I was 80% done with my taxes this year when TT suddenly demanded an additional $119 to list deductible expenses on income. That’s on top of $140 to file Federal plus 1 state. I’ve been using TT for 20 years. Never again.
I'm not confident in my ability to get my taxes right (mostly due to my wife and I having owned small businesses plus my day job's stock awards and ESPP), so I've paid a local CPA to do our taxes for years now. He always did an incredible job, was happy to answer my questions for me (tax-related or not), helped us refi our house at an amazing price, and so on. His fees were something on the order of $400 or maybe even as high as $600 some years. But [a] I knew he always had our back, [b] his services partially or entirely paid for themselves in savings I probably wouldn't have caught, and [c] I was paying an individual who earned his keep as compared to a company like Intuit.
I mean, I agree. Especially in the US. I was forced to hire a CPA because of some complicated international stuff. Until then I filed it myself. I have used TaxAct and Credit Karma taxes (which is now Cash app tax). TaxAct is cheap and fully functional. Credit Karma was also straightforward, easy to use and accurate.
CPA can also be useful beyond just tax filing. My CPA does a half year evaluation to see if I'd owe any additional tax and plan accordingly. They also makes sure I get all the deductions I can.
My experience with CPAs has been poor. "I dunno, just put what you think is right" is how the last person I paid told me to handle a mismatch between my wife's actually grant payments and her 1098-T.
1098-T forms are notoriously unreliable. Schools will often misclassify or omit scholarships and payments. And you might have additional educational expenses like books that aren't listed in the first place. It doesn't excuse your experience, though; that tax preparer should have made a better effort to understand the figures.
Out of curiosity, was the tax preparer actually a licensed CPA, or just someone with no professional credentials? If they were a CPA, did they prepare individual tax returns regularly or only as a side job?
> 1098-T forms are notoriously unreliable. Schools will often misclassify or omit scholarships and payments. And you might have additional educational expenses like books that aren't listed in the first place.
Worse, virtually all of the 1098-T guidance exists for undergrads. The problems with the form are entirely different for graduate students and basically nobody can help.
> Out of curiosity, was the tax preparer actually a licensed CPA, or just someone with no professional credentials? If they were a CPA, did they prepare individual tax returns regularly or only as a side job?
It's been a bunch of years so I don't know for certain, but they weren't just a desk worker at H&R Block. Tax preparation was their primary job.
In my experience, somebody who has tax preparation as a primary job is often not a CPA. A CPA usually offers a suite of services, and is also usually a lot more useful.
My CPA is great, and I save money through using his services.
Gotcha. Still worth noting that going to somebody whose sign says "tax preparer" often isn't the same thing as "accountant", and one conflates at their peril!
Your situation sounds like one that a CPA would be perfect for - especially with business taxes involved.
Our household has just the basic salaries / expenses / 401k / IRAs. THe year I received some temporary additional benefits, Intuit decided that I had to pay premium in order to enter that single additional 1099.
I left, found a much simpler, straightforward service with which I filed legitimately free, and have never looked back.
Plus, I've read about Intuit's history with the whole market, and I will never willingly give them a damn cent.
> I left, found a much simpler, straightforward service with which I filed legitimately free, and have never looked back.
Which service is that? I haven't filed my taxes this year and am willing to spend some time switching to an app that's less scummy than Intuit's offerings.
Not GP but I've been using TaxHawk/FreeTaxUSA (same company runs both sites) for more than a decade with no problems, no upsells, and no dark patterns. Filing federal taxes is completely free with them for everyone, so there's no harm in giving them a shot. If you want to add your state tax filing in at the end (if applicable) it will only cost $15. There's no obligation to buy anything, you can file your federal taxes for free without purchasing the state tax filing option.
It's not like an honest mistake is the end of the world. I've made tax mistakes. You get a letter from the IRS, with the amount you owe or are due back, and you settle up. There are no draconian penalties or full audits unless they suspect intentional fraud.
I was once on an IRS payment plan, and a) the interest rate was remarkably low and b) the folks I talked to when I needed to adjust it were the nicest customer service reps I think I've ever encountered.
They're usually shockingly pleasant to deal with, too. Having owned a couple of small businesses over the years, our taxes can get complex. There were a couple of times where the IRS had questions about our filed returns, and the clerks we dealt with have always been genuinely nice, helpful to work with, and authorized to exercise decent human judgment.
Them: It says here you spent $X on healthcare expenses.
Me: I've got 4 kids. I always hit my deductible.
Them, literally laughing: Yeah, kids are expensive. OK, moving on...
Yep, that has been my experience. I got pretty freaked out once when I received a large packet from the IRS in the mail. Turns out I forgot to report a stock sale and just owed them a few hundred bucks. The only penalty was having to pay interest on the amount at a rate that was a little high but not egregious.
I could probably do my taxes with a 1040-EZ most years, but I still pay a local CPA $300 to do it for me. I'm just happier without $300 but with taxes done.
taxact.com did the same trick. Raised prices for a few consecutive years for no apparent reason.
They have your previous filings so switching to another provider can be a pain since you need to know last year income when submitting your filing. I always make sure to at least download the PDF's.
As a consumer we're always free to vote with our wallet and I've been happy with freetaxusa so far but I'm also waiting for the "rate hike" to come...
Love the product as well. Great pricing, handles my complicated return fine. I do miss Turbotax auto importing everything, but doing it manually helps me understand what I'm doing better.
You can absolutely do your own taxes, either on paper and mail the forms or (possibly) via the Free File Fillable forms mentioned on the page you linked (as long as you don't hit a corner case). The Free File Fillable forms page [0] says "Make sure we fully support the forms you need" and links to another page with a lengthy list of limitations [1].
So yeah, we're in a place where the IRS says taxpayers "should file electronically with direct deposit if at all possible" [2] but also informs taxpayers that not everyone can use the IRS's forms to file electronically.
Among unsupported forms, the validation step in Free Fillable Forms also has a number or bugs that prevents filing due to phantom arithmetic errors. It's beyond frustrating filling out everything on FFF, then needing to copy everything onto a third party service just to pay for the privilege of having my data harvested by a shady company and electronically filed exactly as it would have otherwise. The current situation is unworkable.
But few people actually do because it is a painful experience. The IRS' documentation isn't actually bad, it is just that the tax system itself is incredibly (and needlessly) complicated.
For example, you'd need to hand-enter every stock trade (even automated re-investments) even though your broker likely already electronically sent this information to the IRS. Using a digital solution they can often log into your broker and auto-import everything.
For how under-budget the IRS is and how bad the tax system is, they do ok, but the whole thing needs a massive overhaul but there is money in politics keeping it bad in order to profit private companies (plus there's a certain demographic that "hating taxes" is a political position that needs to be kept up with, essentially self-reinforcing-itself).
Doing the next step of the root cause analysis leads to "Intuit lobbied Congress and the IRS hard enough that they passed a law, and the IRS conspired to change their procedures".
Except Intuit hasn't paid anywhere near enough in lobbying money to have that kind of effect. Grover Norquist is the last step in your root cause analysis.
what is to stop someone from just underreporting and blaming laziness or the process being too complicated. either the govt. audits it themselves or does nothing. the benefit of the doubt is on your side.
We used to have to hand enter everything anyway. The auto-import stuff is fairly new for all of the tax filing products. TurboTax also fucks up the auto import for my RSUs. Every single year there are a handful of people on the financial planning groups posting "wtf I got a letter from the government saying I owe $80,000" and it is uniformly because one of these services' autoimport system set all of the cost bases for RSUs to $0.
The end result is that I hand-enter anyway, even when paying $120 to Intuit for the privilege.
> For example, you'd need to hand-enter every stock trade (even automated re-investments) even though your broker likely already electronically sent this information to the IRS.
This is not true for most folks, who can use one of two exceptions that allow summarizing. Exception 1 allows you to simply report totals on Schedule D. Exception 2 has you file Form 8949 with summarized rows, as long as you attach a statement with the detailed transaction info (the brokerage 1099-B generally suffices).
If your tax situation doesn't change much from year to year, you can have a CPA or even TurboTax do this years, and next year fill out the new forms based on the new numbers.
Just pirate TurboTax. Torrent it, set up a fresh windows VM with Internet access via VPN, install/update turbotax, crack it to get the state version, make sure it's got live versions of all the forms you need, disconnect Internet access (never to be reconnected), copy previous year's data files to VM, do taxes, print out and file by mail, copy data files off to long term storage, save VM image in case you need to revisit any time soon.
Sure, it's a bit tedious. But short of a privacy-preserving libre solution or just doing them manually with fillable PDFs, you'd have to do most of that isolation prepwork anyway. So fuck 'em.
P.S. The directions for modifying .NET assemblies to crack TurboTax are simple and easily followed by anyone with basic programming skill. So if you're fine trusting Intuit you could obtain the installation files from them directly, crack it yourself, and even have e-filing capability from what I understand.
TurboTax is one of the few pieces of tax software meant for offline use, thus letting you keep your personal information from entering the permanent records of surveillance valley.
Just quickly looking at CashApp Tax, it appears it is an Android app that likely will want network access to function. If that meets your requirements, good for you. But it doesn't meet mine. I'd also rather use the same software year to year so that information is carried forward, rather than being subject to whichever way the startup winds blow.
CashApp Tax is Credit Karma Tax that was bought by Square. Everything transferred from previous years and Square/Block Inc is publicly traded corporation with a ~$85 billion market cap so I’m not sure what you mean by “whichever way the startup winds blow.”
