline are used for tax enforcement and litigation.
The IRS does have income information, but they do not have deduction information. Deductions are mainly where any form of complexity comes in. Without deductions taxes are super easy.
> please don't use this software to file your taxes for the 2020 / 2021 tax season.
I wonder if there is a PR that Intuit filed to add this to the readme.
Seriously, I wonder how much money Intuit has spent to terrify people into using their software. Each year, I look around for alternatives so I can avoid giving them money, and each year I find some reason to grow fearful of an IRS audit and go with the company that has convinced me they are less risky than anything else. I wonder if that is truth, or if I've been programmed to think that.
I've been using TaxAct for years, but I'm not sure they are better. They have every incentive to lobby with TurboTax to make sure it is hard to file taxes without help.
I'm tempted to go back to paper forms. It wasn't hard, just annoying the one time I forgot to copy line 13 of form 1234 to line 43d of form 5678 and then had to amend my state filings.
Yeah, truthfully I would rather not have to use TaxAct either. Since the IRS already knows what I owe, what's the point of filling out forms by hand?
Every year when I manually copy information from my W2 onto an online form, I think that tax season must be the biggest data entry clusterfuck in the world.
> Since the IRS already knows what I owe, what's the point of filling out forms by hand?
Complete agreement, though there will in some cases be a need to file forms to supply information that they don't already have. Additional deductions, for instance: charitable contributions, deductible expenses, etc. But those forms should be "here's the information", not "here's the information and a pile of careful calculations implementing an algorithm".
It holds your hand a lot less than taxcut or turbotax though. Its basically a very thin shim on top of the IRS forms and instructions. Other than the electronic filing and a couple pretty basic hints, once you have some history and are vaguely aware of tax credits for various things, its barely easier than the IRS instructions in the old paper tax forms.
I tend to use taxcut, which is a bit closer to turbotax, but frankly its messed up things that I only found by reading a paper copy of the return before filing and noticing numbers that didn't make sense (doubling values by adding imported values with hand entered ones, that kind of thing). I had problems like that with turbotax in the 1990's but haven't used it since the bootloader fiasco.
I have used TurboTax pretty much my entire working life and never have been audited. The one time I decided to use a professional due to "complex" tax issues that year, I was audited, which became a huge pain in the ass.
Unless you really screw up[1], or are intentionally trying to screw the IRS[2], you don't have to worry about an audit. The IRS's goal isn't to bring down their wrath upon you, their goal is to accurately collect the taxes they are due. If you pay too little, they'll ask you to pay the difference. If you pay too much, they'll refund it. Really: I once used the single-payer tax table instead of the filing-jointly tax table, and they sent me a nice letter explaining my error alongside a big check.
Unless it was written by a contractor who then gave the copyright to the IRS. This is a very common situation. The federal government is not barred from having copyrights.
It really isn't - the point is freedom access, not free use. Information acquired this way doesn't magically become public domain, it may (or may not) have other constraints on it.
Any code authored by or for (exclusively) the government is default open. Usually all it takes is a FOIA request; if you're lucky they're publishing it on github already. However there are carve-outs for areas where making the code public could impede the law-enforcement mission of the entity that uses it, that is, FOIA exemption 7E. Since the IRS knows that if you knew how the audit worked*, then you'd do your taxes "just so" to avoid the thresholds by running the logic yourself, which is not something they'd want to encourage. And it would definitely increase their audit casework load.
There's also the issue that if the code wasn't bespoke but also sold to non-government entities for similar missions (i.e. government does not hold exclusive rights), then it can be protected as the contractors IP. But for the IRS this would be rare, they are pretty unique and often do things their own way.
* You can sort of do this without the code. The IRS is not allowed by legislation to base an audit decision on any information that is not covered by eFile, so contents of forms 1041QFT and 990T, or any attachments to what could have been an electronically submitted form, is out of scope. As long as what you submit in the core set of forms aren't statistical outliers, then you're good.
IANAL, or an accountant, etc, but if I’ve learned anything from ravenously consuming Trump family news the past few years, it’s that ignorance of the law actually is a defense in cases around taxes, and the IRS has to satisfy a standard of proving bad intent in order to really screw you.
Again, IANAL, do your taxes, please. But it does seem like the system is legitimately designed with an ethos of just making sure taxes get collected and isn’t about being vindictive.
Having dealt with tax authorities in several countries, it's a recurring theme that they have no interest in coming down on you hard if you seem to be trying to do the right thing and make actual efforts at compliance, as they have their hands full putting actual effort into dealing with people actually trying to evade tax.
What I always do if in doubt is to attach a letter setting out my assumptions. I've outright had to tell the tax authorities I didn't know the real numbers one year, because I realised shortly before filing that I'd lost documentation in a move, and so a whole bunch of details were estimates. Even that was accepted without additional documentation.
Of course I'm sure there are countries that are worse.
There is no way that would work with the IRS. Anything you estimated and can't provide documentation for will automatically be considered void and non-existent by the IRS if that thing reduces your tax bill.
If you think you have about $5k in valid deductions, but you can't provide any documentation upon an audit, then that $5k will be reduced to exactly $0 and you will owe all additional taxes plus interest and penalties.
I agree with the basic premise that the IRS is nothing to be afraid of if you make a simple mistake. Though if you make a $5,000 error (which is getting out of "simple mistake" territory), they'll tack on a 20% penalty.
That being said, audits are incredibly annoying if you didn't make a mistake, especially if children are involved. The Examinations department of the IRS is hard-headed, to say the least, and they will often make any excuse to deny you credits that you are actually entitled to. In order to get a fair hearing, you have to appeal the case to court. (The U.S. has made the appeal and court processes pretty doable even for taxpayers without an attorney, though.)
Even besides the risk of pecuniary damage, the problem with an audit is that it can take a long time. It's a time sink for you where the best outcome is usually nothing different happens.
At least half a decade, judging by how some people claimed "ongoing tax audit" as an excuse for not publishing their tax returns for a whole campaign year and Presidency term...
I made an error like that one year. It was as simple as me (personally) not receiving one of the 1099s from a few months of work my wife had done for a non-profit.
For those unaware: You get a 1099 when you're paid as a contractor, which means taxes haven't been taken out yet. It's fairly common for temp work and similar oddjobs that don't warrant a dedicated employee.
There was no audit in my case. They just sent me a letter that boiled down to that I had missed that 1099, and they were correct. I was just a little miffed that they waited almost a year to send that letter, which by then had higher interest / penalties than if I had been notified sooner. Still way better than an audit would be, though.
Which begs the question if they essentially already know how much tax they think you should owe (for most people) why don't they present that number to get first and let you either agree or disagree?
If we view it as an error checking process, it's better to come up with the two numbers independently. Whether the improvement is worth the costs, I don't know.
This is my experience too. I was audited and they do send you a "shock" letter or at least they did in my case claiming I owed roughly $15,000 USD. After fixing my mistakes (and submitting an updated filing), they sent me a check for a bit more than $1,500 USD. Plus I learned about my mistakes so it was a win-win (as I learned with just enough time to not repeat the same mistake for the next year's taxes).
I had an A+ experience being audited after my initial shock. They even have a secure message system where you can communicate via a website with the IRS including uploading files instead of having to mail letters back and forth. Definitely some clunkiness but overall it was solid and worked.
Not sure I'd recommend the experience but I definitely found it nothing to fear. I also found I didn't need professional assistance with being audited (I did seek it out but due to the time of year being so close to the next year's tax due date, I couldn't find someone right then so I decided to try fixing it myself).
It sounds like you got a letter from the IRS's automated underreporter program. I believe these are more common (and less painful) than an actual audit.
Paying for stuff like roads, highways, snowplows, schools, government workers, the military, that kind of thing. If you'd like a detailed response, you can look up the federal budget, and the state and city budgets relevant to your area.
I apologize - I am just so upset on how things are going and I am livid at the inability to make meaningful change for the positive while we all watch ourselves being robbed.
The fact that there is a "vote" on a 1.9 TRILLION additional stimulus, on top of the ~6 TRILLION previous thefts - the fact that in 2008, many senators and congress folk had their spouses create LLCs - then get stimulus and bailout funds just illustrates the corruption.
The situation is bananas right now.
And people are defending the system.
This is like if you have major outages to prod and instead of doing a proper post mortem to get to root cause on the failures, you re-up your contracts with the vendors who failed you and pay bonuses to execs and ops people who left the system in a position to fail, then have all the other employees yell at anyone who questions what the hell is going on.
I get emotional - isolation for the last year has made emotions bottle up...
But seriously this situation sucks.
Again, I apologize for certain things - but not my indignant opinion of the current political and technical climate we are forced to live in.
> Each year, I look around for alternatives so I can avoid giving them money
Why not pay an accountant? Why is everyone trying to do their own taxes? By the time you've spent a couple of hours looking for alternatives... you might as well have just paid a professional to do it!
It’s pretty simple to do your own taxes unless you have your own business and partnerships and whatnot.
Spend a couple hours reading the instructions, use the IRS free fillable forms website, and you do it once and every year after it’s quick and easy. Things don’t change much year to year. If you don’t understand, post a question a personal finance forum and someone will pipe in with an answer.
Mostly because it's an unpleasant task that can involve large sums of money if you put things in the wrong boxes. And even relatively straightforward brokerage accounts and second income sources start cranking up the complexity in a hurry.
I don’t know. But if you’ve opened up the IRS free fillable forms website, and put up the accompanying instructions on your second monitor, and know how to read English, I don’t see how it’s difficult, if you’re income is from a W-2. Everything is kind of labeled and laid out for you.
I believe that's only for filing a federal tax return, and for filing your state tax return you still have to either use a tax preparation website or do it on paper.
When I was in middle school (1980s) we did a tax return on paper, I think it was part of a Social Studies class? We were given a fictitious W2, number of dependents, etc. and had to fill out a 1040 and a State return (on paper of course, no computers then). This permanently demystified the process. I think a lot of people who pay HRBlock or similar to do their taxes have never tried to do their taxes manually and are just afraid to try.
I have always done my taxes myself, on paper, even years when I had capital gains, education credits, 1099s, and small business (single member LLC) income. It's a bit time consuming but not difficult per se.
Because everyone (for certain values of everyone) has a niche issue that current software doesn't address or addresses poorly, or they just don't want to pay for something that the government should provide. It's their damn tax code, the least they could do is make it as simple as possible to PAY THEM MONEY.
I used to do it myself when I was a W-2 employee, and I remember spending a few hours on it the first or second year, but after that it’s pretty quick since the process and forms don’t change much. Kids are just a couple credits and maybe a form for dependent care deductions.
But I also had a few hours to burn. I understand preferring to spend that time with kids instead. But it is worth noting that it’s a much smaller time commitment after the first couple years.
> It’s pretty simple to do your own taxes unless you have your own business and partnerships and whatnot.
IDK about that. As a non-resident alien for tax purposes for a couple of years I couldn't use any of the existing software (TurboTax, etc). I even tried to contact a tax accounting firm like HRBlock and they had no idea about things I needed to file that I discovered on my own reading the IRS publications. So I did the taxes on my own and every time it was the most painful thing happening that year (yes, that likely means I lead an otherwise stress-free life), it took 3 weeks at least spending most evenings a few hours making little progress on it each day. And at the end of it I never felt very confident about it and I likely left on the table possible deductions.
But if there's one thing doing that helped with is appreciate how easy and painless is to do it as a resident alien with something like TurboTax (takes a few hours instead of weeks) and it helped me understand the terms and instructions of some of the more complex issues that you may have to deal with even with TurboTax.
HRBlock is not a tax accounting firm. They are a service firm who hire people to sit in retail storefronts and key your info into TurboTax (or their internal equivalent).
You need a real CPA with a tax focus if you have "complicated" taxes.
It seems like you are (were) a good candidate for a more comprehensive service for sure. Perhaps a better wording would have been "it's pretty simple as a resident and (W-2) employee," which encompasses the majority of those filing, and who probably don't need a service like TurboTax or an accountant.
Actually IMHO, the difficulty with any of these things are tracking the right metrics. Particularly for "hobby" style businesses. You find out at the end of the year trying to avoid paying a bunch of taxes on something that didn't really make any money, that you mixed up or failed to compute your vehicle mileage correctly (or whatever).
So, having an accountant handling all the details, in the en puts the information at your fingertips that otherwise you have to scrape out of the box of receipts/etc. The tax filing parts are easy.
Why not just pay the nice mafia boss the protection money, and stop complaining?
First and foremost, it's a matter of principle. It's just not right to have the tax code written in the way it is written. It is written by special interests. If we all just said "complexity is no problem, we'll all just pay a small fee to accountants", not only will that "small fee" keep going up, but it will get more complex, and special interests will be better served to the detriment of everyone else.
Pragmatically I do hire a CPA, and in general like paying for the high level strategic advice. But the tax compliance services should be unnecessary. My tax returns should be a single text document that I can keep in git and copy/paste/update each year.
I 100% agree with you. I think it creates lots of weird artefacts. I really like the continuous nature of the crypto world and smart contracts, and think the world will slowly pay off the technical debt of wierd arbitrary schedules and move to a smoother, simple, more transparent system.
Mine sends me a tax planner every year. Yes, there are a bunch of questions up front but that's mostly to discover if I've had a change of status, some large transaction, a deduction I'm due, etc. Yes, I still have to round up my info but I don't need to figure out the right schedules, where to put the various data, etc. I get a pretty big sheaf of paper back.
Most people without businesses don't need to worry about audits. IRS, of course, still audit a small percentage of the most simple and honest-looking returns. But that is mostly for how factories spot check products to ensure quality, not because they suspect you did something wrong.