Furthermore — it’s your tax records. As soon as the government receives them they enter the permanent records of surveillance valley.
"Cash.app" had no name recognition for me and frankly the name sounds gimmicky. I hassumed it was some fly by night thing, but okay, thanks for informing me it has a longer history and large company behind it. Still, being free, it either presently has a revenue strategy (ie commercial surveillance), or it will inevitably pivot to one down the line.
> As soon as the government receives them they enter the permanent records of surveillance valley.
Uh no, US tax records are not public data, nor available for the surveillance industry to buy AFAIK. It's unavoidable that the government gets them, but the fewer parties that get mine the better.
It is quite possible to do them yourself especially if your taxes are relatively simple - and in a lot of other countries you'll just be mailed a bill or credit depending on how much your withholding was along with a receipt to review if you think they messed up somehow. American and Canada are held hostage by tax software lobbyists though.
Just be a little careful with the state returns on CashApp. It has a bug on handling mortgage interest deductions if your mortgage is over $750000 and the state allows deduction up to $1000000. Double check by filing with other tax software and verify the refund amount is the same. I used freetaxusa.com to get this right.
Currently, many Federal tax forms are supported, as well as tax filing for the state of Illinois. Filing for Oregon and California is under development!
If you made under $100,000 from salary and don't otherwise have any complications (like dependents), a form 1040EZ really is simple. There's no reason to use software for that. It's quite straightforward.
If you have deductions, stock sales, a nanny, a business, etc then you need the regular 1040 and various schedules, and those are all complex enough that you'd probably benefit from software. It's not absolutely required, but there are enough ways to do it wrong (like adding up the wrong lines) that the peace of mind alone is probably worth it to you.
You're right, I'm basically counting all the time it took me to find an envelope and stamps, get lunch, get a bus to the post office, drop it off, and head to a nearby coffee shop :)
Yes, I used to file taxes with paper forms from the IRS years ago and this is free. There isn't even an income limit to do it this way as far as I know. But of course it's more of a hassle than doing it online as you have to buy stamps, go to the post office, etc.
Did my taxes this year using TurboTax like always. Sold some stocks this year and all of a sudden I am paying $90 for TurboTax "Premium" to put a couple additional entries in the 1040. What a racket. Next year I'm going to file using something else. This has gone on too long.
Let me know if you find anyone that is better. I'm sick of TaxAct premium for the same reason.
I'm ready to go back to doing my taxes by hand and mailing them in. (I'm old enough to remember doing that - it is faster than doing it on the computer except for the one year I forgot to copy line 13 of form 1234A to line 56b of form 9876B) So many dark patters where the software is pretending to take time doing a complex calculation that takes a computer a couple nanoseconds, not to mention all the time to skip over things that don't apply to me.
I also would vote for FreeTaxUSA, they have served me well. I do however note the irony of them being named FreeTaxUSA and in the same breath, mentioning that it costs to file. Especially given the context of the thread in general.
FreeTaxUsa forced me to manually enter my stock last year, I had to provide a supplemental PDF form outlining each transaction.
Obnoxiously, this year TurboTax's integration with Binance is broken. I haven't checked in a few weeks but it won't accept Binance CSV's either. This needs to be fixed soon.
I used them for the first time and it was fine. But it doesn't look like they support the state form I plan to use for this year. Already contacted them asking for it next year, but didn't receive a concrete answer.
I like them for the most part, but FTU tricked me this year by forcing me to upload certain forms for a state EV tax credit, and then just completely ignoring those uploaded forms and not sending them to my state tax agency. I only noticed it because I went over the final packet of state tax forms and noticed the ones I uploaded weren't included.
To be honest, I think I may just do it all myself like I did back in the early days. I'm a single, high income, earner with few complicated investments and no state income taxes. I may as well just fill out a 1040 myself at this point.
TurboTax tried to double count my Benevity sales anyways and I had to catch it when it messed up the 1040. Why am I paying for software? If I get to the point I can't handle it myself anymore I'll just start paying an accountant.
I used Cash App Taxes. I sold some mutual fund shares in 2021 and it handled it fine.
Here's a page describing forms and situations it does not handle [1].
One thing that might annoy some people is that to login to the Cash App Taxes website you must use their mobile app. The website shows a QR code which you scan from the mobile app.
It uses the approach of asking you various questions in order to figure out what forms it thinks you need to file, which is an approach that some people do not like.
If there is a form you know you have to do that it missed or you have a 1099-something that it has not asked you to enter it took me a little while to figure out how to deal with that. What you do is type the name of the form into the help search box. One of the results will be a link to take you directly to the page that deals with that form.
Cash App taxes has a bug where mortgage interest deduction is not handled properly with state vs federal. If your mortgage is more than 750000$ and your state is California or a state allows deduction up to a million $ in mortgage interest then you will end up getting a lower refund.
Cash app also couldn't file my ev credit correctly. Support was significantly worse than useless. Ended up going with Free Tax USA this year but I've also seen bugs with them.
I filed with them last year when it was still Credit Karma Taxes. The process was painless and my first time not filing with Turbo Tax. I was going to file with them again, but the moment I saw I needed to install an app to scan a QR code, I bailed. No thanks. I don't need their app on my devices.
So this year, I prepared my taxes with FreeTaxUSA instead. So far I love it. It required me to manually input a lot of information that was auto-imported on TT and CK, which isn't as terrible as I thought. Overall I'm finding the UX to be very clean and clear. I haven't had to Google answers to vague questions or unique situations like I had to with the others. It even caught an error that I'm having to fix with my bank, and told me exactly how to fix it. I'm very impressed with FreeTaxUSA so far. Hopefully they never sell out.
Even dirtier secret - the government is legally required to publish all the forms in an accessible manner. You can just download them without ever even installing any Intuit software.
Just to back this up with facts - here are the braille and spanish language offerings which took all of two seconds of googling:
Yep, though arguably the base turbotax is helpful in filling them out (but after the first year or so you could just imitate the previous year's filings).
I know that ship has sailed, but I really wish politicians would go back to making promises that have an impact on everyone like abolishing tax fillings.
It might be different in the US, but in Canada I file my taxes using the CRA's data directly. TurboTax even fetches it directly from their website. What's the point? They have my T4, my T2202 (studies) and everything else. Just send me a letter telling me how much money I owe/I am owed and that's it.
In the US, the Republican Party has a history of intentionally pushing for cumbersome tax filing as part of encouraging people to hate the idea of taxes in general.
I don't think it's a Republican thing, the Liberal party and the NPD in Canada are both left-leaning and they have a majority yet they aren't pushing for this.
Pretty sure it's just run-of-the-mill lobbying and corruption unfortunately. A typical "think of the jobs!" type of thing.
What parent is referring to is not just lack of pushing for it, but active campaigning against automatic filing. Not a "think of the jobs" but "automatic filing is intrinsically bad."
Republicans and the Liberal party in Canada are both neoliberal when it comes to their economic policies, they mostly only diverge on social issues and social services.
It kinda already had been addressed. SimpleTax was released as donationware and the CRA introduced NETFILE and Autofill. Filing a return today is way easier than in, say, 2011. Buying TurboTax has been unnecessary for a decade.
haha, have it done all automatically in SimpleTax, then download the PDFs, run a custom character-to-messy-handwriting transformer on all filled fields, then print out the paper forms and mail them in
I've heard that too. And the idea is disgusting to me. I assume those who genuinely espouse this idea are those who are rich enough to have an accountant do all their taxes for them.
Is it really necessary to "encourage" me to dislike taxes? Is not the money leaving my pocket sufficient?
I've also heard Republicans claiming that IRS-provided tax bills/refunds is equivalent to a tax. I guess the implication is that the government is going to intentionally charge you more.
Having to use TurboTax or someting like it is equivalent to a tax, but it's paid to a corporation instead of the government. If I had to choose between my money going to the government and Intuit, I'd choose the government.
This has actually been done rather often in the past, you can start a donor driven PAC that can compete with corporate lobbyists with crowdfunding. It's generally quite a bit cheaper too because while we all love to criticize politicians for only listening to monied interests if they can raise some campaign funds and get brownie points for their voting base they're happy to dramatically spurn the corporate funding they'd otherwise accept with open arms.
Honestly though, actually reaching out to your representatives and talking to them is far more effective than most people assume.
American politicians can be bought off very cheaply by corporations, but the minute people try to crowd-fund bribes to get actual representation in government corporations will just start to offer more. Some companies and industries have more wealth than entire nations at their disposal. If it comes down to a bidding war between you and Google you will lose. If paying out a little more to congressmen will keep an industry making even greater profits they'll do it.
The only real fix is actual accountability for lawmakers. It means massive amounts of oversight to catch those who accept bribes in any forms (including "campaign contributions") and it means making it simple for the people to vote out anyone who refuses to represent their interests.
Right now, bribery is effectively legal, there is zero accountability and between the two party system, gerrymandering, and voter suppression even if you manage to get someone out of office you're probably not going to like the person you're forced to vote in to replace them. We're a very long way from fixing the problem and all of the people in power have zero incentive to start getting us there because they profit off the system being broken.
A neat solution is actually public campaign financing. We currently say that you can give $3 towards public financing on your tax return when you file - why not make that $100?
Collectively, people have a lot more money than corporations do - the trouble is organization. But basically flooding the system with so much money that corporate bribery becomes insignificant is the other option to banning it
It’s too late. Citizens United means corporations and the ueber-wealthy can do whatever they want. McCain-Feingold represented actual progress in this area, and it’s gone now. We are going to witness heavy fascism in the US, and I wish I knew what to do about it. Other than somehow prevent Peter Thiel from escaping to New Zealand, since it’s partially his fault and he should have to reap what he sowed.
(Tangentially, Feingold was one of the smartest people in the Senate. Wisconsin voted him out in favor of Johnson, one of the stupidest people in the Senate — the only thing that keeps him from the top spot is just the fuckload of really dumb other Republican senators.)
Every time I see this issue brought up I think about how if you sum up all the money spent every year on US politics, including personal donations, industry lobbying, and the budgets of think tanks, you get a noticeably smaller number than the amount of money spent every year on almonds. [0] It always makes me question if the lobbying is really the cause of the tax system being the way it is. Or is the money just to grease the wheels and slightly alter the course of whatever was going to happen anyways due to a multitude of complicated factors?
I dont think its cynical at all, as someone who has done some work for political campaigns, follows them closely, and studies them. Incumbents keep power within their own party by generally massively outspending their primary opponents, making it extremely rare for them to lose in the primary. The only real exceptions to this recently have been Dem stronghold incumbents losing to progressives.
After that, its just whether or not the incumbent can defend against the opposition party in the general election. Primaries are generally where the biggest changes are made, and are also where its the hardest to oust the incumbent.
It was. And the consequence of this ruling was nearly unlimited amounts money being spent on the reelection campaigns of various lawmakers by corporations, with the obvious intent being to install friendly legislators.
Well, corporations are people, people have the right to bear arms, and the country was founded on the idea that if you really really don't like your government, violence is an appropriate response to change it. Of course the Constitution pulled the ladder up behind the founding fathers on that bit of political philosophy, but in recent years I've heard some rhetoric citing the Declaration as inspiration for the path they should take now. Corporate personhood adds an interesting twist to things, especially considering that Alphabet or Apple could secede and have a larger GDP than many countries. Alphabet might quickly get labelled a hostile foreign power for all their spying. Apple might start a trade war with their extortionate tariffs but we'd still probably have reasonable diplomatic relations with them.
Maybe 200+ years with only one major civil war is a good record under these conditions, and maybe the next one will have official corporate sponsors.
I missed including my T2202 one year and thought I owned a ton. They then sent me a letter saying lol, no we owe you. So pointless.
What annoys me now is that if you want a paper booklet you have to request one in advance if you did not use one previously but otherwise there is no free to everyone option to do it. You either request a paper booklet or use 3rd party software.
In México if you are an average employee earning less than around $50000 usd (I.e. most workers), your employer can "do" your taxes (very simple, they report what they have withheld from you).
If you have some amounts you want to regain from losses, etc., you can still do your taxes manually.
That means logging into the free MEX IRS platform, which shows all your tax info preffilled. Most likely the stuff you want to input is already there (all invoices in mexico are signed by private/public keys through the IRS system).
So you just enter your bank account to get your money back. Or get your reference to pay your taxes.
Does this system pre-populate the forms with everything the IRS already knows about me and then I just modify the things that are incorrect? Can people upload their tax documents from all the financial institutions in some standard format that automatically figures out what form to use and populates maybe 95% of the fields and marks the empty required fields with yellow? I ask because I have an id.me/IRS login and they do not appear to have this data until I give it to them.
This is the system I am looking for. I think it would make the lives of the IRS employees better and would save me time and money.
> I know that ship has sailed, but I really wish politicians would go back to making promises that have an impact on everyone like abolishing tax fillings.
I'm not a fan of Trump, but the Trump tax changes made it so it doesn't make sense for me to do itemized deductions, because I won't beat the standard deduction unless I have a lot more things to deduct than I normally do, which greatly simplifies my tax filing and record keeping. Since I know I won't be deducting donations, I don't need a receipt when donating them, and that saves paperwork.
Someday our descendants will have sane and automatic filing like the rest of the developed world; I can only hope to live long enough to see the death of this stupid industry.
Not sure why you're including the word 'technically,' in there - you are clearly and definitely committing tax fraud if you knowingly fail to include all of your financial information.
> If I don't file my HSA contribution I'm technically committing fraud, right?
The IRS will send you a corrected tax return, you sign it and mail them a check and you'll hear nothing from them again. Maybe you didn't get the form, or didn't understand the software, etc, etc. There are lots of honest ways to screw up your taxes. The IRS isn't going to assume fraud unless you refuse to pay them when they point it out.
I've screwed up my taxes a lot of times. Not maliciously, but not having all of my forms, I've had clients report paying me a different amount than they told the IRS, forgot stock trades I made, etc. Every time, they've sent a letter asking to pay a balance, plus maybe a small fee, and all is good.
I wonder if this is a backdoor into having the IRS mail you your completed form to sign and send back, like many other countries do. Just file a 1040-EZ every year with only your personal details and everything else zeroed out, and then look over what comes back in 6 months. :D
Would not recommend. If you happen to owe, you would most likely incur a 20% accuracy-related penalty. Also, interest accrues from the filing deadline on both the unpaid tax and the penalty.
I hate TurboTax with a passion. At this point, the only benefit I see from it is the fact that because my taxes are boring, I just update the information from the last return. Which is something the IRS could do EASILY. Because of all the 'tax freedom' which has been lobbied in America, I now have to pay a private corporation, navigate countless dark patterns to make sure I don't accidentally sign up for Super AuDiTProTec™ at every step of the way (God forbid I sell stock or do something soo complicated), to do something the federal government is more than competent to do on their own.
Every piece of news in which Intuit gets slapped is good news to me. I just hope legislators start doing their jobs at some point and spare the taxpayer of this bullshit.
I manually filed a revision to a previous tax year in which I had accidentally double-payed state taxes on a schedule K-2 disbursement two years back. Without any background in this I was able to follow the IRS and state-gov websites to get everything together and ultimately received my check for the difference (many thousands of dollars). All without paying a dollar.
I manually filed taxes on paper (federal) last year and they still have not been processed. Got a letter that the IRS is sitting on my 5-figure tax payment but haven't gone through the 1040 yet.
There is an institutional (mainly Republican) commitment to strangling the IRS here in the US. Filing taxes should be free and easy.
Or, ideally, not needed at all. In the UK having an average financial situation like a job (one that doesn’t pay megabucks, anyway), a pension, a tax-efficient savings account and a student doesn’t require any filing at all. Everything happens through payroll. If you do earn a lot or have other things that trigger the need to file it’s free and not overly onerous — certainly within the grasp of a mere mortal.
(And before someone chimes in with “how do you know the government gets the figures right?!”: because the tax code, or at least the parts that face most people, is straightforward and most people have a bog-standard default configuration that is easy to verify.)
They get my income, loans for future capital gain deductions, have calculated in the basic deductions and so on.
I wanted some extra deductions this year, so I simply went and inserted those on their own web site with simple boxes to fill. Even before the tax season. No problems...
It is great when the tax agency isn't actually adversarial, but instead ready to help and even work with you if you are having troubles.
> A long-standing law requires the IRS to pay interest to those who received their tax refunds late — notably 45 days after the typical filing date of April 15. Just as taxpayers must pay interest on any outstanding obligations they owe to the IRS, the rule works both ways if the IRS is late on the money they owe back.
They pay 3% interest currently, which is pretty nice.
Yes. The FTC, BigLaw, and tech are highly interconnected.
> Public Citizen found that just over 75 percent of top FTC officials (31 out of 41) over the past two decades have either left the agency to serve corporate interests confronting FTC issues, joined the agency after serving corporate interests on these issues, or both.
Good, but the situation is so much worse than just this. Most Americans could just use the IRS Free File system, which the article mentions, instead of ever giving money to Intuit or H&R Block ever again. But we don’t heavily advertise that system, because that would encourage people to use it, and if you’re going that far, you might as well let the IRS build its own tax software with all your information prefilled like they do in civilized countries.
As long as the job of Congress is to kiss the ass of every powerful industry lobby, we won’t have good things.
TurboTax and H&R Block aren't part of Free File as of 2021, so the supported software under the program are now things most Americans wouldn't recognize, either.
The problem truly is advertising, like you said. The government just cannot out-advertise companies that are doing $9 billion in revenue.
Of course the government could out-advertise them. It'd be like Google advertising its own products on its search engine -- the government controls all end-user tax related communications.
They just don't want to because someone bribed them to not do so.
The years in which I've had a refund, I have had the amount directly deposited. The years in which I've paid have been through a software portal that supports credit card payment.
I, personally, have no idea what the government's "communications" have been regarding taxes outside of news articles.
Either way, though, this is no competition for a year's worth of massive advertising campaigns.
IMO: The mind blowing element, is that in the grand scheme of things It's not actually that much money.
I'm not sure if anyone knows the true amount, but estimates put the number spent on lobbying around a few million dollars. Opensecrets.org estimated ~$3.2m lobbying in 2021.
Politicians are surprisingly cheap, so long as you're talking about topics that don't get a lot of press.
And thanks to Citizens United and similar decisions that have driven up the cost of US elections, US pols are very expensive compared to their counterparts in other countries.