On other hand, if you are audited, it is not a big deal as long as you were not intentionally defrauding IRS. My boss used to get audited almost every year for his business. IRS would ask for receipts, and once he provided those, it was end of story.
That software looks to be worked on primarily by two people in their spare time, spread out over a year, with most of the activity happening within the last couple months if I'm reading this correctly. Understandable that they still consider it to be in an early stage, and not ready for use by the public.
I've never really been fearful of an audit. I just assume that if I DIY, I'm likely missing out on refunds I should have gotten because I didn't know where to look.
If the government wanted to help people do taxes more easily, they would just simplify taxes. Lobbies (from TurbTax and competitors) are standing in the way.
In the UK you can file electronically with the HMRC using their website. It guides you through several forms, tells you what numbers to input from your P60 (end of year notice from employer of salary and tax paid) P11D (end of year notice of taxable benefits) and a few other sources then produces a downloadable PDF copy, and submits them electronically.
It's not for everyone, e.g. Lloyds Names can't use it, but for 99% of people it's fine.
Why is it better in the UK? I don't think we have quite the level of regulatory capture, and still somewhat believe in public services, and spending money to make things better for everyone.
In that same thread someone mentioned OpenFisca [0], which is used to codify tax law. Have you considering utilising it instead of re-inventing the wheel?
These projects seems to come at tax policy from very different directions. US Taxes helps you fill out the specific form needed to file your taxes in the United States. OpenFisca helps you model a country's tax policy overall.
It would certainly be interesting to connect the two, but I suspect that you'd do that after finishing US Taxes. Specifically, you could take a completed return from US Taxes and transform it into an input for an OpenFisca model of the USA tax code.
As it stands, nobody has developed a USA model on OpenFisca. Perhaps that could be a next step, pursued in parallel with the US Taxes effort.
Cool to see more open software in this space. Curious to know if there are any plans/efforts in leveraging the work done in http://opentaxsolver.sourceforge.net/ to handle more use cases. Maybe ustaxes can be a nice frontend to some of the tax logic in opentaxsolver?
I'm not sure I understand how monopolies acquiring their competitors early on in order to be able to maintain their monopoly price works in practice. Wouldn't the eager gaze of startup founders looking to strike their first big score turn like the Eye of Sauron on any such industry? And all the monopoly profits that the monopolist stands to extract would in the medium run hit an equilibrium of zero when balanced against the extractions of the people it's forced to acquire?
But it has been acquiring companies, as mentioned in the article. Why didn't those companies face a barrier to entry? Or if they did and it wasn't binding why is it apparently binding to other up and comers?
Did you read the article? None of them ever seriously threatened TurboTax as a whole, they were just trying to carve out tiny niches that weren't already under the Borg. They were assimilated.
How would an eager startup person get funded to build something that competes with TurboTax? How will you bring novel value to the industry at this point?
A monopolized industry is also intentionally difficult to enter. It’s not just about buying existing competitors it’s about also making it as hard as possible to enter.
So even when some startup manages to get funding and deploy a viable product, they’re immediately on the radar for acquisition for monopolists if they weren’t before going to production.
TurboTax has also lobbied to affect US law in their favor. They’re a scumbag organization who makes an excellent product.
It's an OK product. The interesting thing about TurboTax lobbying is that they oppose most attempts to simplify the law because the value of their product is for people who have tax situations that are too complex for an individual but not complex enough to make hiring a full-time tax accountant worthwhile.
I just don't understand why a guaranteed payday if you're even modestly successful doesn't draw competition like flies. I would think that once you're known to be willing to pay a bribe to someone who threatens you even a little you would be bankrupted in short time.
Intuit doesn't exactly buyout direct competitors, they buy companies that try to move into niches that Intuit doesn't cover. If you tried to compete directly, they wouldn't spend money and time buying you out, they'd put their resources into other ways of bumping you out of the market. Lawsuits over patents are a good one, and Intuit as around 1600 patents.
this is why it's important to build an open-source tax calculation engine, as @breck and others have done, so that the creation of tax startups are not disadvantaged (they start from step 19 rather than step 1). this is (fairness in) market competition driving the market to efficiency, the exact opposite of monopoly/oligarchy (e.g., turbotax, taxact & hr block) extracting economic rents while languishing under lobbied regulatory protection.
I think you could ask a similar question about how profits work in practice. In a hypothetical perfectly efficient market, all profit margins should be zero. But in practice the world is full of transaction costs, imperfect information, and scarcity. Maybe something similar applies to reasoning about the "acquire your competitors" strategy. In a perfectly efficient market it shouldn't work, but in practice the number of startups willing to take this approach is limited (because the number of available engineers investors is limited, and in competition with other sectors), plus you only have bother acquiring the ones that manage to succeed as a company first, which is somewhat difficult. Maybe we should expect the "acquire your competitors" strategy to be partially effective, if you combine it with a relatively good underlying business and relatively high barriers to entry. Not something that necessarily always works, but a piece of the puzzle?
What exactly does everyone have against Turbotax? I use it every year and I love it. Sure I could save a hundred bucks and spend hours filling out IRS worksheets, but I don't want to. They have excellent UX, and serve as a reliable secure cloud repository for all of my financial information. What's the big deal?
You're paying for a service that should be provided for free by the IRS, as happens in many other developed countries. It's unnecessary financial drag on the economy.
>You're paying for a service that should be provided for free by the IRS, as happens in many other developed countries.
But Turbotax is free for 1040EZ filers. It's only in an instance where you would otherwise just hire a tax accountant that they charge you. In terms of SAAS pricing, it comes out to like $15/month annualized. It's a bargain IMO.
It's unacceptable to argue that it should be free for some, but not for everyone. It's not a bargain, it's unnecessary regulatory capture, for what my government should be providing at no cost to all citizens who are required to file returns.
Private electronic tax filing systems (and the fees they charge) should not exist.
> It's only in an instance where you would otherwise just hire a tax accountant that they charge you.
This is false. It's plenty possible to be in neither scenario, and every year millions of Americans are.
Further, the 1040EZ system no longer exists. Tax filers often charge for "tax accountant" services like having a moderate income or filing state taxes.
Not true. If you have any capital markets gains, you have to pay TurboTax. I don't need a tax accountant to report simple capital gains. If you have side hustle income, you have to pay TurboTax. Basically, if you're reporting any income other than your standard day job, you have to pay. And TurboTax has done things like advertising free filing but only offering free federal filing and finding out you have to pay for state filing only after you've filled out your federal forms. It's just a scammy business that relies on lobbying and governmental pressure to stay afloat.
> But Turbotax is free for 1040EZ filers. It's only in an instance where you would otherwise just hire a tax accountant that they charge you.
This is incorrect in practice. Through dark patterns and otherwise, an extremely small minority filing without paying even if they should be “eligible” (which is itself an absurd position).
That Americans self sabotage (and ignore obvious counter examples) doesn’t change the fact that filing taxes can and should be simplified and made less costly to the average citizen.
Further: I rely on “government services” every day that are essential and delivered reliably. Even on the tech front - my municipal parking app is fast, free, and pretty much flawless.
Who even said it would be software. In Germany I have the option of letting the government do my taxes for me. At the end of the year I can choose to dispute the charges.
For one, I don't blame a company for lobbying for their interests. Lobbying is protected by the first amendment. Congress has sole authority to author and vote on legislation at the pleasure of the electorate. The fact that TT (and H&R Block) have impressed upon reps that they will participate in Free File, it mitigates their need to make a government-sponsored program. Which isn't just barricaded by simply force of will, but rather that the IRS would actually have to do it which means likely means a giant appropriation of funds and the risk of them screwing it up.
I do blame companies (and people who work at those companies) for spending their time trying to figure out how to waste as much of their fellow countryman's time and money as possible every year. Just like I would blame people for trying to get away with legally polluting waterways or any other public resource.
>The fact that TT (and H&R Block) have impressed upon reps that they will participate in Free File, it mitigates their need to make a government-sponsored program.
It's a half assed solution so they can say they did something and give them political cover.
The issue isn't the lobbying per se, but rather that it's not hard to look at the situation and conclude that Congress is favoring the interests of TurboTax over the interests of their constituents.
It's difficult for me to believe that my representatives actually believe it's in my best interest to pay TurboTax $100 every year, compared to having the IRS automatically file my taxes.
On the other hard, it's easy to believe that my representatives have been cheaply bought with political donations.
Maybe I'm being too generous but the electorate has all the power over elected officials. If a candidate makes a big deal over free file and voters don't care, then the lobbyists are effectively absolved. You'd have to show me that Congress actually had this on their agenda and removed it at the behest of lobbyists to say it's really corruption.
Unless they're actively spreading disinformation or corrupting the vote.
Because the IRS should do it for you, for free, but doesn't because TurboTax uses the money you pay them to sponsor legislation to prevent the IRS from doing that:
In some countries the government calculates the (simple compared to US) taxes and all you do is approve it. That would be possible here too for most people, but neither politicians (of various stripes) or Intuit wants anything to change. Only the US turns paying taxes into the equivalent of Quantum Mechanics.
I'll actually give a response that is not Turbotax specific.
The forms I get every year from the ~10 banks I have accounts with and the ~2 companies I earned a salary from are essentially just copies of forms that they also had to send to the IRS. So in principle the IRS already has the same information I do when it comes to how much tax I paid and on what income.
It is not clear to me why I have to share:
- My name
- My address
- My _social security number_
- My spouse's name
- The names of my children
- All their social security numbers, too
- How much money I made
with a for-profit company. This is information that the IRS already has. To me, this is totally unnecessary. I would much rather the government increase the IRS's budget so that they can implement services that provide any help I might need directly, rather than through a totally unrelated corporation. The IRS's job is to make sure you paid the tax you owed. They don't dictate how much tax you pay. I truly believe that with the right financial resources they can make it easier to make that payment (and correctly) for: 1) us; and 2) them.
For folks with very simple tax situations, this seems like a no-brainer. For folks with complicated situations, you are still more than welcome to talk to a tax professional for advice. But a company _doing your taxes_ for you seems unnecessary.
Wouldn't it be lovely if instead I went to www.irs.gov to file my taxes, and I was presented with a very similar interface to what for-profit companies are providing, but with the information already filled out because they already have it? Essentially, all I'd be doing is sanity-checking the inputs.
Last year turbo tax said I could file for free. Every so often it asked if I wanted to upgrade to a deluxe version for $70. I said no. After a couple hours of filling everything out, it told me that my income, from one of the first steps, was too high so I would need to pay $70. Deeply unethical to tell me that at the end when they had the information necessary to do so at the beginning.
Also, fuck them for charging $70 while lobbying for taxes to remain difficult to file.
Turbotax et al. lobby heavily to prevent this. Given that much of the relevant information--W2s, 1099s, etc., are already reported, you'd think that this would be easier for a very large percentage of taxpayers. But it would effectively kill TurboTax's business.
You can't actually use the word "corrupt" to describe what the legislators are doing, that's painting them unfairly.
All they're doing is lining their own pockets with millions from TurboTax et. al to make sure laws are favourable for those big companies. But because it's perfectly legal, and there are no thugs with guns or drugs or "bad members of society", it's absolutely not corruption.
when something doesn't provide a reliable return on investment, they stop spending that money. that's how much you know something works, whether it's buying advertising or congressmen.
With the caveat that the ability to measure ROI exists and is also reliable. See for example advertising, and especially online programmatic targeted advertising: https://hbr.org/2013/03/did-ebay-just-prove-that-paid
Legislators are basically doing triage, responding to perceived consensus. Kinda like a product manager. Think attention economy. There's 10,000s of bills filed every year. No one has the resources or bandwidth to handle that.
Any given legislator has 1 maybe 2 issues that they care about, for which they will advocate an agenda. The rest, they rely on what they're hearing.
Intuit's lobbying effectively drowns out alternative view points. Assuming that anyone anywhere is consistently advocating for something like free auto-filing.
Source: Have lobbied. Know legislators and their staff. Also read many books about legislation. Most legislators would LOVE to hear from their constituents; will bounce out pro lobbyists to give their own people an audience.
Ahh... that makes sense why this is one of the more reasonable descriptions of how lobbying works. HN seems to think it works by guys in $3,000 suits handing over bags of cash to Congressmen.
Your point about legislators loving to hear from constituents is true - one reason why lobbyists are so effective is because there is often few or no other voices in the room. If voters actually organized around some of these topics they'd be surprised how much power they have.
They can ignore the lobbyists, but they like the money, and they like not having to campaign against the lobbyist's marketing. Enough to make it difficult to pass reforms.
They usually claim that if people didn’t have to file their own taxes, they would not be aware of how much they are getting taxed. In their view, this would eventually make it very easy for the government to increase taxes without significant protests from the public.
I don't know where this idea came from (I've seen it on reddit a LOT), but it's the same here in Switzerland: you do it yourself because the tax department has no idea how much you made precisely, what you can deduce from it (expenses you had to do in order to acquire your income), etc. It just makes more sense to have everyone manage their own taxes.
The government automatically doing it doesn't preclude from letting taxpayers be able to amend it. The vast majority of people have simple tax returns, and all that information is already electronically flying around with unique identifiers (social security number).
It's trivial for government to be able to automatically produce a tax return that's basically almost all done for everyone.
This is exactly how South Korea does the taxation. Employeers are required to report employees' incomes and also deduct the tentative tax. The final tax is set by the year-end settlement where you can put documents for income deduction and tax credit to the National Tax Service. Common documents (e.g. credit card expenses count towards income deduction) are electronically available in one place and it is not very hard to get hold of other documents if you are an employee. In the end you pay or get the delta between the tentative tax and the settled tax.
The IRS already has most of your income information and much of your deduction information. They already use this to validate if your return makes sense.
In effect, the IRS already does most of a taxpayer's paperwork. Since they do this, it might be nice to provide it to taxpayers for review and correction, rather than making us all start from zero each time.
The IRS already has a web portal that lets you retrieve your data. This could be executed by adding more info to that. The higher cost of administration on that shouldn't make anyone bug-eyed, no matter how wonderful your idea of auto-filing and simplification is.
No, no they don't. At most they have your mortgage interest deduction - side hustle expenses, charitable contributions, etc. are not reported to the IRS automatically.
The IRS doesn’t have your deductions, but at the same time most people don’t have enough to itemize anyway, especially since Trump increased the standard deduction for individuals and families.
I think simplifying the tax code first requires trading in our deduction system for a flat tax or lower taxes across the board. Then you could get to a simple postcard bill every year. Too many special interests to let that happen though.
Depends how intricate your taxes are. Perhaps 30 million people file Schedule C, which covers freelance income, gig income, etc.
The IRS will (mostly) know your gross income, but it won't know the exact details about claimable deductions such as business travel, business meals, supplies, etc.
The only way it could know that would be to peer inside your credit-card statements, bank statements, etc. and make judgments about what was work related and what wasn't.
I'd rather do the tallying myself -- which is a chore -- rather than have IRS software make guesses that are a) awfully nosy and b) bound to disadvantage me.
You're right. The IRS emphatically does not have everything. Please accept my deepest and humblest apologies for implying in any way, shape, or form that they do.
In addition to hundreds of millions of W-2s, the also IRS has 1099s and 1098s of various sorts. For the majority of Americans, the IRS already has the majority of their tax data. And the infrastructure already in place to provide this to them. Why not present it along with the opportunity to amend it? Or tally from zero yourself, if you prefer. This is what I intended to communicate earlier, and I can see I failed to be clear.
You're absolutely right. The IRS in no way has everything! Do you think it's maybe worth considering that it might be possible to make many people's lives easier for a very small marginal cost by letting people see what data the IRS already has about them? It might not work for every single person every single time, but it might work for a lot of people a lot of the time.
In the UK vast majority of people don't do their own taxes. Your employer pays the tax on your behalf directly from your salary and updates the tax office as to how much you make. In turn, the tax office tells your employer how much tax to pay from your salary, without any input required from yourself.
In fact most people I work with don't even know there is such a thing as a tax deadline every year or anything like that, because....why would they? if you are a normal full time employee there is absolutely no need to file your own taxes. HMRC has all the information it needs to tax you year on year.
>>what you can deduce from it (expenses you had to do in order to acquire your income)
Well, at least here in UK there's practically nothing you can deduct from your taxes if you are a "regular" full time worker, so that solves that issue.
> Your employer pays the tax on your behalf directly from your salary and updates the tax office as to how much you make. In turn, the tax office tells your employer how much tax to pay from your salary, without any input required from yourself.
Same thing happens in the US. When most people file their taxes here, they get money back because they already overpaid.
For example I spent a few thousand trying to launch a business this year, and that is all tax deductible. So I'll file that with my tax form that my employer sends me (with the salary info prefilled), and I'll end up getting some money back because my taxable income is lower than what the gov't expected.
From what I remember in Switzerland, the forms were prefilled, just like neighboring countries. Your salary was automatically takes from your employer, any declared children are carried over year to year etc. Then all you have to do is correct and add any complex stuff
The usual proposed method would be the IRS calculates what you owe based on the standard deduction because they don't know about most donations or possible deductions.
They'd just assume you want to take the standard deduction--which isn't a bad assumption for a lot of people these days.
My taxes are admittedly at least somewhat complex but, even if I did them myself, I'm not sure how much effort it would save if I had to do a bunch of additions and corrections. Pre-filling would mostly be useful if you could just check your W2, maybe a 1099, some things like dependents, sign it, and file it.
This is the solution. We can already do this. A pilot program was run. The problem is that the anti tax wing of the Republican party and Turbotax are actively opposed.
Instead of developing software, we should be writing our representatives.
Because of Grover Norquist and his organization (ironically named Americans for Tax Reform). Their "Taxpayer Protection Pledge" taken by most Republican lawmakers (95% before 2012), locks them into supporting his policies. The problem is that he views any attempt to simplify tax filing just like a tax increase (presumably since people will be less upset about paying their taxes), and uses his influence to lobby against reforms like this.
It's true that the Democratic caucuses, both federal and state level, are much harder to hold together. Every year there's a bill in my state to reign in pay day lenders. Basically banning usury level interest rates on loans. Overwhelming popular support (~80%) and editorial support.
And every year there's a "blue dog" Democrat living in a purple district which bends to the pro pay day loan lobbyists.
Vetocracy is a tough problem. Our civic legacy is to fear the mob, tyranny of the majority. (Thanks Plato.) So it's rare that mere popular support ( >60%) is sufficient to attain progress.
So, to your point, mere 50% + 1 vote ain't ever enough.
Making payday lending illegal will push poor people who desperately need the cash to seek it from organized crime instead.
There’s a reason those bills get stopped and killed. They sound good on their face, but when you dig into the details they harm the people they’re supposed to help.
>Democrats had filibuster proof majority when Obama was president.
For 2 years. And spent basically the entire time barely getting ACA through. Not a lot of "political capital" leftover for battling to have free tax filing.
That's what they're system would be in essence, you'd get a piece of mail saying this is what you'd pay taking what we know and using the standard deduction. If you want you could calculate any itemized deductions and resumbit.
That's actually exactly what happened when I failed to file for over a year one time. They sent me all the forms prefilled and asked me to review them and just send them back if correct. Sadly, they weren't.
The intent of certain lawmakers is to make sure that the filing and reporting of taxes is onerous as a lesson about the illegitimacy of government taxation.
I don't suppose those lawmakers are voting to reduce their pay to $0, eliminating their government-provided pensions, or reducing the need for taxes by giving up any of their other benefits, are they?
Otherwise, legitimate or not, that money is going to have to come from taxes somewhere.....
Also, what does onerous have to do with legitimacy? It's like there's two orthogonal axes and they're trying to make taxes painful to convince the populace to dislike taxes, whether the taxation process is legitimate or not.
This. You can't kill TurboTax with tech, it has to be done with policy. TurboTax is in this position because they lobbied their way to it. Any tech solution will just be further lobbied into oblivion.
The IRS can simplify the process, sure. And if you are living alone, have no children, and don't care about taking advantage of any special credits or deductions, then a "file for me" button would be fine. (Though the process for those taxpayers is already in a good place--I filed my taxes for free in about 30 minutes this year.)
But if you, say, have children, the IRS will not be able to "file for you" in any meaningful sense. Whether you are allowed to claim dependents on tax returns is a complicated question that is highly fact-specific. Happily, the IRS does not have cameras in my house checking to see if my children are living with me. I have to report that information to the IRS myself.
Drive for Uber? Your taxes are also gonna be pretty complicated, and there's no way the IRS can do them for you. After all, they don't have any information on how many miles you drove for Uber and what other business expenses you might have had.
Right now, the system we have is pretty good. Most people qualify for free filing, and free-file tools get better every year. At worst, there is an issue of consumer education (psst, you might be able to find a better/cheaper tax filing option than Turbotax).
Maybe it's "bull pucky" to you, but I have vivid memories of my parents agonizing over taxes as a child. The agony they went through is much ameliorated now due to advances in technology.
And thank you for the link, but this news segment basically is big on opinion, low on specifics. Feel free to link me to a detailed article on how non-U.S. countries handle self-employment or dependent tax issues and whether/how those things are easier elsewhere.
Most importantly, most countries do it by simply having much higher thresholds for complicated tax rules applying to you.
In the UK quite a few people don't pay any tax at all, and the vast majority don't pay enough tax to have to file any return.
What impact does a dependent have on your tax that needs to make it so complicated? I have relatively complicated taxes due to two jobs and some unusual deductions, but having a child doesn't really have any impact on my tax return in the UK.
Children are hard if the parents are separated. You get child support to figure out. And who gets what share of the tax credit is tricky as well. (This is one way for one parent to abuse the other - file fast and claim all the credits, whoever files second now has to prove the first did the wrong thing at their expense)
Well, if you are a simple family where everyone is biologically related and living together, then things are pretty simple in the end. The issues come up with mixed families, divorced parents, etc.
As for the dollar values, if you make $30,000 and have 2 kids, you can usually get a $6,000 tax credit or more. The U.S.'s support for working low-income families is carried out through the tax system. Put another way, tax credits are one of the U.S.'s most important social safety nets.
Not a problem, you enter dependents into the wizard, and take them out when/if they move out.
No matter the situation, they accept your word for it. If an audit occurs you will have to prove things with documentation and be held liable for mistakes or fraud.
It's basically a five-minute task that you appear to believe should make tax filing take hours?
I did taxes once in NZ, you go to a website where they have all the data ready. Then you go next, next, finish, adding a deduction or dependent here and there. Takes 15-30 mins.
True that the US tax system used to be a lot worse and a lot more vindictive. See the hearings during the nineties that led to IRS reform. Horror story after horror story.
But that doesn’t mean it’s a great system now. I would favor dropping exemptions and moving to a lower flat tax, for instance - taxes by postcard. Probably never that way for businesses, but for 9-5ers, it should be way more straight forward than it is now.
A task being easier than it used to be doesn't mean that task's process shouldn't be improved or that its existence shouldn't be questioned altogether as a matter of course.
True. But I think progress over the years is a better metric for whether things are in a good place, policy-wise, than "some other country does things better." So I'm not grumpy about the state of the U.S.'s internet infrastructure, but I am grumpy about the state of the U.S. health care system (for example).
> Right now, the system we have is pretty good.
> I have vivid memories...
Sounds like the whole discussion is rife with opinion.
BTW, you have my sympathy, but your story doesn't shore up your argument. It only sounds like tax filing in the States has gotten better. And better locally is not best globally, by a long shot.
In general the States has been shot through for so long with so much corruption (aka special interests and campaign contributions and lobbying) that the citizenry has a perversely skewed idea of what is normal. /rant
A large part of it has been. The standard deduction is high enough now that most people can't take advantage of the deduction based approach. Of course most tax people will tell you to save all receipts, they will happily charge you to look through them and calculate that they are not big enough to matter. If people knew how simple their taxes really were most people wouldn't be willing to pay as much for it.
I've itemized the past couple of years for various reasons and I have some other complexities. But, yeah, most people--especially if they don't have a mortgage--are just going to take the standard deduction.
That ignores the effect of wealth inequality in the US. You may not know a lot of people who itemize, but our elite / political class does at almost a 100% rate.
So long as they want / use it, it will 'trickle down' to others.
Most countries have their version of the IRS "file for you" without any of those difficulties. Everyone reports tax information to the central authority which determines how much you owe. Even complex things like 1099-B, 1099-Div etc. Which is how the current system works anyways, it just eliminates the hassle.
There's almost no scenario where the IRS cannot do this stuff. Think about this fact: your W-2, 1099 investments and most other financial information is already reported to the IRS. They have it already. Absolutely bonkers that people accept anything less than just being sent a bill or check once a year.
> Right now, the system we have is pretty good.
Yeah, big disagree there. If you've ever done taxes in another country you will realize how idiotic taxes are in the US. Australia is literally, 10 minutes per year, and even complex things like investments, stocks...
Yes, those docs are filed with the IRS, but charitable contributions, child status (are they dependents or not this year?), expenses (home office, side hustle, property management etc), and many other things aren't.
If all your tax returns reference are the handful of items you mention, your tax return can be done in a matter of minutes on a short form.
Yes, it could be better, but it's a fantasy to think it should be as simple as getting a bill from the IRS at the end of the year.
These are easily done and in other countries, are fairly simple. Sure it turns your 10 minute tax affair into a 25 minute one. Declaring child status is just a simple form box. Declaring "side hustle" money is a similar affair. Charitable contributions just register with the IRS instead of it going directly to you like a 1099 or W2.
It's still a far cry from the "entire Saturday morning" affair, even using online tax software.
I came here to write something along these lines. For the simplest cases, filing is free and really easy now. Everyone who needs TurboTax now would need something roughly as complicated until our entire tax regime is overhauled.
Adding to the types of really common situations where you do have to provide context the IRS doesn't already have:
- side-hustle contracting (IRS doesn't know what expenditures are for the business)
- stock sales (your broker may not know your basis)
- home improvements eligible for tax deductions
- sold a home (IRS won't know your basis or selling price)
- did you move for a job? IRS won't know whether you are eligible for tax deductions.
- crypto gains/losses
- inheritances (basis again)
I'm curious whether other countries have simpler tax codes that permit simpler filing?
>- stock sales (your broker may not know your basis)
This used to be a real nightmare especially when there were acquisitions in stock, splits, etc. There were a couple times over the years when I just said F' it and put down a reasonable number.
But these days, unless you have some pretty old investments, the brokerages generally track your basis.
Yes, but IIRC if you transfer investments between brokers you are back to tracking basis yourself (if you're lucky, the new broker will allow you to enter the basis after the transfer).
But agree in the general case that it's not a problem for younger people. (Gen X and older may indeed have some of those pretty old investments lurking in their portfolios.)
That's not universally the case at least. I transferred some shares a month or so ago (in a horribly manual process I might add) and the cost basis was transferred over.