It does make me wonder about the efficacy of standing up a lobbying fund to lobby to Do The Right Thing about something. This would be a prime example - I would happily pay $100 to compete with Intuit's lobbying here. I'm also certain there are 31,999 other people in the US who feel the same way.
I just don't have the energy to do the work of learning how to set up the corporate structure around that to make it legal.
> standing up a lobbying fund to lobby to Do The Right Thing about something. This would be a prime example - I would happily pay $100 to compete with Intuit's lobbying here. I'm also certain there are 31,999 other people in the US who feel the same way.
Congratulations, you just independently invented the concept of a Political Action Committee.
I completely agree that politicians are not cheap at all. The reality is that so much of the money that's invested in influencing politicians is through means other than campaign contributions.
It's through season tickets to the network of friends that know the politician, it's through donations to the university that gets their child into college, it's through pacs and issue groups, it's through lining up and bundling donors to max out their individual donations to a politician's preferred presidential candidate, it's through flying them out to special events, it's through hiring their best friend, it's through investing in their brother in law's new business, it's through buying things at their husband or wife's charity auction, it's through arranging a job for them after they retire from politics, it's through finding them a buyer for their investment property, it's through an entire network of investments one or two degrees removed from the politician.
The only sliver of that that people typically cite is the amount directly spent on campaign contributions which (1) mistakenly makes it seem like politicians are cheap and (2) is underwhelming, to people who cite those numbers sincerely believing that that's the only economic dimension to political influence.
That's not exactly true. Free filing is also opposed by influential conservatives. The argument goes that if paying taxes were easier, then people wouldn't pay as much attention and oppose taxes as much. (I'm paraphrasing as best I can.)
Here's an old article from 2013 on it, for example, and a letter from Grover Norquist (sponsor of the Taxpayer Protection Pledge) and others.
I tried to make this point in the other thread, so let me take another stab at it here.
You say this like it's just a thing that people can do. But the people you're telling to "Just do this" have already been trained to be terrified of the IRS. Many of them are currently paying huge fines due to missing their returns in prior years. Any small mistake can hang you when you're impoverished, precisely because you don't have any room for error.
"Most Americans" is an umbrella that contains mostly service workers. The people that serve you food, bag your groceries, drive your amazon purchases, and so on. If you've spent a lot of time with people like this, I encourage you to ask them "Hey, do you pay someone to do your taxes, or do you do it yourself? Why?"
I'm pretty sure the conversation will go "I pay. I just don't want to worry about it." And that "worry" is because they've been hit hard in the wallet, because the (American) government is not friendly when it comes to messing up your taxes.
If I am mistaken about this, I would like to know. But this is true of my extended family, and I'm pretty sure it's true for most of their friends.
> But the people you're telling to "Just do this" have already been trained to be terrified of the IRS. Many of them are currently paying huge fines due to missing their returns in prior years. Any small mistake can hang you when you're impoverished, precisely because you don't have any room for error.
Why do you say that? I've never encountered people who were terrified nor have I read about it. How many people are paying "huge fines"? AFAIK, the IRS's audit capacity is greatly underfunded.
My wife and her parents. Not her sisters though, admittedly.
It's possible that I'm just reacting to a biased sample of people. But my impression was that this is a common mindset for a nontrivial subset of the population. Being afraid of doing something wrong on your government forms isn't really an irrational fear. Anyone who's owned a car in Chicago will tell you that the city's goal is to extract as many thousands of dollars from you as possible – it was still one of my worst financial decisions of all time. And that wasn't even taxes.
The broader point is that "dealing with the government" is a big messy bucket that people usually want to pay a janitorial service to dispose of. Even things like "being reminded to file your taxes right now" is valuable in that situation. Most people don't have a clue what day they need to file by. They don't learn it in school, and their parents either don't know or didn't bother to teach them.
But you left out income. The idea here is that HN users tend to be a biased sample. Most of us aren't impoverished.
I would bet that your family's discussions are due to the fact that you have a stable, fully functional family. Most people outside of tech aren't as fortunate.
If I'm mistaken about this, and your family isn't middle class or higher, then that's an important data point though.
I'm not talking about my family discussions. Just turn on the local news and you'll see them discuss it, including the annual segment about the lines at the post office.
For what it's worth -- and it's possible I'm living in a bubble, but -- the only family member I know that watches the news is my dad. Everyone else quietly switched to netflix long ago. The news mostly comes from the drama of the day; things that show up on facebook. (The recent Chris Rock drama, and other nonsense like that.)
I recently followed CBS on TikTok though, to my surprise. They had some of the best coverage of the Ukraine war I've seen. I even joked to my wife that the circle of life was complete: not only have I never watched the news in years, and not only does my dad have no clue what tiktok is, but now I'm watching the news on tiktok.
Thanks for pointing out that the news is sometimes a valuable thing to keep on one's radar.
April 15 (ok. Sometimes a few days later based on holidays.) is pretty engrained into the minds of adult Americans who pay taxes. I have rarely watched tv news in years and don’t even get it any longer. But I can pretty much guarantee if you asked a bunch of middle class adults when tax day is, an overwhelming majority would tell you the correct answer.
I grew up impoverished. Impoverished people talk about tax filing time way, way more than well off people because they need the money (refund) much more. A very pleasant memory of my early childhood was at my aunt's house celebrating her tax refund with her by making strombolis.
This is quite true, even excluding service workers. Every tax season I have conversations with bright, well-to-do, college-educated people who seem to live in terminal fear of the IRS. They're absolutely terrified that if they get one tiny thing wrong during the tax filing process, they will immediately be arrested and shipped off to prison. So they always pay someone to file their taxes, even if they're simple. It's mind-boggling.
The irony is that -- as you said -- the IRS hits people of modest income harder, because the IRS doesn't have the resources to take on many battles with wealthy people who can afford lawyers. This means the IRS mostly goes after easy targets who won't fight back. Yet another tax on being poor.
What are you actually referring to? In my experience, it takes a pretty serious mistake to get charged a fine (it’s never happened to me despite mistakes). The IRS just charges (fairly reasonable) interest if a mistake results in underpayment. And IIRC, they pay interest to you when you overpay too.
Much of my experience may have been shaped by my experiences with Chicago. I vividly remember how painful it was to have to call them up every month in order to pay them. It was 2016, and I forget exactly what the reason was. But autopay was somehow sufficiently painful to set up that the path of least resistance was to set a reminder in my phone of "Pay taxes to city" and deal with sitting on hold.
If it sounds unbelievable, I don't blame you at all. I wouldn't have believed it myself until seeing just how Kafkaesque "dealing with the government" can be. Especially when penalties are involved.
For the rest of my family, it's a little awkward to find out. It's mostly on my wife's side; my father was always very fastidious about taxes, as most families of most HN readers probably are. I only wanted to point out that there's a large number of people where this isn't true.
I'll try to dig up direct answers for you. Thankfully most of this pain has been not-mine for many years now.
I think most of the fear of the IRS comes from rumors like your post.
I think in reality, a way to get the “civilized country” (as referred to by another poster) tax experience is just file an incomplete return, the IRS will bill you the correct amount along with a negligible “fee” (interest) a few weeks or months later.
Maybe doing this repeatedly would upset the IRS, I don’t know. But it definitely works a few times without issue.
Out of curiosity, what monthly tax did you pay to Chicago? The city does not levy income or property tax. Most people will only ever pay Chicago sales tax or things like a yearly “city sticker” car license fee.
Isn’t the free file system simply asking e-file companies to offer a free program to qualifying customers? I thought that the IRS didn’t actually run their own filling system/website for citizens.
I was not allowed to use the free file because I made >70k if I recall correctly. It seems really stupid and arbitrary to not allow people above a certain income to access software that helps them fill out govt. forms. Only lower income people deserve help filling out their taxes??! Bizarre.
People who make more than the median tend to have more complicated tax situations due to investing, owning business, owning a house, and so forth, and generally have more complicated finances.
So it's not totally arbitrary, but I certainly agree that the US tax system is messed up.
free file fillable forms is available to you (I use it). It's not a hand-holder, but it does get the job done (and it does quite a bit of the math for you).
The fact that our government doesn't have the collective intelligence to just mail the tax bill using the information it already knows, with the option for the recipient to submit corrections/deductions, is a testament to the utter failure of governance in the US. Fortunately having an ineffective government can often be a feature instead of a bug.
My understanding is that most Western European get what amounts to a "final bill" for the previous year sometime early on each year. It shows what you owe. If you don't want to contest it, you just pay it and you're done.
The fact that our government has made such a process for fulfilling a legal obligation speaks volumes about the mafia-like nature of our federal government.
I pay lots of property tax where I live. But its just a bill. I can and sometimes do dispute the amount owed. But imagine if each year instead of that process I had to hire an independent team to determine what I owe, make a case for that, then submit that to my local tax authority. That's basically what the IRS does with individuals.
Idk. I think the IRS gets the better end of the stick here. They have you tell them how much you owe. If you report more than they knew about great they made money. If you tell them less than they knew about, then they'll audit you assuming the difference is large enough (and there being a high likelihood of winning)
Not an audit, but they corrected a mistake I made in my favor once. It was a trivial amount, like $30 or something, but they sent me a little packet explaining what they did, why, and a check.
Whatever indicators they use to select audit recipients may correlate with under-payers, but it's not a guarantee. I'm sure there's some fraction of those they audit that turn out to have paid too much.