I fall into the older bucket but I guess my old 401(K) must have had basis added when it merged with an IRA and none of my other investments lack basis information.
Adding a perspective from Germany, where the tax code is definitely not simple, a major difference I see is that filing is optional for the simple cases because you can only ever get money back. There are some default deductibles already applied to your payroll tax so the tax office doesn't have to deal with super small cases. The big advantage is that Joe Average won't risk getting into a lot of trouble for not filing.
Just to illustrate, let's go through your examples and how it'd work in Germany:
> side-hustle contracting (IRS doesn't know what expenditures are for the business)
You'll have to mandatory file income taxes since the income from contracting is not salary and there are no payroll taxes deducted from it. Not sure how common it is in the US but in Germany the vast majority of people don't have side hustles like this (for a variety of reasons; certainly a bad thing)
> stock sales (your broker may not know your basis)
There's a default tax rate on capital gains (25%) with a 800€ allowance. You assign how you want to split the allowance between your various banks and other capital gains generating accounts (you're responsibility to not exceed them) and the banks will report your cap gains with your tax ID to the tax office. If you did pay taxes it's often worth filing to make sure the allowance evens out. Also, if you want to carry forward a loss you have to file (but you got 5 years to do so)
> home improvements eligible for tax deductions
You'll probably want to file but you don't _have to_. You just won't get the deduction.
> sold a home (IRS won't know your basis or selling price)
If it was the home you lived in, you don't have to file (it's tax free). If it was a house you rented you'll have to file but you'll have to do that anyway for the rental income.
> did you move for a job? IRS won't know whether you are eligible for tax deductions.
Same as with the other deductions, it's in your best interest to file but you don't have to. No (legal) consequences if you don't.
> crypto gains/losses
This gets tricky but if you owned the coins for more than a year (to the day) they're tax free and you don't have to report them. But you better have documentation on this if you ever get audited.
> inheritances (basis again)
This one is actually interesting as it's a completely separate tax and thus separate process from income tax.
There's an allowance based on your relationship to the deceased (500k€ for spouses, 400k€ for children, etc.), if the inheritance exceeds that you'll get a letter from the tax office asking you to file a declaration for inheritance tax. At that point there's not much software that'll help you and you'll better hire a tax advisor :)
It seems the major difference derives from our (American) punitive approach to those who use our meager social safety net.
For example a large swath of Americans earn an income that entitles them to assistance in the form of the Earned Income Tax Credit (EITC). This is (roughly, it depends) available to people who earn < 85% of the median income. But they have to file taxes to get the money they are owed (because we hate the poor in America and this will dissuade them from getting their money). So that's going to be a large set of the country that has to apply or leave money on the table.
For a large set in the middle class, you have to file because you leave money on the table by not claiming deductions.
So even if we weren't all more or less required by law to file, we would mostly have a financial incentives to file anyway.
Oh and anecdotally, side-hustles and second jobs are very common in the US. Poor social safety net, no employment contracts, very low minimum wage, high healthcare costs all doom most Americans to perpetually precarious financial circumstances. So everybody is trying to get a little more so they don't get wiped out.
If you think the IRS aren't able to work out how much tax you need to pay... how do you think they're catching people who don't pay enough tax? They must already know!
They don't already know. Sometimes they have suspicions, and then perform an audit, or request more information about a particular detail, by which they get the information they might need.
Only then do they actually know.
For example, you yourself may have filed with the status, "Married, filing separately", but the other person in your relationship may have filed with the status, "Single".
The IRS has no idea who is right without actually talking to the two of you. And because they don't know which status is correct, they don't know how much each of you owe.
They do know almost everything and learning more every day. Of course there are extenuating circumstances, which you will list and have to prove if a question comes up. This is not an excuse for tax filing being more difficult than it needs to be.
The great-grandparent's claim is that they already know. They don't already know. I can list two dozen things off the top of my head that they don't already know.
Should tax filing be easier? Sure. But, "They already know how much you owe." is patently false.
For that matter, everyone qualifies for free filing--although in practice it gets too complicated for most past some point. I know it sounds like something savages would do but it's actually possible to just fill out the forms by hand if your taxes are fairly simple.
I use an accountant who I've been using for years but if you just have a W-2, a 1099 or two, and just use the standard deduction, it'ls likely pretty simple to just fill out a 1040 form and a state tax form.
I don’t understand the argument. You go from stating that in some cases, the ziRS can’t prefill your taxes correctly - sure, we all agree here, that’s the same in every other country. And then you go on to say that’s why you need TurboTax. Huh? Why not just have the same input boxes as TurboTax, but on irs.gov? That’s what pretty much every other developed country has
An Australian friend of mine showed me his tax receipt once and it made me yearn for this. It’s ridiculous what the US has created for its citizens, or rather not created.
Another vote for FreeTaxUSA. They are totally free for federal returns but I happily pay the $6 for the ‘Deluxe’ service level to support its development.
Been using them for years now after getting tired of TurboTax’s $60-100 fear racket.
I had a lovely experience with freetaxusa this year.
They're not entirely free, but they're still very cheap and transparent about their pricing. They don't do the login thing where you hook into your banks and pull in documents automatically, but... honestly those aren't that useful and I'm not sure I trust those on turbotax.
I just tried it. It has a good interface, but a massive downside in that it doesn't have any automated importing/parsing of W-2's, 1099's, and other forms, unlike TurboTax. You have to type in every single number, leaving room for fat finger errors that TurboTax largely eliminates. This removes much of the advantage of doing your taxes online in the first place. TurboTax will smoothly import these, sometimes directly from your bank's website (you don't have to download and upload the PDF). If FreeTaxUSA built a robust tax form PDF parser it would be a real TurboTax competitor. Right now, it's just a cleaner interface to filling out the IRS PDF's on your own. It's good if you don't mind a more manual approach to your taxes.
I don't mind paying for a service, but with a URL that includes the word "free" I was surprised to see at the top of the page "State Returns $14.99 $12.95 — 12 more days to save on state filing"
This has already been done successfully in Canada.
A small team from Vancouver built a pay-what-you-want web-based tax-filing system from scratch. It's called SimpleTax and it's already a major competitor to the Canadian version of TurboTax.
In fact, it was so successful that it was recently acquired by Canadian investment group WealthSimple.
Unfortunately, the "we promise not to sell your personal data" disappeared from the privacy policy during the acquisition, so we know why they remain donationware post-acquisition.
Used to be a plain Firefox extension back in the days.
It was really simple, something like:
- You clicked a button in the toolbar or right clicked and chose menu option
- a dialog showed up, you chose how often it should check the page and how big differences it should tolerate and clicked OK.
- once every hour or 4 times a day or twice a day depending on your choice Firefox would download the page locally, compare it and tell me if there were changes.
Yes, we oldtimers mostly complain about TST, but there were an entire ecosystem of brilliant extensions - so brilliant I figure it would habe been hard for me to believe today if I hadn't experienced it back then.
That's what you can have when you have brilliant people making brilliant software to empower you :-/
Edit: seriously, I would pay $20 a month for someone who would fix the new Firefox. If someone made a realistic Kickstarter I'd support it right away and then monthly if necessary.
No wonder I've been seeing so much ads about WealthSimple tax. It's literally every other ad on TikTok for the past 2 months. That and every other WealthSimple app (trade, invest, etc).
For people who haven't used it: SimpleTax just absolutely nails UI quality, it's so nice and smooth that every year I've used them I've been done in under 15 minutes (other than time spent double-checking because it can't have possible been that easy) and come away so grateful for their existence that I gladly throw money at them. One year the Canadian Revenue Agency even introduced a new API that lets SimpleTax pre-fill most of the information like employment income from the stuff the CRA has on file.
I've since moved to the US and I'm dreading doing my taxes using probably TurboTax for the first time this year. At least it probably won't be as bad as previous years when I had to file non-resident US taxes for internships, where you can't even use TurboTax and have to use Glacier or TaxAct, which were terrible compared to SimpleTax.
I can honestly say that SimpleTax has been life changing for me, and is a great example of just how important UX can be. My partner used to have literal panic attacks trying to file taxes, even with TurboTax/UFile/etc. Since we've started using SimpleTax, it's done in one sitting and is not even a source of stress anymore.
TurboTax is disgusting. I used them for a few years in the past due to their great marketing and easy to use website. But they pulled a bait & switch on me last year, at the last minute (after I had done everything) I was required to pay north of $120 to actually file.
The problem isn't that they want money to use their software, it's that they're not upfront about it. Free is thrown in your face about 100 times during the process and then they surprise you right at the end after you've already invested a bunch of your time.
My taxes are dead simple - I just don't trust myself or care enough to file without some software assistance. This year I'm using a different company who appears to be much less shady and will never use TurboTax again. I hope TurboTax making my money once was enough to lose me as a customer for life. In reality I hope the company ceases to exist in the near future, but that seems unlikely.
I'm excited at the prospect of free & open source tax software - for next year maybe.
You basically type your numbers in and it does the math for you. Then you print it out and mail it in. It can't do anything complex, though.
In my experience (Minnesota), state filing is even easier, usually just copying numbers from your federal form and doing one table lookup. No reason to give the shitty companies more money.
Thank you, that actually appears to be much more user friendly than I would have imagined. When I think of government websites I think I'm still stuck in the mindset of government websites 10 years ago (aka absolutely horrible). I've been surprised at how good things have gotten regarding them a few times, so I guess I need to snap out of that mindset.
While looking over the requirements and supported forms I didn't find anything about student loans (form 1098E), would you happen to know if that method is compatible with them?
Free Fillable Forms supports every tax form as far as I'm aware.
It's really no different from doing your taxes by hand on paper, except it does almost all the math for you.
I've been using it for years (with about 15 different various forms) simply because I refuse to support the tax prep software companies out of principle.
And each year I just look at the previous year's which I saved as PDF for reference in case I forget which number goes where.
Thats exactly what I got that I felt like the Article didnt seem to get.
Turbo Tax is required to abide by the FreeFile rules. this means that for some customers their software is required to be free.
By some customers I mean like 60%.
So TurboTax moved to seeing their product as an upsell game, start at free and UHOH! You have to pay us! To that they dont have to be upfront because they 'Didn't know you made too much'.
Now, this is where things get fun. How does TurboTax get you to pay?
Three ways:
1. Have your info on file so you don't need to enter it.
2. Make sure to place the payment step at the VERY end of the process when you are deep into the system and offer ways to pay it via your return.
3. Agressive UI and UI dark patterns to make the software appear to work harder and be more trustworthy and to make you feel as if you put in more involvement. There are numarous animations stating things like 'Verifing your maximum money back' and such that are all false loading screens. It all makes the customer trust it more while it's just wasting their time.
TurboTax is a bait and switch company that for many is free and makes their customer feel like they did the work. You can't compete with that concept by offering an automatic engine with no involvement becasue the customer will think it's wrong or they are being screwed and any upfront cost to cover development will make the customer think your product costs more.
Another way is how they have two "free" sites: One called "IRS Free File Program by Turbotax" and one called "Turbotax Free Edition". The free file version of Turbotax is only accessible from the IRS free file webpage (they block it from search engine results) and has a limit on annual income, but (as far as I know, I file on paper) it does not have as many upsells as "Turbotax Free Edition", which has a different (higher) annual income limit and gets advertised like crazy by Turbotax. This obviously creates customer confusion and people get tricked into using the wrong version.
Intuit (owner of TurboTax) was sued over this because they had some of the darkest patterns imaginable around FreeFile. They blocked search engines from finding it using robots.txt. They would show a page where only 1 tiny link brought you to the free site, while all others switched you back to the paid one.
Pro Publica did some excellent reporting on this in 2019 and they seem to have made it one of their pet projects.
You're not required to pay anything if your taxes are 'dead simple' you can fill out 1040EZ for free. And still can still compare turbo tax for free to see if you got the same numbers, and send it in for free. Nobody forces you to pay. I did that when I was single.
Nowadays, its complicated. Mortgage deductions, rental income and depreciation, independent contractor, children, jointly filing. I could attempt to do that on my own but it would take hours and I likely would leave money on the table. In my use case I am more than happy to pay a hundred bucks. It's actually less if you file early too, and its deductible in your next years tax liability... I don't understand why everyone here wants to kill Turbo Tax. It makes my life easier and less stressful around tax season.
1040-EZ and 1040-A were eliminated in 2018, so pretty much everyone uses 1040 now (which was probably simplified, I haven't compared). There's also 1040-SR for seniors.
> And still can still compare turbo tax for free to see if you got the same numbers, and send it in for free.
That's what I do for state, since my state has a relatively simple tax structure and offers free online e-file. For federal my situation is similar, I'm happy to pay someone < $100 to deal with all the schedules and calculations and make sure things are consistent. An accountant would be much more, and inertia keeps me with TurboTax, for better or worse.
TurboTax Deluxe comes in a version that includes a state filing, and one that doesn't. There is a $10 price difference, but if you get the Federal only one, the price to add a state filing is much more than $10. Last year, the listings on Amazon were very hard to distinguish, and my father, who is pretty tech savvy for his generation, bought the Federal only one by accident, so state filing cost him much more. It seems like the Amazon listings are a bit more clear this year, but the whole thing put a sour taste in my mouth last year, and I switched away from TurboTax.
Are accountants prohibitively expensive in the US? I don't use any tax software myself in the UK - I just pay an accountant $250 once a year and he does it for me (using some software I presume.) It's not really on my radar as things worth trying to automate or use software myself for, let alone building my own software! I'd have to be able to do it in just a few hours to be cost effective.
You also have to trust the accountant, and the accountant is not liable at the end of the day anyway.
If you are a W-2 employee, even with having to file a Sch 1/2/3/B/D/etc, it shouldn’t take more than a couple hours. And you get to know you did it right.
Of course, if you don’t enjoy reading tax instructions, I highly recommend parting with a couple hundred dollars and letting someone else do it.
The idea of paying someone $250 when the government already has the data is ridiculous. Accountants are accessible to some, but we shouldn't need to pay someone when the government can do the calculations.
The government really doesn't have the data. Do they have cameras in your home detecting whether or not you paid for more than 50% of your child's living expenses?
He'll just have to take your word for it, and send that in to the IRS. He won't be liable for it if it's a lie; you will. So what's the difference to you telling the IRS directly?
And no, checking a box "I did not have any income besides my tax-withheld salary [_]" and filling in an integer "I have [_] dependent children" seems like something most people could do on an IRS web page without having to buy software or pay an accountant every year. (And if you tell them when the kids were born the first time you do this, they could carry them over year to year and age them out automatically when they turn 18, and then you wouldn't even have to do that any more unless and until some exception occurs.)
All these pro-status quo comments sound so weird, like desperate apologetics for the world's most needlessly complicated system. Are you all just finding it impossible to conceive of there being a better way than The American Way, or what's the reason?
> Are accountants prohibitively expensive in the US?
No, they're not. Obviously cost will vary based on complexity (self employment, side-hustles, stock options etc) but for the most part a basic return by an accountant would be in line with what you're paying.
At that price point, your accountant is just charging you to do the data entry into Turbo Tax or equivalent. It's more work to coordinate, and and provide all the info, and costs more.
> At that price point, your accountant is just charging you to do the data entry into Turbo Tax or equivalent. It's more work to coordinate, and and provide all the info, and costs more.
People in this thread are talking about literally writing their own software to do it. Half an hour to collect up my payslips and email them to an accountant for $250 can't possibly be more work and cost more?
That's about what those franchise tax prep companies charge (Liberty Tax, Jackson Hewitt, etc).
I found out my parents used one of these places last year, and they charged them about $350 for a SIMPLE tax return. It looked like the goal was to charge about $50 less than the eventual refund, and also push the "get your refund right now!!" scam (i.e. take a high interest loan for the refund amount).
This year, I did their taxes and mine too (separately), using FreeTaxUSA.
Younger me would say, "Or we could actually simplify and fix the tax system!". Older me unfortunately knows just how corrupt the whole thing is, thus has no hope for such honorable dreams, and is sad.
The difference is that they're using your data to target financial products at you (just like any other free service). But they don't sell your data at least.
The part you're missing is that as a part of the acquisition, Intuit was required by the Justice Department to divest the "tax" portion of Credit Karma - so no, they're not the same company. Credit Karma, the main app, is Intuit. The tax portion of Credit Karma is not.
I use an accountant. It has worked for me for many years.
I'm grateful to be able to do that.
On another note, I used TurboTax, like, no exaggeration, over 20 years ago, for the last time.
They kept my email, and migrated me to one of their current accounts, and, on a regular basis, I get spammed by them to "reactivate my account."
The problem is that there is absolutely no way to respond, and ask them to remove me from their spam list. They try to get me to log in, instead, and the login attempts are always rejected. I have tried to contact their support, a couple of times, and received auto-bot responses that are basically repeats of the worthless footer in the spam they send me.
It's annoying. Not "jump off a cliff" annoying. More like "persistent mosquito" annoying.
“What if we could give customers a button. They’d press it at the end of the year and it would automagically file their taxes for them.”
Literally is like this where I live. It's done through a government website.
Except they also send it by snail mail, so you can read that and if it looks correct you don't even have to go online to click "OK". (Though I think I saw somewhere they may be phasing that out; saves on trees and postage.)
It was set up for Hasan Minhaj's show, and the show was cancelled. Since it was set up right before previous "tax season" I'm assuming they'd just paid for a year.
It's in archive.org, though, e.g. [1], and it's just a static site with a bunch of links.
Something I never understood about us taxes - from reading discussions online, it seems like everyone needs to file taxes at the end of every year? Here it's only self employed, or people with rental or investment income. In a normal employer-employee relationship, the employer has to take care of it for you, they deduct taxes before sending the money to your account. This seems to be the way it works in most places, but not the us?
It's not quite that simple. There's a lot of popular political support for things that make a simpler tax season impossible, too.
For example, the existence of tax-advantaged savings vehicles such as IRAs and HSAs mean that the taxable portion of your income isn't settled until the deadline for making contributions for that tax year. Which is April 15. But I imagine there would be a lot of popular political backlash if Congress were to abolish IRAs in the name of sticking it to Intuit.
There's also that whole mess of expenditures that you can deduct from your taxable income, which doesn't kick in until the total of your deductible expenses exceeds the standard deduction. And a lot of people were worried when the standard deduction got increased a few years ago. It made a lot of people's taxes nominally easier to calculate, but people were worried that it might remove an incentive for charitable donations, or reduce the largess that the government gives to homeowners relative to renters, or alter the impact of tax incentives for people who put solar panels on their roofs, or whatever.
Long story short, we love to blame Intuit, and it is true that Intuit generally wants a nasty complicated tax code, but it's also true that, in the aggregate, so does America.
Yes, but for things where all you have is a W-2, the IRS could easily do your taxes for you. They could send everyone a letter saying, “based on what we have, these are your numbers. If you want to change what we know, feel free to file yourself or with something like TurboTax.” Then you get the best of both worlds: people with simple taxes don’t have to deal with it, and people with complex situations can keep doing what they’re doing.
The (previous) existence of the 1040EZ showed that a lot of people have simple returns that the IRS could do for them.
This is making mountains out of mole hills though: these types of problems can be solved without abolishing tax-deductible accounts.
For example, one could tweak the deadline for contributions to those accounts to be say March 1, make the financial institutions report to the IRS by March 15th, send everyone their estimate on April 1st and have a deadline of April 15th to confirm or adjust their tax filing.
Most of the big things that involve deductions are already tied to a financial institution that already report to the IRS.
It's not like Turbo Tax is the only thing standing between you and not having to do your own taxes. The entire system top down would need to be redesigned and the withholdings concept done away with. That'd be such a sweeping piece of legislation it will most assuredly never happen.
A swedish guy I go to school had to file taxes...while not generating any income or allowed to generate income. He almost got in trouble with whatever US dept handles immigrants cause his advisor in the foreign affairs office didn't tell him this.
Most Americans are simply unaware that other countries have dramatically simplified this problem. It's amazing how many have magically assumed this was because this was some socialist concept and the immediately launch into "oh, but how much more in taxes are you paying? pfff."
Technically you only need to file if you owe the government money. If you have money deducted from your paycheck, you will want to file in order to get a refund, but technically you don’t have to.
This is not entirely true. You have to file if your income is above a certain amount for your age and filing status. If you owe or get a refund from the federal or state government is entirely dependent on your tax obligation and the amount withheld from your paychecks throughout the year.
This is incorrect. You have to file a federal tax return if your income is above the standard deduction, and there are other rules [1]. Anyone can use this IRS page [2] to determine if they are required to file a tax return.
Employers do withhold some income for federal and state taxes, and for social-security and some other odds and ends.
But the tax system is very complicated, with multiple tax brackets (income above a threshold is taxed at a higher rate), deductions, exemptions, exceptions, alternative-minimum, and more. There are deductions and exceptions for things like mortgage payments that go to interest (on only one residential property), donations to certified charities up to a limit, green energy incentives, travel to start a new job, who knows what.
So, we have to settle-up with lots of complicated forms each year, and I've tried alternatives to Turbo Tax, but didn't have enough confidence with the alternative's handling of all the complexity, they just were noticeably worse at handling all the complex details. Not that I like Turbo Tax or the overall situation, but for me it's either Turbo Tax or pay a more expensive accountant.
The USA has payroll deduction, but the tax code is complicated enough that that's only a rough estimate of what you actually owe. What you actually owe cannot be determined and deducted ahead of time, because a person's true tax obligation depends on information and events that may not be available until up to ~105 days after the end of the tax year.
So, every year, you have to do a bunch of paperwork (it took me over 4 hours this year) to calculate your actual tax obligation, and then either you send the government a check or they send you a check to settle the difference.
The US's system of tax deductions makes it impossible for your employer to know how much to remove from your paycheck except in the simplest of scenarios. They may not know how many children you have or how much money your spouse makes if you file jointly or how much you pay in rent or whether you're a first-time home buyer or what your deductible medical expenses were for the year or whether you had education expenses and so on...
There is literally a form you fill out for your employer to tell them this information so they how to much withhold from your paycheck: https://www.irs.gov/pub/irs-pdf/fw4.pdf
A W-4 is an input into a formula that tells the employer how much you want deducted. So a couple with 3 dependent children and a mortgage will put down more deductions than a childless couple with no mortgage. But it's just to get you in the ballpark so you don't seriously overpay or underpay.
The employer tax withholding does not account for any other source of income you may have (sell stocks, rental income, make money on Twitch/Youtube/ebay/etc, withdrawal from tax free investment, interest, etc) so you may need to pay more taxes than they withheld and at the same time it doesn't account for all the possible deductions you may have that year so it may withhold more than you need to pay (usually that's the "desired" case).
So at the end of each year you need to go through all the income sources of that year, subtract all deductions and compute how much actual tax you own. And pay or receive the difference to/from IRS.
Even if you have an extremely simple income situation (only one wage, no other income), depending on the state you live in you may still qualify for deductions that the employer is not aware of so it can be in your advantage to do the taxes.
Employers do witholding the US. Filing at the end of the year is doing a calculation to determine if the withholding is correct and if you owe extra or are due a refund. The factors determining total liability aren't simple enough that paycheck withholding can be entirely accurate.
Why people hate TurboTax so much ? Is it because its a monopoly (or) does it uses any predatory practices (or) kill other companies that tries to compete.
Disclosure: I used TurboTax to file this year's taxes and kind of like their UI and ease of use (for top $ of course):|
All of the above. Yeah TurboTax is great because they make it easier to do something nearly everyone hates to do and doesn't understand. So most people don't care about why Intuit is a terrible company because TurboTax is their only option and it works well.
Intuit has excessively lobbied the US government to prevent simplification of the tax code, they struck a deal to offer a free option in return for the IRS not developing their own alternative, and then deceptively hid access to the free option so that users are tricked into purchasing it anyway.
People don't like TurboTax becauseof their advertising and lobbying tactics. They target income levels that can file for free online and spend money 'lobbying' the government to allow the practice to continue. That being said, I use Turbo Tax and love it. The clean UI made filing take 90 minutes despite having several property and other transactions this year.
The other comments provided a great overview, but I would really recommend read ProPublica's reporting about them [1]
Some very brief highlights:
- They use dark patterns and other trickery to prevent people from filing for free (the vast majority of Americans can file for free via IRS free-file), instead directing them to the "free" up-sell laden product
- Lobbying against literally anything that would make filing taxes easier or cheaper. It doesn't have to be this way (and it's not in many countries), but it's how they make their money.
Not only do they kill other companies, but they kill the government's ability to compete. As is mentioned in other threads, many countries don't have this tax filling non-sense at all. The government just says: Here's what we're basing your taxes on; let us know if there are any mistakes.
It's absurd to spend ones time and money to file taxes only to have the government punish you because you didn't get the right answer.
I just want to point out that this article is using a really bad definition of monopoly. There are about a dozen if not more ways to file taxes, and just because one is the most most popular and gets a bigger slice on the bell curve doesn't mean it has a monopoly.
It bugs me a little because I keep seeing the definition of monopoly becoming less and less meaningful.
I think the argument, if anything is the opposite: there are dozens of tax filing software, they all more or less do the same thing, and all the resources get wasted on marketing against each other. So I think I would prefer an actual monopoly! And if the government won't make it, why not make an open source one that can drive the for-profit ones out of business!
This discussion feels incomplete without mentioning "return-free filing". A lot of countries you don't even need to send a return because the government already has all the info you need.
The fact that this isn't in the conversation has always surprised me. Both Regan and Obama supported it. The Republicans did that whole "taxes on a postcard" skit, but we don't even need a postcard. We're talking about TurboTax, well how many of you also log in and all the information is already there? I don't see why we can't replace the 1040 with return free filing, or at least the 1040Ez
Grover Norquist has had Republicans sign "the Pledge" opposing tax increase since 1986. Reportedly, he also wants filing taxes to be painful so you hate the government and he opposes these measures.
In 2005, California had a pilot program called ReadyReturn where they mailed you prefilled forms. It was popular. TurboTax lobbied against it and it died.
I do mortage deductions etc. and I filed my taxes some years back by responding to a text message. "If this looks right and you don't want to change anything, just reply YES and you are done for this year", basically.
In recent years it's just a smartphone app or website. Typically you cclick "next" 3 times to review and then submit.
It's around as simple as your average online retail experience.
In case you're wondering how they justify keeping the system the way it is, the going line is, "If you allowed auto-filing taxes, the government will sneak in new taxes that you'd never even know about!!"
The other argument I've heard is, "it should be painful to file taxes, to make people support the idea of getting rid of taxes".
691 comments
[ 5.4 ms ] story [ 216 ms ] threadSo it's a rare case of a sleazy state-sanctioned (via refusal to simplify the tax code) monopoly with a decent product. Usually such monopolies have complete shit products because they don't need to care.
It's intentionally obtuse and confusing for something that should be simple and straightforward for 80% of the population.
Besides understanding my taxes (and taxes in general) better, I almost enjoy the process using Turbo Tax.