They have some data on this (https://www.irs.gov/pub/irs-pdf/p55b.pdf, pages 33-35). Out of 509,917 examinations, 18,988 resulted in a refund. There was $7.0 billion of tax refunded in 2020. For comparison, there was $17.2 billion of additional tax generated with additional recommended and unagreed amounts.
this is not how taxes work with the IRS. If you make a calculation error in their favour they will correct it and issue you a refund. If you make a compilation error in their favour and get reviewed or audited, you will get a refund. They also audit based more on discrepencies vs. "likelihood of a big payout".
If they precalculated your taxes and sent you a bill (or refund) it would (a) be easier, (b) be more accurate and (c) encourage simplification of the entire system. I consider that both more effective and more fair.
Also income from illegal activity is taxed like any other. If you get caught for doing illegal things and not reporting it on your tax bill, you're in trouble for that too. Harder to prove you're stiffing the IRS when you pay the bill they send you.
In slovenia, this is done for "normal people" (people who are employed by companies (LLC, etc.), because companies have to fill out paycheck reports to the government). If you win something (eg lottery), the prize-giver has to report that too. You have to only fill out the form if you have any younger kids (tax benefit, can be done online on a governments website), and you're done. Then you just get the yearly report and a bill in the mail.
If you're an eg. independent contractor, you have to fill out a full report (income, expenses, income tax already prepaid, benefits paid, etc.), but you also do it on a governments website and sign it using a digital certificate (that is free for citizens).
No 3rd party software, no paying anything (unless you have an accountant do that for you, but it's relatively simple to do it by yourself), and the most time-consuming task is calculating all the yearly earnings and expenses.
As i mentioned on another thread[1], that's one of those American things that really don't make any sense after spending more than a few seconds about it. There is no legitimate excuse for things to be this bad. The best I've heard is that paying taxes being hard is good because it reminds you how much money you give the government, so you are more attentive how it's spent, but it doesn't really make sense either.
> The best I've heard is that paying taxes being hard is good because it reminds you how much money you give the government, so you are more attentive how it's spent
The argument I've heard is that so righteous indignation over the "staggeringly high" taxes "stolen from the hardworking American people" or whatever. This is one of the same arguments as to why sales taxes shouldn't be included in the shelf price of an item or service.
Except it doesn't work. People can be mad about taxes regardless of whether they're easy or hard to file. (Paying taxes is straightforward; the vast majority of us have it done for us from our paychecks every interval.) And where I live, public votes to raise the sales tax for various projects, often public transit, rarely if ever fail.
It seems to me just to be an excuse to not actually deal with our busted as hell tax collection system because that system benefits people who themselves have an excuse to rile people up about taxes.
I think there is room for a reasonable agreement which could result in a simplified filing system, without making it opaque. My modest proposal would be that each voter’s registration card (or equivalent voting voucher) be attached to a statement showing all the taxes they’ve paid since the last election, and where they went, along with some information on how many taxpayers there are, and the amount and percentage of income and payroll taxes paid by income decile.
I think this would provide the transparency that conservatives want, along with the simplicity that liberals want. My only concern is that the data would be fudged, like the social security “statements” are.
> Except it doesn't work. People can be mad about taxes regardless of whether they're easy or hard to file.
"that can't possibly be a fair representation of that ideologue's position, there's huge gaps in the logic!"
look, positions way out on the fringes don't have to make coherent sense to the rest of us. PETA runs kill-shelters that euthanize millions of animals every year, sometimes multiples of other kill shelters. It makes sense to them, they have their own logic why that's good.
Making Americans hate every aspect of taxes - the amount, having to spend a couple quality hours with a tax program every year, getting sales tax rolled on top of advertised prices, everything - is the goal here. Just make taxes suck so that people hate them. Because then people will oppose taxation.
That's highly ineffective and ultimately pointless. I don't want income taxes to be abolished because I think taxation is wrong. I want them to be abolished because there are better taxes than income taxes cause dead weight losses in the economy and tell people to work less than they want.
Abolishing income tax because it is hard to file is quite absurd. You can have a flat percentage income tax and then you wouldn't have to file. Then you could implement an automatic deduction via tax credits ala Milton's negative income tax. For me that would be an acceptable compromise if my goal was simplifying taxes.
Grover Norquist wants to cut government spending. It's difficult to do that directly because people often like government services. Instead he suggests cutting taxes. This is easier to sell to the public because no one likes paying taxes. This will drive the government into debt, forcing spending cuts due to the risk of default. This plan is called "starving the beast".
For this plan to work, people have to really hate paying taxes. So, despite the fact that Norquist and his allies often talk about things like "reducing the burden on the taypayer", they have in fact acted to make paying taxes as unpleasant an experience as possible. This means deliberately underfunding the IRS and ensuring filing taxes is slow, complicated, and expensive.
He is also the architect of the Taxpayer Protection Pledge, which is endorsed by the vast majority of Republican politicians currently in office. The pledge prohibits them from supporting any legislation that would increase taxes on people or corporations. The idea of "starving the beast" has been endorsed in as many words by a number of politicians, including George W. Bush.
Any time a Republican politician starts talking about reducing the deficit, know that they are lying. Over 95% of them have publicly signed a pledge meant to deliberately increase the deficit. This isn't a conspiracy theory. The plans are public.
His stated reasons are so fantastically stupid that I can't imagine them being legitimate. Return-free filing is the best tool we have to achieve his claimed goals of reducing the complexity and confusion of tax season. Can you think of an innocent explanation for his opposition?
> Grover Norquist wants to cut government spending. It's difficult to do that directly because people often like government services.
Reminds me of Grafton where the population didn't care about cutting government services and only cared about lower taxes. Liberals all over the country moved there and it ended with bear attacks because everyone was disposing their trash incorrectly and the only policeman in town had a broken down car.
> paying taxes being hard is good because it reminds you how much money you give the government
Wouldn't it be the opposite? Having a complicated tax system makes it harder to find out how much you're paying. If things were simpler it would be much more apparent.
In Europe VAT is a line item on every invoice. And apparently in the US you have to do some mental gymnastics to manually add sales tax to the listed price to figure out how much to pay in the first place.
Of course most people have no idea how much VAT they pay for Amazon purchases in a year, but that's mostly a product of them not knowing how much they spend on Amazon in a year. If they know the latter, the former is trivial to figure out.
> apparently in the US you have to do some mental gymnastics to manually add sales tax to the listed price to figure out how much to pay in the first place
FWIW, usually in the US it's just a line item on the receipt or checkout screen.
FYI, in the US, depending on the jurisdiction, some items are exempt from sales tax. E.g. necessities like food and clothing. In my jurisdiction, clothing is taxed by the county but not by the state.
Which is a long way of saying that even if you knew the total you spent at Amazon, you wouldn't be able to derive the total amount of sales tax paid.
In the US, it's still a line item on your receipt. Most places don't include sales tax on the shelf tag or price sticker due to complexity. You can have state, county/area, and/or city taxes that apply. In NYC, for instance, we have a 4% NY State sales tax, a 4.5% NYC sales tax, and a 0.375% NYC metro area sales tax, totaling 8.875%. Clothes aren't taxed in the metro area sales tax so are 8.5% unless they're under $110 and then they're exempt. Most food is exempt except prepared food. Then there's the issue of fractions of a cent as the sales tax is calculated on the total bill not each item individually. There's also the fact that taxes change now and then... they adjust what food it applies to or what the cutoff is for clothes, etc. Some organizations have a sales tax exemption certificate (if they are a business planning to resell for instance) and that must also be taken into account.
Due to complexity, all larger stores with multiple geographic locations would never have separate pricing signage for every single store, so they don't. Other stores do the same. It's all calculated at the register as things are scanned in the computer.
As has been said numerous times, this is a bullshit excuse. If the register is capable of calculating the taxes, an electronic price tag system ( which is the norm in all big chain stores in Western European countries, which have multiple geographic locations and have locale-specific prices) would too.
If you're referring to the digitally updated signage at the shelves (e-paper or otherwise), none of the stores I go to in NYC have that except Best Buy.
It may be weird for you when you visit, but, as we all grew up with it, it's just normal here.
As a non-American who's not self-employed or a business owner I get a monthly payslip with my gross pay and the tax deduction. I see that every month, I know exactly how much I pay the government. All my investments also have tax deducted by the provider as well, when applicable.
I never have to think about calculating or filing tax, but I always see it and know exactly how much it is.
This is also the case for most Americans, but we're still expected to file every year. For most people, it's verifying what the government already knows. Filing a 1040-EZ with no itemization should be unnecessary.
Nit. But the 1040-EZ form was discontinued. I don’t disagree with the basic point that simple taxes could be more automatic—though the reality is that simple taxes are pretty simple.
The exact amount doesn't matter for this, all that matters is that you vote against taxes. It is sufficient that you suspect you may owe some amount and realize that you are required to figure it out. If it's hard to figure out, that serves the purpose of those who want you to associate negative emotions with taxes so that you'll vote against taxes.
That sounds like an incentive to vote against complexity, not against taxes. Paying a larger amount doesn't make the calculation any harder to figure out, nor does paying a lesser amount make it easier.
It's pretty obvious if you do your own taxes, even without fully understanding the tax code. The last few lines include "Add up [lines]; this is the total you owe for the year: ____" and "Add up [lines]; this is how much you already paid: ____".
I've heard a slightly different version of that rational, which I think is more more plausible but cynical. Tax collection is deliberately painful to justify cutting IRS funding and passing tax cuts (mostly for the very wealthy). It doesn't really make a lot of sense rationally, but might be effective as a manipulation tactic.