If there is a better Turbo Tax product out there, it would have to be very compelling to get me to switch. Besides familiarity with Turbo Tax, it pulls in last years data and saves me the more tedious steps.
Like you though I feel like I am locked in at this point.
Things like brokerage transaction imports were simply broken while I was trying to file last year (which, incidentally, is the only reason I pay for it).
And their "UIs" for dealing with forms like K1s are often more confusing (to me at least) than the underlying IRS form.
I feel that a lot of people complaining about TurboTax upselling or anything like that are attempting to use the online version. I am very much opposed to giving some online site all my tax information so I will always keep using the desktop version for as long as I can. It includes 5 free federal e-filins and have to pay extra (about $30) for state filing (but can always just print out the filled forms and mail them in if you don't want to). And when I did the taxes on my own I had to print and mail them anyways.
Because many eyes often make bugs shallow, there is a pretty good chance that a public release of the code will find errors that both find funds that are owed to the government and exonerate people who have been incorrectly billed.
What better purpose for the American Fuzzy Lop?
However, that doesn't necessarily mean they're public domain. Trademark law still applies, for example.
Additionally, not everything the government uses, even exclusively, was produced or is owned by the government. Often, government contracts allow the contractor to retain control and ownership of the intellectual property. The government may also have copyright transferred to it and retain that copyright. A legal issue I haven't researched is the line between a work that is a government work under work-for-hire principles, and therefore is ineligible for copyright protection, and a work for which the government contracts and for which copyright is subsequently transferred.
Before attempting to FOIA the source code of a piece of government-exclusive software, I would first FOIA all government contracts for the creation of that software. Then you'll have something to go on when crafting the FOIA request you really want.
https://www.irs.gov/privacy-disclosure/use-of-federal-tax-in...
lots of vague stuff, but looking at the Google result, I noticed some differences. Ah, the meta description of the page reads:
Open source software, while it can be useful in many instances and appear to be cost effective, may present a security risk because open source developers don’t typically follow security best practices when developing their software.
Well, there ya have it! :D
https://www.irs.gov/e-file-providers/modernized-e-file-mef-u...
In the case of W-2 data, seems like you can get it as part of a transcript if you want it:
https://www.irs.gov/individuals/transcript-types-and-ways-to...
Of course, you also get a copy of the same W-2 directly, but it doesn't seem true that "they won't give it to you" if you ask them.
I wonder if there is a PR that Intuit filed to add this to the readme.
Seriously, I wonder how much money Intuit has spent to terrify people into using their software. Each year, I look around for alternatives so I can avoid giving them money, and each year I find some reason to grow fearful of an IRS audit and go with the company that has convinced me they are less risky than anything else. I wonder if that is truth, or if I've been programmed to think that.
I'm tempted to go back to paper forms. It wasn't hard, just annoying the one time I forgot to copy line 13 of form 1234 to line 43d of form 5678 and then had to amend my state filings.
Every year when I manually copy information from my W2 onto an online form, I think that tax season must be the biggest data entry clusterfuck in the world.
Complete agreement, though there will in some cases be a need to file forms to supply information that they don't already have. Additional deductions, for instance: charitable contributions, deductible expenses, etc. But those forms should be "here's the information", not "here's the information and a pile of careful calculations implementing an algorithm".
I tend to use taxcut, which is a bit closer to turbotax, but frankly its messed up things that I only found by reading a paper copy of the return before filing and noticing numbers that didn't make sense (doubling values by adding imported values with hand entered ones, that kind of thing). I had problems like that with turbotax in the 1990's but haven't used it since the bootloader fiasco.
[1] http://achewood.com/index.php?date=02102004
[2] http://achewood.com/index.php?date=02272003
It really isn't - the point is freedom access, not free use. Information acquired this way doesn't magically become public domain, it may (or may not) have other constraints on it.
See e.g. https://www.justice.gov/oip/blog/foia-update-oip-guidance-co...
There's also the issue that if the code wasn't bespoke but also sold to non-government entities for similar missions (i.e. government does not hold exclusive rights), then it can be protected as the contractors IP. But for the IRS this would be rare, they are pretty unique and often do things their own way.
* You can sort of do this without the code. The IRS is not allowed by legislation to base an audit decision on any information that is not covered by eFile, so contents of forms 1041QFT and 990T, or any attachments to what could have been an electronically submitted form, is out of scope. As long as what you submit in the core set of forms aren't statistical outliers, then you're good.
Again, IANAL, do your taxes, please. But it does seem like the system is legitimately designed with an ethos of just making sure taxes get collected and isn’t about being vindictive.
What I always do if in doubt is to attach a letter setting out my assumptions. I've outright had to tell the tax authorities I didn't know the real numbers one year, because I realised shortly before filing that I'd lost documentation in a move, and so a whole bunch of details were estimates. Even that was accepted without additional documentation.
Of course I'm sure there are countries that are worse.
If you think you have about $5k in valid deductions, but you can't provide any documentation upon an audit, then that $5k will be reduced to exactly $0 and you will owe all additional taxes plus interest and penalties.
That being said, audits are incredibly annoying if you didn't make a mistake, especially if children are involved. The Examinations department of the IRS is hard-headed, to say the least, and they will often make any excuse to deny you credits that you are actually entitled to. In order to get a fair hearing, you have to appeal the case to court. (The U.S. has made the appeal and court processes pretty doable even for taxpayers without an attorney, though.)
At least half a decade, judging by how some people claimed "ongoing tax audit" as an excuse for not publishing their tax returns for a whole campaign year and Presidency term...
For those unaware: You get a 1099 when you're paid as a contractor, which means taxes haven't been taken out yet. It's fairly common for temp work and similar oddjobs that don't warrant a dedicated employee.
There was no audit in my case. They just sent me a letter that boiled down to that I had missed that 1099, and they were correct. I was just a little miffed that they waited almost a year to send that letter, which by then had higher interest / penalties than if I had been notified sooner. Still way better than an audit would be, though.
I had an A+ experience being audited after my initial shock. They even have a secure message system where you can communicate via a website with the IRS including uploading files instead of having to mail letters back and forth. Definitely some clunkiness but overall it was solid and worked.
Not sure I'd recommend the experience but I definitely found it nothing to fear. I also found I didn't need professional assistance with being audited (I did seek it out but due to the time of year being so close to the next year's tax due date, I couldn't find someone right then so I decided to try fixing it myself).
Please explain to me why they are *DUE* said taxes...
What is the gas tax for, what is it intended to perform
What is the lottery tax for, what is it intended to perform
What is income/state taxes intended to perform
Where are the metrics for what tax==intent==outcome results?
Please - give me a detailed response.
Why are our roads so fucked up?
Why are our teachers so underpaid? (Did you read the entire 1.9 TRILLION stimulus bill from Harris Biden? - I DID.
Guess what they only gave $800 million toward edu packages which DID NOT EVEN CALL FOR OR REFERENCE TEACHER PAY INCREASES)
Why are government workers not answering phones.
Why is the military un-auditable.
You are a fucking idiot.
Let me tell you something,
The gas tax has done nothing for actual roads.
The lottery has done nothing for schools
The government workers are only in it for their own benefits
The military is NOT on your side.
Your taxes are used to thwart you - not build you.
If you disagree - then, please explain to me. EDUCATE me. on how I am wrong.
>If you disagree - then, please explain to me. EDUCATE me. on how I am wrong.
Boy howdy if that's how you go about seeking education I can guess a) what you political opinions are and b) how you arrived at them.
Because some assholes -- present company very much not excluded -- don't pay enough taxes?
https://news.ycombinator.com/newsguidelines.html
"When disagreeing, please reply to the argument instead of calling names."
"Please don't use Hacker News for political or ideological battle."
"Please don't use uppercase for emphasis."
"Have curious conversation; don't cross-examine."
"Please don't fulminate."
You were warned a day ago as well:
https://news.ycombinator.com/item?id=26323291
The fact that there is a "vote" on a 1.9 TRILLION additional stimulus, on top of the ~6 TRILLION previous thefts - the fact that in 2008, many senators and congress folk had their spouses create LLCs - then get stimulus and bailout funds just illustrates the corruption.
The situation is bananas right now.
And people are defending the system.
This is like if you have major outages to prod and instead of doing a proper post mortem to get to root cause on the failures, you re-up your contracts with the vendors who failed you and pay bonuses to execs and ops people who left the system in a position to fail, then have all the other employees yell at anyone who questions what the hell is going on.
I get emotional - isolation for the last year has made emotions bottle up...
But seriously this situation sucks.
Again, I apologize for certain things - but not my indignant opinion of the current political and technical climate we are forced to live in.
Why not pay an accountant? Why is everyone trying to do their own taxes? By the time you've spent a couple of hours looking for alternatives... you might as well have just paid a professional to do it!
Spend a couple hours reading the instructions, use the IRS free fillable forms website, and you do it once and every year after it’s quick and easy. Things don’t change much year to year. If you don’t understand, post a question a personal finance forum and someone will pipe in with an answer.
So why do people complain about it so much? To the point where they're writing their own custom software (?!) to do it?
Non W-2 or 1099 incomes with various deductions get things complicated though, and I would punt that to an accountant.
https://www.ftb.ca.gov/file/ways-to-file/online/index.html
Maybe a bit of an open secret? Found with "site:ca.gov", halfway down the DDG page.
Other little-known, useful USA services:
weather.gov new.nowcoast.noaa.gov
I have always done my taxes myself, on paper, even years when I had capital gains, education credits, 1099s, and small business (single member LLC) income. It's a bit time consuming but not difficult per se.
lol bro, I'm employed and married with 2 kids.
I guess that's considered a partnership.
;)
But I also had a few hours to burn. I understand preferring to spend that time with kids instead. But it is worth noting that it’s a much smaller time commitment after the first couple years.
IDK about that. As a non-resident alien for tax purposes for a couple of years I couldn't use any of the existing software (TurboTax, etc). I even tried to contact a tax accounting firm like HRBlock and they had no idea about things I needed to file that I discovered on my own reading the IRS publications. So I did the taxes on my own and every time it was the most painful thing happening that year (yes, that likely means I lead an otherwise stress-free life), it took 3 weeks at least spending most evenings a few hours making little progress on it each day. And at the end of it I never felt very confident about it and I likely left on the table possible deductions.
But if there's one thing doing that helped with is appreciate how easy and painless is to do it as a resident alien with something like TurboTax (takes a few hours instead of weeks) and it helped me understand the terms and instructions of some of the more complex issues that you may have to deal with even with TurboTax.
You need a real CPA with a tax focus if you have "complicated" taxes.
It seems like you are (were) a good candidate for a more comprehensive service for sure. Perhaps a better wording would have been "it's pretty simple as a resident and (W-2) employee," which encompasses the majority of those filing, and who probably don't need a service like TurboTax or an accountant.
So, having an accountant handling all the details, in the en puts the information at your fingertips that otherwise you have to scrape out of the box of receipts/etc. The tax filing parts are easy.
Complexity covers corruption.
Why not just pay the nice mafia boss the protection money, and stop complaining?
First and foremost, it's a matter of principle. It's just not right to have the tax code written in the way it is written. It is written by special interests. If we all just said "complexity is no problem, we'll all just pay a small fee to accountants", not only will that "small fee" keep going up, but it will get more complex, and special interests will be better served to the detriment of everyone else.
Pragmatically I do hire a CPA, and in general like paying for the high level strategic advice. But the tax compliance services should be unnecessary. My tax returns should be a single text document that I can keep in git and copy/paste/update each year.
But why do you even need a tax return? Most countries don't need it for the vast majority of people. Why does the US?
On other hand, if you are audited, it is not a big deal as long as you were not intentionally defrauding IRS. My boss used to get audited almost every year for his business. IRS would ask for receipts, and once he provided those, it was end of story.
https://www.irs.gov/e-file-providers/free-file-fillable-form...
If you’re reading Hacker News, you can probably figure it out.
The ProPublica report linked in the OP:
https://www.propublica.org/article/inside-turbotax-20-year-f...
In the UK you can file electronically with the HMRC using their website. It guides you through several forms, tells you what numbers to input from your P60 (end of year notice from employer of salary and tax paid) P11D (end of year notice of taxable benefits) and a few other sources then produces a downloadable PDF copy, and submits them electronically.
It's not for everyone, e.g. Lloyds Names can't use it, but for 99% of people it's fine.
Why is it better in the UK? I don't think we have quite the level of regulatory capture, and still somewhat believe in public services, and spending money to make things better for everyone.
[0] https://github.com/openfisca
It would certainly be interesting to connect the two, but I suspect that you'd do that after finishing US Taxes. Specifically, you could take a completed return from US Taxes and transform it into an input for an OpenFisca model of the USA tax code.
As it stands, nobody has developed a USA model on OpenFisca. Perhaps that could be a next step, pursued in parallel with the US Taxes effort.
A monopolized industry is also intentionally difficult to enter. It’s not just about buying existing competitors it’s about also making it as hard as possible to enter.
So even when some startup manages to get funding and deploy a viable product, they’re immediately on the radar for acquisition for monopolists if they weren’t before going to production.
TurboTax has also lobbied to affect US law in their favor. They’re a scumbag organization who makes an excellent product.
But Turbotax is free for 1040EZ filers. It's only in an instance where you would otherwise just hire a tax accountant that they charge you. In terms of SAAS pricing, it comes out to like $15/month annualized. It's a bargain IMO.
Private electronic tax filing systems (and the fees they charge) should not exist.
This is false. There's no need for 90% of people to hire an accountant to file their state tax return, for which Intuit charges.
This is false. It's plenty possible to be in neither scenario, and every year millions of Americans are.
Further, the 1040EZ system no longer exists. Tax filers often charge for "tax accountant" services like having a moderate income or filing state taxes.
This is incorrect in practice. Through dark patterns and otherwise, an extremely small minority filing without paying even if they should be “eligible” (which is itself an absurd position).
You mean like the Internet?
>The fact that TT (and H&R Block) have impressed upon reps that they will participate in Free File, it mitigates their need to make a government-sponsored program.
It's a half assed solution so they can say they did something and give them political cover.
It's difficult for me to believe that my representatives actually believe it's in my best interest to pay TurboTax $100 every year, compared to having the IRS automatically file my taxes.
On the other hard, it's easy to believe that my representatives have been cheaply bought with political donations.
Unless they're actively spreading disinformation or corrupting the vote.
https://www.propublica.org/article/inside-turbotax-20-year-f...
The forms I get every year from the ~10 banks I have accounts with and the ~2 companies I earned a salary from are essentially just copies of forms that they also had to send to the IRS. So in principle the IRS already has the same information I do when it comes to how much tax I paid and on what income.
It is not clear to me why I have to share:
- My name
- My address
- My _social security number_
- My spouse's name
- The names of my children
- All their social security numbers, too
- How much money I made
with a for-profit company. This is information that the IRS already has. To me, this is totally unnecessary. I would much rather the government increase the IRS's budget so that they can implement services that provide any help I might need directly, rather than through a totally unrelated corporation. The IRS's job is to make sure you paid the tax you owed. They don't dictate how much tax you pay. I truly believe that with the right financial resources they can make it easier to make that payment (and correctly) for: 1) us; and 2) them.
For folks with very simple tax situations, this seems like a no-brainer. For folks with complicated situations, you are still more than welcome to talk to a tax professional for advice. But a company _doing your taxes_ for you seems unnecessary.
Wouldn't it be lovely if instead I went to www.irs.gov to file my taxes, and I was presented with a very similar interface to what for-profit companies are providing, but with the information already filled out because they already have it? Essentially, all I'd be doing is sanity-checking the inputs.
Also, fuck them for charging $70 while lobbying for taxes to remain difficult to file.
All they're doing is lining their own pockets with millions from TurboTax et. al to make sure laws are favourable for those big companies. But because it's perfectly legal, and there are no thugs with guns or drugs or "bad members of society", it's absolutely not corruption.
/s
If that were so, there wouldn't be so much money spent on lobbyists by companies.
I guess there's a reason they call it "the dismal science."
Any given legislator has 1 maybe 2 issues that they care about, for which they will advocate an agenda. The rest, they rely on what they're hearing.
Intuit's lobbying effectively drowns out alternative view points. Assuming that anyone anywhere is consistently advocating for something like free auto-filing.
Source: Have lobbied. Know legislators and their staff. Also read many books about legislation. Most legislators would LOVE to hear from their constituents; will bounce out pro lobbyists to give their own people an audience.
Yeah, I'm sure that desire to hear from them is only up to a point, at which they love the lobbying dollars more.
Ahh... that makes sense why this is one of the more reasonable descriptions of how lobbying works. HN seems to think it works by guys in $3,000 suits handing over bags of cash to Congressmen.
Your point about legislators loving to hear from constituents is true - one reason why lobbyists are so effective is because there is often few or no other voices in the room. If voters actually organized around some of these topics they'd be surprised how much power they have.
It's trivial for government to be able to automatically produce a tax return that's basically almost all done for everyone.
In effect, the IRS already does most of a taxpayer's paperwork. Since they do this, it might be nice to provide it to taxpayers for review and correction, rather than making us all start from zero each time.
Auto-filing and simplification would be so much cheaper.
No, no they don't. At most they have your mortgage interest deduction - side hustle expenses, charitable contributions, etc. are not reported to the IRS automatically.
I think simplifying the tax code first requires trading in our deduction system for a flat tax or lower taxes across the board. Then you could get to a simple postcard bill every year. Too many special interests to let that happen though.
The IRS will (mostly) know your gross income, but it won't know the exact details about claimable deductions such as business travel, business meals, supplies, etc.
The only way it could know that would be to peer inside your credit-card statements, bank statements, etc. and make judgments about what was work related and what wasn't.
I'd rather do the tallying myself -- which is a chore -- rather than have IRS software make guesses that are a) awfully nosy and b) bound to disadvantage me.
In addition to hundreds of millions of W-2s, the also IRS has 1099s and 1098s of various sorts. For the majority of Americans, the IRS already has the majority of their tax data. And the infrastructure already in place to provide this to them. Why not present it along with the opportunity to amend it? Or tally from zero yourself, if you prefer. This is what I intended to communicate earlier, and I can see I failed to be clear.
You're absolutely right. The IRS in no way has everything! Do you think it's maybe worth considering that it might be possible to make many people's lives easier for a very small marginal cost by letting people see what data the IRS already has about them? It might not work for every single person every single time, but it might work for a lot of people a lot of the time.
Thanks for the very helpful clarification. Your argument for provisional disclosure is compelling.
In fact most people I work with don't even know there is such a thing as a tax deadline every year or anything like that, because....why would they? if you are a normal full time employee there is absolutely no need to file your own taxes. HMRC has all the information it needs to tax you year on year.
>>what you can deduce from it (expenses you had to do in order to acquire your income)
Well, at least here in UK there's practically nothing you can deduct from your taxes if you are a "regular" full time worker, so that solves that issue.
Same thing happens in the US. When most people file their taxes here, they get money back because they already overpaid.
For example I spent a few thousand trying to launch a business this year, and that is all tax deductible. So I'll file that with my tax form that my employer sends me (with the salary info prefilled), and I'll end up getting some money back because my taxable income is lower than what the gov't expected.
Also, the way it works is that you still have the option of doing it yourself. But by default, done for you.
My taxes are admittedly at least somewhat complex but, even if I did them myself, I'm not sure how much effort it would save if I had to do a bunch of additions and corrections. Pre-filling would mostly be useful if you could just check your W2, maybe a 1099, some things like dependents, sign it, and file it.
Instead of developing software, we should be writing our representatives.
Why are you just blaming Republicans?
If the taxpayer agrees, they can just sign and get refund or pay additional taxes.
If taxpayer disagrees, they can submit additional information.
The Democratic president can do this right now, for this tax year.
And every year there's a "blue dog" Democrat living in a purple district which bends to the pro pay day loan lobbyists.
Vetocracy is a tough problem. Our civic legacy is to fear the mob, tyranny of the majority. (Thanks Plato.) So it's rare that mere popular support ( >60%) is sufficient to attain progress.
So, to your point, mere 50% + 1 vote ain't ever enough.
Why did this not happen then?
There’s a reason those bills get stopped and killed. They sound good on their face, but when you dig into the details they harm the people they’re supposed to help.
For 2 years. And spent basically the entire time barely getting ACA through. Not a lot of "political capital" leftover for battling to have free tax filing.
http://www.msnbc.com/rachel-maddow-show/fleeting-illusory-su...
Otherwise, legitimate or not, that money is going to have to come from taxes somewhere.....
Also, what does onerous have to do with legitimacy? It's like there's two orthogonal axes and they're trying to make taxes painful to convince the populace to dislike taxes, whether the taxation process is legitimate or not.
But if you, say, have children, the IRS will not be able to "file for you" in any meaningful sense. Whether you are allowed to claim dependents on tax returns is a complicated question that is highly fact-specific. Happily, the IRS does not have cameras in my house checking to see if my children are living with me. I have to report that information to the IRS myself.
Drive for Uber? Your taxes are also gonna be pretty complicated, and there's no way the IRS can do them for you. After all, they don't have any information on how many miles you drove for Uber and what other business expenses you might have had.
Right now, the system we have is pretty good. Most people qualify for free filing, and free-file tools get better every year. At worst, there is an issue of consumer education (psst, you might be able to find a better/cheaper tax filing option than Turbotax).
Not compared to other countries it isn't. Not by a long shot.
Video with transcript below:
https://www.pbs.org/newshour/show/dreading-taxes-countries-s...
Get the heck out of here with your bull pucky
And thank you for the link, but this news segment basically is big on opinion, low on specifics. Feel free to link me to a detailed article on how non-U.S. countries handle self-employment or dependent tax issues and whether/how those things are easier elsewhere.
In the UK quite a few people don't pay any tax at all, and the vast majority don't pay enough tax to have to file any return.
What impact does a dependent have on your tax that needs to make it so complicated? I have relatively complicated taxes due to two jobs and some unusual deductions, but having a child doesn't really have any impact on my tax return in the UK.
As for the dollar values, if you make $30,000 and have 2 kids, you can usually get a $6,000 tax credit or more. The U.S.'s support for working low-income families is carried out through the tax system. Put another way, tax credits are one of the U.S.'s most important social safety nets.
No matter the situation, they accept your word for it. If an audit occurs you will have to prove things with documentation and be held liable for mistakes or fraud.
It's basically a five-minute task that you appear to believe should make tax filing take hours?
I did taxes once in NZ, you go to a website where they have all the data ready. Then you go next, next, finish, adding a deduction or dependent here and there. Takes 15-30 mins.
But that doesn’t mean it’s a great system now. I would favor dropping exemptions and moving to a lower flat tax, for instance - taxes by postcard. Probably never that way for businesses, but for 9-5ers, it should be way more straight forward than it is now.
and a lot of other people too
> big on opinion
&
> Right now, the system we have is pretty good. > I have vivid memories...
Sounds like the whole discussion is rife with opinion.
BTW, you have my sympathy, but your story doesn't shore up your argument. It only sounds like tax filing in the States has gotten better. And better locally is not best globally, by a long shot.
In general the States has been shot through for so long with so much corruption (aka special interests and campaign contributions and lobbying) that the citizenry has a perversely skewed idea of what is normal. /rant
Good luck prying that out of the cold dead hands of boomers (and eventually Gen X)
So long as they want / use it, it will 'trickle down' to others.
https://www.taxpolicycenter.org/briefing-book/what-are-itemi....
There's almost no scenario where the IRS cannot do this stuff. Think about this fact: your W-2, 1099 investments and most other financial information is already reported to the IRS. They have it already. Absolutely bonkers that people accept anything less than just being sent a bill or check once a year.
> Right now, the system we have is pretty good.
Yeah, big disagree there. If you've ever done taxes in another country you will realize how idiotic taxes are in the US. Australia is literally, 10 minutes per year, and even complex things like investments, stocks...
If all your tax returns reference are the handful of items you mention, your tax return can be done in a matter of minutes on a short form.
Yes, it could be better, but it's a fantasy to think it should be as simple as getting a bill from the IRS at the end of the year.
It's still a far cry from the "entire Saturday morning" affair, even using online tax software.
Adding to the types of really common situations where you do have to provide context the IRS doesn't already have:
- side-hustle contracting (IRS doesn't know what expenditures are for the business)
- stock sales (your broker may not know your basis)
- home improvements eligible for tax deductions
- sold a home (IRS won't know your basis or selling price)
- did you move for a job? IRS won't know whether you are eligible for tax deductions.
- crypto gains/losses
- inheritances (basis again)
I'm curious whether other countries have simpler tax codes that permit simpler filing?
This used to be a real nightmare especially when there were acquisitions in stock, splits, etc. There were a couple times over the years when I just said F' it and put down a reasonable number.
But these days, unless you have some pretty old investments, the brokerages generally track your basis.
Yes, but IIRC if you transfer investments between brokers you are back to tracking basis yourself (if you're lucky, the new broker will allow you to enter the basis after the transfer).
But agree in the general case that it's not a problem for younger people. (Gen X and older may indeed have some of those pretty old investments lurking in their portfolios.)
I fall into the older bucket but I guess my old 401(K) must have had basis added when it merged with an IRA and none of my other investments lack basis information.
Just to illustrate, let's go through your examples and how it'd work in Germany:
> side-hustle contracting (IRS doesn't know what expenditures are for the business)
You'll have to mandatory file income taxes since the income from contracting is not salary and there are no payroll taxes deducted from it. Not sure how common it is in the US but in Germany the vast majority of people don't have side hustles like this (for a variety of reasons; certainly a bad thing)
> stock sales (your broker may not know your basis)
There's a default tax rate on capital gains (25%) with a 800€ allowance. You assign how you want to split the allowance between your various banks and other capital gains generating accounts (you're responsibility to not exceed them) and the banks will report your cap gains with your tax ID to the tax office. If you did pay taxes it's often worth filing to make sure the allowance evens out. Also, if you want to carry forward a loss you have to file (but you got 5 years to do so)
> home improvements eligible for tax deductions
You'll probably want to file but you don't _have to_. You just won't get the deduction.
> sold a home (IRS won't know your basis or selling price)
If it was the home you lived in, you don't have to file (it's tax free). If it was a house you rented you'll have to file but you'll have to do that anyway for the rental income.
> did you move for a job? IRS won't know whether you are eligible for tax deductions.
Same as with the other deductions, it's in your best interest to file but you don't have to. No (legal) consequences if you don't.
> crypto gains/losses
This gets tricky but if you owned the coins for more than a year (to the day) they're tax free and you don't have to report them. But you better have documentation on this if you ever get audited.
> inheritances (basis again)
This one is actually interesting as it's a completely separate tax and thus separate process from income tax. There's an allowance based on your relationship to the deceased (500k€ for spouses, 400k€ for children, etc.), if the inheritance exceeds that you'll get a letter from the tax office asking you to file a declaration for inheritance tax. At that point there's not much software that'll help you and you'll better hire a tax advisor :)
It seems the major difference derives from our (American) punitive approach to those who use our meager social safety net.