Well if you work from an assumption that taxation is theft and gov't is an existential threat to liberty then it makes sense why filing for taxes is terrible.
By that very same logic living in a community without paying for public infrastructure is theft as well which would turn a lot of land owners (frozen property taxes) into thieves.
I found out from a friend that she paid $600 to have her taxes done because (presumably) she falls for the dark patterns that TurboTax uses. She's a low paid service worker whose tax return can probably be done for free. And it is a sizable portion of her income because of things like Earned income tax credits, child tax credits, etc.
Realistically, how would you do your tax return for free?
Keep in mind that every service worker is terrified of an audit. The cost is much higher when you don’t have resources.
EDIT: I think I didn't phrase this very well. My point was that the average service worker is trained to be terrified of the IRS. These people are already usually paying hefty fines because they missed their returns in prior years. That's why they take the path of least resistance, and just pay someone else as a shield against this.
So it's not particularly surprising that TurboTax has swindled this person out of $600 with their upsells. Nor should she be condemned as a fool. If you were in her shoes, you might do the same thing.
There are many free filing options for anyone with an average salary from a straightforward W2 source. I went years without paying to file, until I got into freelancing and a higher tax bracket.
Being audited isn't much of a concern if your only source of income is a typical W2 job. The average service worker isn't throwing money around in stocks, crypto, blackjack, and corporate entities.
Even if you toss in a 1099 or two taxes are still mostly straightforward. I’ve always had mine done but it’s mostly only in the last ten years or so that they’ve gotten genuinely complicated.
One time I had a single 1099 form, and I screwed it up badly enough that it took months to resolve, and dozens of hours on my part. Someone who understood the process probably could have sorted it out in minutes.
1090ez, or any of a dozen free-file options? State returns are cheap if not free almost everywhere.
The vast majority of the people who qualify for free tax filing have nothing to audit. The government makes enough money off their deductions, not to mention what they generate having to spend >50% of their income to stay afloat, to overlook a few unreported tips or sneaker sales.
Do you mean the 1040ez, which was discontinued, & no longer a form?
(I agree with the rest of your comment. While I disagree with the parent's perspective, I think the FTC's here is that Intuit's advertising leads people towards their not-free products, instead of the actually free stuff that does exist. I don't think most people have the self-confidence to do the 1040 by hand.)
I would get rid of the tax return process as the only purpose for its existence is to waste the time of poor people and thus keep the government boot on their face.
Most other countries are comparable to US states rather than all of US. The US is incredibly diverse (in humans and govermental systems) in a lot of ways. So using one system is not easy as in other countries.
The government has enough information to process the taxes for most of us or at least publicly make it super easy. TurboTax just lobbies the government to not do so.
About two weeks ago, I got a letter from the IRS telling me that I owe an extra eight-thousand dollars from my 2020 return, with a $1000 fine and $200 interest as a result. [1]
I'm not mad about owing the money, but what annoys me is if they have enough information to know that I underreported, then why am I part of this equation to begin with? Clearly they have enough of my tax data to know I screwed up, so why don't they just send me a bill once a year? I don't see why Intuit (or HR Block or TaxAct or Jackson Hewitt etc) need to be part of this transaction at all.
[1] It was an honest mistake on my end, I forgot to report a sizeable stock sale I did in 2020.
You can file taxes without a software package, if you want. You have to file because they want you to report things they don't know about, and also if you want to claim itemized deductions.
It'd be great if they just billed me and I was on the hook for correcting them however. The current method is doing math homework under penalty of being fined.
Here in Norway, the government fills out our tax forms for us with all of the information that has been reported to them by our banks, our employers, etc. It is then our responsibility as tax payers to look over the tax forms, add anything not included, and adding any additional claims for deductions.
By comparison, the needless busywork that the IRS puts the tax payers through is nothing short of ridiculous really. It only serves to waste time and effort, and there is plain and simple no reason whatsoever why the IRS could not do it like Norwegian tax authorities does. Our system here in Norway is not perfect either, but the citizens of the United States, and the US government, would benefit hugely from a tax filing system built to help you file taxes the way that ours does for us.
The basic elements are not much busywork at all. For a person with only wage income, or maybe even a little interest & dividend income and perhaps one contracting payout, its pretty simple.
The busywork comes mostly from the arcane and convoluted nature of US tax code, notably the parts that describe deductions and credits. US governments use such things as a way to implement policy, and the crap just piles up over time. Can you deduct X? How much of X can you deduct? Are you eligible for a credit? Or just part of a credit? Or none of it? etc. etc.
If it's the first time you've screwed up the return, you might try calling them and ask to have the penalty waived or reduced. That works pretty often on first-time penalties.
Prepare to wait on hold for hours, probably trying for multiple days. They are woefully behind.
I believe your best chance is dialing in right when they open, before the call queues build up. Also the folks answering the calls are in a better mood then, and you're more likely to get the outcome you're looking for.
It's too bad they're so far behind now. It used to be fairly painless to reach a human at the IRS, and they are usually pretty helpful. Kind of the opposite of what a lot of people expect.
Worked as a temp for the IRS equivalent in my country. The degree of understanding and professionalism was unexpected. We were just overworked, mostly because the systems were really not up to date and had a few directives that were a bit inhumane (first time asking for a delay=> ok in all cases, no explanation needed. 4th time=> NOK in all cases, expect interests.). For people who couldn't afford the taxes, we had really knowledgeable people taking a lot of time finding ways of rebating taxes, people who could make 10x working as taxes lawyers and making a better job at it than actual lawyer (in my skewed perspective, don't quote me on that).
Because Capitalism, in essence, is the optimization of one particular group’s ability to alter how people live their lives in a way that transfers the most wealth from the working class.
America’s economy is a house of cards built around financial middlemen.
As others have noted, the IRS doesn't know everything, and some things may be to your advantage to report to them. They could send you a bill and ask you to fix it, but many people wouldn't know where to look to find mistakes.
For example: RSUs and NQSOs (employee stock grants) are in my experience handled extremely poorly by default. If I have RSUs vest when the stock is worth $10 a share, then I pay income tax that year based on income of ($10 x share-count). If I sell those shares later on, my brokerage reports to the IRS either: unknown basis value or $0 basis value. The correct basis value is $10 per share. There's a spot in the tax forms where you can tell the IRS that you have the corrected basis, but if you don't do this, you will pay extra tax, and it's an easy one to miss, especially if you're just importing the 1099-B.
At tax time my brokerage does send me additional forms beyond the 1099-B that include the corrected basis values, so its not that they don't know the right value, they just don't give it to the IRS directly. I assume this is due to IRS/congress rules and not my brokerage being obnoxious.
> As others have noted, the IRS doesn't know everything, and some things may be to your advantage to report to them.
Sure, and I'd be ok with giving people the option to deny the default return and file their own using Intuit or something. For people like me, who don't have the ambition to try and do anything clever with taxes, I'd be ok with the default return that they generate from all the information sent via my employer and banks.
To elaborate on the GP comment, the issue is not whether the brokerage reports, but how they do it. You generally compute capital gain income as (sale price) - (acquisition price). If you buy a stock on the market and sell it, brokers generally report both sale price and acquisition price to you and the IRS.
But for employee stock compensation, the broker can report sale price without acquisition price to the IRS. If you don't report the acquisition price yourself, the IRS will think that it's 0, and assume your income is much higher than the real value.
> They could send you a bill and ask you to fix it, but many people wouldn't know where to look to find mistakes.
Then people in that situation can do it from scratch like they're already required to do now. This is really not an issue anywhere else - this change wouldn't make the process harder for anyone.
I also have to deal with the cost basis issue every year, and it’s the biggest headache in the entire process for me and my partner. I don’t understand why the brokerage can’t provide the correct basis directly — it would lead to way fewer mistakes and more accurate returns.
> They could send you a bill and ask you to fix it, but many people wouldn't know where to look to find mistakes.
The overwhelming majority of people do not have complicated taxes. That is the exception and as others have pointed out, they could hire an accountant just like they do today.
Having the IRS mail out your bill would eliminate the need for most people to purchase accounting software each year, which is exactly what Intuit doesn't want.
I actually did pour blood and sweat to a campaign that did have this as one of their policies. I don't think this can be solved until lobbyist money and the Senate is fixed. Even if there's 90% support for an issue, politicians follow the money.
Heck I’m a high skilled, non-essential employee and I fell for this trap for years. Next year I’m using Cash App. But it’s wild what brand recognition can do.
Have you gone through TurboTax's filing process? It starts with ~$149 upgrade for me, I believe. They have countless add-ons that popup throughout the filing process beyond just that (annual audit defense membership, get your refund faster, etc). So many up-sells and cross-sells, it is pretty disgusting.
I stopped using them last year because it was just too much. I can easily see how someone could end up with a multi-hundred dollar bill from them. Many of the popups are tailored to look like you need to say yes.
So they're trying to completely fill the price shadow underneath the $500 or so a very basic "entry-level" accountant relationship would cost — and fill it with a zero-marginal-cost roster of non-product products and non-service services. Terrible.
Agreed, I’ve used turbotax in the past and never paid anywhere near that much. You could get a real accountant to do your taxes for less than that, maybe depending on the state. I know because I’ve done so.
It's more than that, tacks on even more for state. and every time you 'finish' a step it tries to upsell some stupid audit protection and also another one to get human involved. I somehow doubt 'audit protection' would even give you a certified cpa or attorney when the irs comes knocking for a real audit, it's probably some dumb small print
I personally use it because my taxes are too complicated to do it myself on paper.
I hope they are correct, I honestly do a good faith job but it's too complicated.... the pdf download for 2020 was 426 pages... that includes state. and it will be even more next this year about to file my 21.
way too complicated I only own a small s-corp (technically 2) and do some really small level investing with active trading.
Not sure, but I saw a screenshot of her return. (looking it up now) It was $539.
The sad part: she didn't think anything of it, and thought that's how it was. The reason for the screenshot is because last year, her daughter's dad basically stole her child tax credit. So she was celebrating getting her return accepted before he could pull the same thing.
For reference, her return was also five figures. I'm guessing these companies aim for a % of the total return. So perhaps a "$149" upgrade was $249 because of her return size. Like how online retailers bump up the price for goods based on zip code. I'm speculating though.
Government: You must provide a free way for those that qualify.
Intuit: OK.
Intuits exec to its employees: Make this free system, but hide it from the public. Provide links that are broken, make sure it doesn't show up on search indexes.
Scott Cook and all those involved should have all of their assets seized. About as slimy as you can get as a person. Made billions off of scamming United States citizens.
I'm curious what the original deal was, because Intuit doesn't even have the free system anymore. This year, they "elected not to renew its participation in the IRS Free File Program." [1]
Allegedly the government had plans to make a completely free, simple way for you file your taxes electronically. Tax software companies knew if that took place their cash machines would die. They made an agreement with the government that they would provide a completely free simple way for individuals to file taxes electronically if the government wouldn't build their own. They technically did, they just made it pretty much impossible to find it. Broken links, hid it from search indexes etc.
Intuit is one of the few companies that I don't hear any good things about them. They always do something shady, last one I recall was sharing employee salary info with Equifax.
That's why despite my bookkeepers protests, we moved to another accounting service and when they bought MailChimp I pulled my whole company out of that too.
I understand workplace is not always a place for activism, but I could switch with reasonable effort and it made me feel good not to fund this sort of behavior.
Currently, many Federal tax forms are supported, as well as tax filing for the state of Illinois. Filing for Oregon and California is under development!
Definitely true. The goal is to unify the filing so that the user doesn't have to refill in their information for separate state and federal tax application websites.
Fortunately, state tax returns (in my experience) are pretty straightforward to do by hand once the Federal return is done. I'm sure some states are more complicated than others, that might be the prioritization to use if more resources become available.
This is fantastic. I'm curious if you have any tax lawyers or accountants involved with this effort. Doing some amount of pro bono work is standard in the legal profession, and I can't think of too many services that would be more impactful to the average American than this one.
This sounds awesome. How does the user handle the actual filing? I assume you don't have any way to provide e-filing, so would people have to print this out and mail it?
Yeah, currently the user would print out the PDF generated by the site and mail it in to the IRS. E-filing is on the roadmap, but registering as an E-file provider is a pretty complex process. One of the options we were thinking about is scraping and automatically filling in fields on the free fillable forms site https://www.irs.gov/e-file-providers/free-file-fillable-form...
That's really neat and I'm glad you're doing it. That said I worked on tax software once and the amount of changes each year are huge and often require expert analysis. Sometimes they get dropped on you with very little notice.
How does the project plan to keep up with that? Will it require volunteers?
Absolutely, yeah the project has a loose group of contributor volunteers but longer term we would probably have to have a larger, more formal structure.
Right now, we're focusing on tooling to make onboarding new tax forms simpler and require a lower threshold of project understanding to allow a larger, less technical group of people to contribute
Go to the GitHub link above, read the README, and pay special attention to the “CONTRIBUTING” section.
If you have questions and the README and CONTRIBUTING documents do not specify a way to communicate, then open Issues on GitHub with your questions. Try to avoid asking questions unless you’ve read everything and cannot figure out how to proceed: remember that everyone working on the project is volunteering their limited time, just like you, and try to be respectful of their time and energy.
I am unaffiliated with this project, this is just the general procedure for contributing to open source projects.
Thank you for the explanation. I've never contributed before to open source and have benefited from open source software a lot, so I'm trying to contribute to this the right way.
I assume the amount of changes is much higher for the more complex tax forms, which 99% of people don't need. If this free software can even just handle the free tier or semi-complex tier filing, it's still a huge step.
The 1040 changes just about every year although it's usually just updating line numbers and various amounts (e.g. standard deduction). The 1040 schedules often get updates too.
IME everything else stays the same (e.g. the 8000s forms), but there are so many of them that it's a lot of work to just see which ones have changed and if you have to care about them. The forms also become less formulaic. E.g. If you file 6251, you need to keep your own records about Alternative basis, so you can't just fill them out based on w2s and 1099s.
This is an interesting situation for FOSS licenses. AGPL doesn't necessarily prohibit commercial behavior. I think if all the maintainers truly wanted to prevent anyone from commercializing it, you'd go with a source available license like BSL or creative commons.
It's interesting because having a group of disparate humans come together and say "yea, we hate the current thing, let's build something better and not commercialize it" doesn't typically happen. Kudos to you folks!
AGPL just means that users can fork the project if they have access to older AGPL code, but CLAs that assign copyright mean that the rights holders can change the license whenever they want and make it difficult to find old AGPL code by removing repositories and scrubbing the web of it.
It's entirely possible for the rights holders to say "we're going private now" and pivot the project into a for-profit business.
There isn't one, because copyright holders have all the legal right to do whatever they want. The legal owner of a copyrighted work is not beholden to the license they release the work under.
You don't need another license. You just need to either (1) not require a CLA, or (2) if you do, write the CLA so that it prevents you from doing that with others' contributions.
Your license choice is perfectly fine. If you do not have CLA, you have an AGPL codebase with many people owning the copyright on portions of it.
In terms of future proofing against the project "going commercial" (i.e. changing the license going forward), it doesn't get much better than this, because pretty much all the copyright holders would need to agree on a license change.
Ideally, the bulk of the copyright does not reside with a small number of authors - the more authors, and the more evenly the copyright is spread among them, the better.
You don't need a CLA. Github's ToS are set up such that contributions you get from other github users are licensed in the same manner as your repo unless the contributor gets you to agree to accept them under some other license : https://docs.github.com/en/site-policy/github-terms/github-t.... People should not be worried about you "going private"; if you've accepted non de minimis contributions from other users, any future conveyance or network interaction stuff would require you to include the source materials to stay in compliance.
It did the job, mostly, but had some quirks and didn't quite get everything right with the rounding when I set it to use whole dollar amounts, so I had to correct a few totals that ended up being $1 off, which was annoying. Probably won't use that one again.
This is actually a bit of an annoying problem for us! All the 1040 instructions say to round all figures at the end. So it is expected that you would have a few cases of 1.49 + 1.49 = 3 showing as 1 + 1 = 3.
But the freefilefillableforms supported by IRS rounds all input and then does addition based on that. For now we just maintain all cents and do math with the precise numbers, then round at the end when the numbers need to go into the forms. We have some work in the pipeline now to make that user-configurable too.
The way it seems it should work is that once the amount is entered on the form, it should be treated as the whole dollar amount for subsequent calculations. E.g. if the number comes from Schedule C, once that form is completed and you "enter this amount on line X of Form 1040" then any further calculations on the Form 1040 should use the whole dollar amount as printed, not the dollars and cents.
Switch to FreeTaxFileUSA for now if you’re not willing to go for this open source project.
Not only is it cheaper, more importantly, you’re not giving money that’s going towards maintaining the tax code that prevents the government from “competing” with TurboTax.
Obviously the Government already has what it needs to pretty much do all of your taxes, and they already must do this anyway. They could ask you like 5 short questions and your taxes would be done…they already have all your info.
Stop paying the lobbyists to continue lobbying against your interests. Start getting in the habit of calling or emailing your reps around tax time.
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[ 0.18 ms ] story [ 350 ms ] threadCPA can also be useful beyond just tax filing. My CPA does a half year evaluation to see if I'd owe any additional tax and plan accordingly. They also makes sure I get all the deductions I can.
Out of curiosity, was the tax preparer actually a licensed CPA, or just someone with no professional credentials? If they were a CPA, did they prepare individual tax returns regularly or only as a side job?
Worse, virtually all of the 1098-T guidance exists for undergrads. The problems with the form are entirely different for graduate students and basically nobody can help.
> Out of curiosity, was the tax preparer actually a licensed CPA, or just someone with no professional credentials? If they were a CPA, did they prepare individual tax returns regularly or only as a side job?
It's been a bunch of years so I don't know for certain, but they weren't just a desk worker at H&R Block. Tax preparation was their primary job.
My CPA is great, and I save money through using his services.
Our household has just the basic salaries / expenses / 401k / IRAs. THe year I received some temporary additional benefits, Intuit decided that I had to pay premium in order to enter that single additional 1099.
I left, found a much simpler, straightforward service with which I filed legitimately free, and have never looked back.
Plus, I've read about Intuit's history with the whole market, and I will never willingly give them a damn cent.
Which service is that? I haven't filed my taxes this year and am willing to spend some time switching to an app that's less scummy than Intuit's offerings.
What they can't do for you is know about deductions sometimes.
Them: It says here you spent $X on healthcare expenses.