For example a large swath of Americans earn an income that entitles them to assistance in the form of the Earned Income Tax Credit (EITC). This is (roughly, it depends) available to people who earn < 85% of the median income. But they have to file taxes to get the money they are owed (because we hate the poor in America and this will dissuade them from getting their money). So that's going to be a large set of the country that has to apply or leave money on the table.
For a large set in the middle class, you have to file because you leave money on the table by not claiming deductions.
So even if we weren't all more or less required by law to file, we would mostly have a financial incentives to file anyway.
Oh and anecdotally, side-hustles and second jobs are very common in the US. Poor social safety net, no employment contracts, very low minimum wage, high healthcare costs all doom most Americans to perpetually precarious financial circumstances. So everybody is trying to get a little more so they don't get wiped out.
Only then do they actually know.
For example, you yourself may have filed with the status, "Married, filing separately", but the other person in your relationship may have filed with the status, "Single".
The IRS has no idea who is right without actually talking to the two of you. And because they don't know which status is correct, they don't know how much each of you owe.
Should tax filing be easier? Sure. But, "They already know how much you owe." is patently false.
For that matter, everyone qualifies for free filing--although in practice it gets too complicated for most past some point. I know it sounds like something savages would do but it's actually possible to just fill out the forms by hand if your taxes are fairly simple.
I use an accountant who I've been using for years but if you just have a W-2, a 1099 or two, and just use the standard deduction, it'ls likely pretty simple to just fill out a 1040 form and a state tax form.
Been using them for years now after getting tired of TurboTax’s $60-100 fear racket.
They're not entirely free, but they're still very cheap and transparent about their pricing. They don't do the login thing where you hook into your banks and pull in documents automatically, but... honestly those aren't that useful and I'm not sure I trust those on turbotax.
Or it's "Free as in freedom from Intuit."
https://www.cbc.ca/radio/costofliving/the-canadian-tech-comp...
It was really simple, something like:
- You clicked a button in the toolbar or right clicked and chose menu option
- a dialog showed up, you chose how often it should check the page and how big differences it should tolerate and clicked OK.
- once every hour or 4 times a day or twice a day depending on your choice Firefox would download the page locally, compare it and tell me if there were changes.
Yes, we oldtimers mostly complain about TST, but there were an entire ecosystem of brilliant extensions - so brilliant I figure it would habe been hard for me to believe today if I hadn't experienced it back then.
That's what you can have when you have brilliant people making brilliant software to empower you :-/
Edit: seriously, I would pay $20 a month for someone who would fix the new Firefox. If someone made a realistic Kickstarter I'd support it right away and then monthly if necessary.
I've since moved to the US and I'm dreading doing my taxes using probably TurboTax for the first time this year. At least it probably won't be as bad as previous years when I had to file non-resident US taxes for internships, where you can't even use TurboTax and have to use Glacier or TaxAct, which were terrible compared to SimpleTax.
The problem isn't that they want money to use their software, it's that they're not upfront about it. Free is thrown in your face about 100 times during the process and then they surprise you right at the end after you've already invested a bunch of your time.
My taxes are dead simple - I just don't trust myself or care enough to file without some software assistance. This year I'm using a different company who appears to be much less shady and will never use TurboTax again. I hope TurboTax making my money once was enough to lose me as a customer for life. In reality I hope the company ceases to exist in the near future, but that seems unlikely.
I'm excited at the prospect of free & open source tax software - for next year maybe.
https://www.irs.gov/e-file-providers/free-file-fillable-form...
You basically type your numbers in and it does the math for you. Then you print it out and mail it in. It can't do anything complex, though.
In my experience (Minnesota), state filing is even easier, usually just copying numbers from your federal form and doing one table lookup. No reason to give the shitty companies more money.
While looking over the requirements and supported forms I didn't find anything about student loans (form 1098E), would you happen to know if that method is compatible with them?
It's really no different from doing your taxes by hand on paper, except it does almost all the math for you.
I've been using it for years (with about 15 different various forms) simply because I refuse to support the tax prep software companies out of principle.
And each year I just look at the previous year's which I saved as PDF for reference in case I forget which number goes where.
Turbo Tax is required to abide by the FreeFile rules. this means that for some customers their software is required to be free.
By some customers I mean like 60%.
So TurboTax moved to seeing their product as an upsell game, start at free and UHOH! You have to pay us! To that they dont have to be upfront because they 'Didn't know you made too much'.
Now, this is where things get fun. How does TurboTax get you to pay? Three ways: 1. Have your info on file so you don't need to enter it. 2. Make sure to place the payment step at the VERY end of the process when you are deep into the system and offer ways to pay it via your return. 3. Agressive UI and UI dark patterns to make the software appear to work harder and be more trustworthy and to make you feel as if you put in more involvement. There are numarous animations stating things like 'Verifing your maximum money back' and such that are all false loading screens. It all makes the customer trust it more while it's just wasting their time.
TurboTax is a bait and switch company that for many is free and makes their customer feel like they did the work. You can't compete with that concept by offering an automatic engine with no involvement becasue the customer will think it's wrong or they are being screwed and any upfront cost to cover development will make the customer think your product costs more.
Pro Publica did some excellent reporting on this in 2019 and they seem to have made it one of their pet projects.
Nowadays, its complicated. Mortgage deductions, rental income and depreciation, independent contractor, children, jointly filing. I could attempt to do that on my own but it would take hours and I likely would leave money on the table. In my use case I am more than happy to pay a hundred bucks. It's actually less if you file early too, and its deductible in your next years tax liability... I don't understand why everyone here wants to kill Turbo Tax. It makes my life easier and less stressful around tax season.
> And still can still compare turbo tax for free to see if you got the same numbers, and send it in for free.
That's what I do for state, since my state has a relatively simple tax structure and offers free online e-file. For federal my situation is similar, I'm happy to pay someone < $100 to deal with all the schedules and calculations and make sure things are consistent. An accountant would be much more, and inertia keeps me with TurboTax, for better or worse.
If you are a W-2 employee, even with having to file a Sch 1/2/3/B/D/etc, it shouldn’t take more than a couple hours. And you get to know you did it right.
Of course, if you don’t enjoy reading tax instructions, I highly recommend parting with a couple hundred dollars and letting someone else do it.
He'll just have to take your word for it, and send that in to the IRS. He won't be liable for it if it's a lie; you will. So what's the difference to you telling the IRS directly?
And no, checking a box "I did not have any income besides my tax-withheld salary [_]" and filling in an integer "I have [_] dependent children" seems like something most people could do on an IRS web page without having to buy software or pay an accountant every year. (And if you tell them when the kids were born the first time you do this, they could carry them over year to year and age them out automatically when they turn 18, and then you wouldn't even have to do that any more unless and until some exception occurs.)
All these pro-status quo comments sound so weird, like desperate apologetics for the world's most needlessly complicated system. Are you all just finding it impossible to conceive of there being a better way than The American Way, or what's the reason?
No, they're not. Obviously cost will vary based on complexity (self employment, side-hustles, stock options etc) but for the most part a basic return by an accountant would be in line with what you're paying.
People in this thread are talking about literally writing their own software to do it. Half an hour to collect up my payslips and email them to an accountant for $250 can't possibly be more work and cost more?
I found out my parents used one of these places last year, and they charged them about $350 for a SIMPLE tax return. It looked like the goal was to charge about $50 less than the eventual refund, and also push the "get your refund right now!!" scam (i.e. take a high interest loan for the refund amount).
This year, I did their taxes and mine too (separately), using FreeTaxUSA.
Turbotax is a by-product of US tax law which gradually morphed into a wealth hiding and manipulation engine.
Can you kill turbotax? Possibility.
Can you avoid having an inherently anti human tax law, and therefore eliminate the soil of turbotax? Unfortunately no.
The difference is that they're using your data to target financial products at you (just like any other free service). But they don't sell your data at least.
https://investors.intuit.com/news/news-details/2020/Intuit-C...
https://www.justice.gov/opa/pr/justice-department-requires-d...
I'm grateful to be able to do that.
On another note, I used TurboTax, like, no exaggeration, over 20 years ago, for the last time.
They kept my email, and migrated me to one of their current accounts, and, on a regular basis, I get spammed by them to "reactivate my account."
The problem is that there is absolutely no way to respond, and ask them to remove me from their spam list. They try to get me to log in, instead, and the login attempts are always rejected. I have tried to contact their support, a couple of times, and received auto-bot responses that are basically repeats of the worthless footer in the spam they send me.
It's annoying. Not "jump off a cliff" annoying. More like "persistent mosquito" annoying.
That's how it's done in France for example.
Except they also send it by snail mail, so you can read that and if it looks correct you don't even have to go online to click "OK". (Though I think I saw somewhere they may be phasing that out; saves on trees and postage.)
It's in archive.org, though, e.g. [1], and it's just a static site with a bunch of links.
[1] https://web.archive.org/web/20210130180334/https://www.turbo...
For example, the existence of tax-advantaged savings vehicles such as IRAs and HSAs mean that the taxable portion of your income isn't settled until the deadline for making contributions for that tax year. Which is April 15. But I imagine there would be a lot of popular political backlash if Congress were to abolish IRAs in the name of sticking it to Intuit.
There's also that whole mess of expenditures that you can deduct from your taxable income, which doesn't kick in until the total of your deductible expenses exceeds the standard deduction. And a lot of people were worried when the standard deduction got increased a few years ago. It made a lot of people's taxes nominally easier to calculate, but people were worried that it might remove an incentive for charitable donations, or reduce the largess that the government gives to homeowners relative to renters, or alter the impact of tax incentives for people who put solar panels on their roofs, or whatever.
Long story short, we love to blame Intuit, and it is true that Intuit generally wants a nasty complicated tax code, but it's also true that, in the aggregate, so does America.
The (previous) existence of the 1040EZ showed that a lot of people have simple returns that the IRS could do for them.
That's partly because banks send all of their information to HMRC.
For example, one could tweak the deadline for contributions to those accounts to be say March 1, make the financial institutions report to the IRS by March 15th, send everyone their estimate on April 1st and have a deadline of April 15th to confirm or adjust their tax filing.
Most of the big things that involve deductions are already tied to a financial institution that already report to the IRS.
https://www.propublica.org/article/inside-turbotax-20-year-f...
Most Americans are simply unaware that other countries have dramatically simplified this problem. It's amazing how many have magically assumed this was because this was some socialist concept and the immediately launch into "oh, but how much more in taxes are you paying? pfff."
[1] https://www.investopedia.com/ask/answers/07/taxtipfederal.as...
[2] https://www.irs.gov/help/ita/do-i-need-to-file-a-tax-return
But the tax system is very complicated, with multiple tax brackets (income above a threshold is taxed at a higher rate), deductions, exemptions, exceptions, alternative-minimum, and more. There are deductions and exceptions for things like mortgage payments that go to interest (on only one residential property), donations to certified charities up to a limit, green energy incentives, travel to start a new job, who knows what.
So, we have to settle-up with lots of complicated forms each year, and I've tried alternatives to Turbo Tax, but didn't have enough confidence with the alternative's handling of all the complexity, they just were noticeably worse at handling all the complex details. Not that I like Turbo Tax or the overall situation, but for me it's either Turbo Tax or pay a more expensive accountant.
So, every year, you have to do a bunch of paperwork (it took me over 4 hours this year) to calculate your actual tax obligation, and then either you send the government a check or they send you a check to settle the difference.
So at the end of each year you need to go through all the income sources of that year, subtract all deductions and compute how much actual tax you own. And pay or receive the difference to/from IRS.
Even if you have an extremely simple income situation (only one wage, no other income), depending on the state you live in you may still qualify for deductions that the employer is not aware of so it can be in your advantage to do the taxes.
Why people hate TurboTax so much ? Is it because its a monopoly (or) does it uses any predatory practices (or) kill other companies that tries to compete.
Disclosure: I used TurboTax to file this year's taxes and kind of like their UI and ease of use (for top $ of course):|
Intuit has excessively lobbied the US government to prevent simplification of the tax code, they struck a deal to offer a free option in return for the IRS not developing their own alternative, and then deceptively hid access to the free option so that users are tricked into purchasing it anyway.
Some very brief highlights:
- They use dark patterns and other trickery to prevent people from filing for free (the vast majority of Americans can file for free via IRS free-file), instead directing them to the "free" up-sell laden product
- Lobbying against literally anything that would make filing taxes easier or cheaper. It doesn't have to be this way (and it's not in many countries), but it's how they make their money.
[1] https://www.propublica.org/series/the-turbotax-trap
It's absurd to spend ones time and money to file taxes only to have the government punish you because you didn't get the right answer.
It bugs me a little because I keep seeing the definition of monopoly becoming less and less meaningful.
I think the argument, if anything is the opposite: there are dozens of tax filing software, they all more or less do the same thing, and all the resources get wasted on marketing against each other. So I think I would prefer an actual monopoly! And if the government won't make it, why not make an open source one that can drive the for-profit ones out of business!
https://www.taxpolicycenter.org/briefing-book/what-other-cou...
In 2005, California had a pilot program called ReadyReturn where they mailed you prefilled forms. It was popular. TurboTax lobbied against it and it died.
In recent years it's just a smartphone app or website. Typically you cclick "next" 3 times to review and then submit.
It's around as simple as your average online retail experience.
The other argument I've heard is, "it should be painful to file taxes, to make people support the idea of getting rid of taxes".