Me: I've got 4 kids. I always hit my deductible.
Them, literally laughing: Yeah, kids are expensive. OK, moving on...
They have your previous filings so switching to another provider can be a pain since you need to know last year income when submitting your filing. I always make sure to at least download the PDF's.
As a consumer we're always free to vote with our wallet and I've been happy with freetaxusa so far but I'm also waiting for the "rate hike" to come...
Edit: I looks like they don't :(
Items Not Supported
https://www.freetaxusa.com/supported_forms.jspDo them yourself. The IRS has guidance and resources for those who are interested [1].
[1] https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...
So yeah, we're in a place where the IRS says taxpayers "should file electronically with direct deposit if at all possible" [2] but also informs taxpayers that not everyone can use the IRS's forms to file electronically.
0: https://www.irs.gov/e-file-providers/free-file-fillable-form...
1: https://www.irs.gov/e-file-providers/free-file-fillable-form...
2: https://www.irs.gov/newsroom/irs-begins-2022-tax-season-urge...
Credit Karma has an option to do taxes that is completely free, but I tried it once a few years ago and didn't care for it.
I use FreeTaxUSA which offers free federal and $7 state taxes. Cheaper than a meal at Taco Bell.
But few people actually do because it is a painful experience. The IRS' documentation isn't actually bad, it is just that the tax system itself is incredibly (and needlessly) complicated.
For example, you'd need to hand-enter every stock trade (even automated re-investments) even though your broker likely already electronically sent this information to the IRS. Using a digital solution they can often log into your broker and auto-import everything.
For how under-budget the IRS is and how bad the tax system is, they do ok, but the whole thing needs a massive overhaul but there is money in politics keeping it bad in order to profit private companies (plus there's a certain demographic that "hating taxes" is a political position that needs to be kept up with, essentially self-reinforcing-itself).
The answer is "because Congress passed a law saying they can't".
The end result is that I hand-enter anyway, even when paying $120 to Intuit for the privilege.
This is not true for most folks, who can use one of two exceptions that allow summarizing. Exception 1 allows you to simply report totals on Schedule D. Exception 2 has you file Form 8949 with summarized rows, as long as you attach a statement with the detailed transaction info (the brokerage 1099-B generally suffices).
https://www.irs.gov/instructions/i8949#en_US_2021_publink100...
These are the very same exceptions that tax software uses.
Sure, it's a bit tedious. But short of a privacy-preserving libre solution or just doing them manually with fillable PDFs, you'd have to do most of that isolation prepwork anyway. So fuck 'em.
P.S. The directions for modifying .NET assemblies to crack TurboTax are simple and easily followed by anyone with basic programming skill. So if you're fine trusting Intuit you could obtain the installation files from them directly, crack it yourself, and even have e-filing capability from what I understand.
Just quickly looking at CashApp Tax, it appears it is an Android app that likely will want network access to function. If that meets your requirements, good for you. But it doesn't meet mine. I'd also rather use the same software year to year so that information is carried forward, rather than being subject to whichever way the startup winds blow.
Furthermore — it’s your tax records. As soon as the government receives them they enter the permanent records of surveillance valley.
> As soon as the government receives them they enter the permanent records of surveillance valley.
Uh no, US tax records are not public data, nor available for the surveillance industry to buy AFAIK. It's unavoidable that the government gets them, but the fewer parties that get mine the better.
Currently, many Federal tax forms are supported, as well as tax filing for the state of Illinois. Filing for Oregon and California is under development!
If you have deductions, stock sales, a nanny, a business, etc then you need the regular 1040 and various schedules, and those are all complex enough that you'd probably benefit from software. It's not absolutely required, but there are enough ways to do it wrong (like adding up the wrong lines) that the peace of mind alone is probably worth it to you.
That is wild. I remember using it for my first job, and yep, it took me all of a few hours to fill it out by hand and mail it in.
I'm ready to go back to doing my taxes by hand and mailing them in. (I'm old enough to remember doing that - it is faster than doing it on the computer except for the one year I forgot to copy line 13 of form 1234A to line 56b of form 9876B) So many dark patters where the software is pretending to take time doing a complex calculation that takes a computer a couple nanoseconds, not to mention all the time to skip over things that don't apply to me.
Obnoxiously, this year TurboTax's integration with Binance is broken. I haven't checked in a few weeks but it won't accept Binance CSV's either. This needs to be fixed soon.
TurboTax tried to double count my Benevity sales anyways and I had to catch it when it messed up the 1040. Why am I paying for software? If I get to the point I can't handle it myself anymore I'll just start paying an accountant.
Here's a page describing forms and situations it does not handle [1].
One thing that might annoy some people is that to login to the Cash App Taxes website you must use their mobile app. The website shows a QR code which you scan from the mobile app.
It uses the approach of asking you various questions in order to figure out what forms it thinks you need to file, which is an approach that some people do not like.
If there is a form you know you have to do that it missed or you have a 1099-something that it has not asked you to enter it took me a little while to figure out how to deal with that. What you do is type the name of the form into the help search box. One of the results will be a link to take you directly to the page that deals with that form.
[1] https://taxeshelp.cash.app/s/article/Forms-and-situations-Ca...
I'd double check by filing with another software just to make sure (i.e https://www.freetaxusa.com/)
So this year, I prepared my taxes with FreeTaxUSA instead. So far I love it. It required me to manually input a lot of information that was auto-imported on TT and CK, which isn't as terrible as I thought. Overall I'm finding the UX to be very clean and clear. I haven't had to Google answers to vague questions or unique situations like I had to with the others. It even caught an error that I'm having to fix with my bank, and told me exactly how to fix it. I'm very impressed with FreeTaxUSA so far. Hopefully they never sell out.
Just to back this up with facts - here are the braille and spanish language offerings which took all of two seconds of googling:
https://www.irs.gov/forms-pubs/irs-tax-forms-in-braille-and-...
https://apps.irs.gov/app/picklist/list/formsPublications.htm...
Really? There are some TurboTax ads where every word spoken is the word 'free.' ;)
1. https://www.tvcommercialad.com/watch/XosLKPV
2. https://www.youtube.com/watch?v=1qDZA7j4rXU
3. https://www.youtube.com/watch?v=jZV7l3AD5Nc
It might be different in the US, but in Canada I file my taxes using the CRA's data directly. TurboTax even fetches it directly from their website. What's the point? They have my T4, my T2202 (studies) and everything else. Just send me a letter telling me how much money I owe/I am owed and that's it.
Pretty sure it's just run-of-the-mill lobbying and corruption unfortunately. A typical "think of the jobs!" type of thing.
See e.g. http://reason.org/files/ba148cd5babdda39f9ebb43b336b01d4.pdf
Is it really necessary to "encourage" me to dislike taxes? Is not the money leaving my pocket sufficient?
I've also heard Republicans claiming that IRS-provided tax bills/refunds is equivalent to a tax. I guess the implication is that the government is going to intentionally charge you more.
Having to use TurboTax or someting like it is equivalent to a tax, but it's paid to a corporation instead of the government. If I had to choose between my money going to the government and Intuit, I'd choose the government.
https://www.propublica.org/article/inside-turbotax-20-year-f...
Honestly though, actually reaching out to your representatives and talking to them is far more effective than most people assume.
The only real fix is actual accountability for lawmakers. It means massive amounts of oversight to catch those who accept bribes in any forms (including "campaign contributions") and it means making it simple for the people to vote out anyone who refuses to represent their interests.
Right now, bribery is effectively legal, there is zero accountability and between the two party system, gerrymandering, and voter suppression even if you manage to get someone out of office you're probably not going to like the person you're forced to vote in to replace them. We're a very long way from fixing the problem and all of the people in power have zero incentive to start getting us there because they profit off the system being broken.
Collectively, people have a lot more money than corporations do - the trouble is organization. But basically flooding the system with so much money that corporate bribery becomes insignificant is the other option to banning it
(Tangentially, Feingold was one of the smartest people in the Senate. Wisconsin voted him out in favor of Johnson, one of the stupidest people in the Senate — the only thing that keeps him from the top spot is just the fuckload of really dumb other Republican senators.)
[0] https://slatestarcodex.com/2019/09/18/too-much-dark-money-in...
After that, its just whether or not the incumbent can defend against the opposition party in the general election. Primaries are generally where the biggest changes are made, and are also where its the hardest to oust the incumbent.
Its not cynical, nor an excuse.
Citizen's United was a group that made a political-advocacy movie and the FEC wanted to treat it as regulated political activity.
If the NYT can push candidates, why not Sears?
Is it okay with you if a corporation donates money to Roger Moore to support the production of a documentary that said corporation agrees with?
Does it depend on whether said documentary advocates for/against a candidate?
How do we define "advocate"? (Is saying "Fred took money from Mexican drug lords" advocacy?)
Well, corporations are people, people have the right to bear arms, and the country was founded on the idea that if you really really don't like your government, violence is an appropriate response to change it. Of course the Constitution pulled the ladder up behind the founding fathers on that bit of political philosophy, but in recent years I've heard some rhetoric citing the Declaration as inspiration for the path they should take now. Corporate personhood adds an interesting twist to things, especially considering that Alphabet or Apple could secede and have a larger GDP than many countries. Alphabet might quickly get labelled a hostile foreign power for all their spying. Apple might start a trade war with their extortionate tariffs but we'd still probably have reasonable diplomatic relations with them.
Maybe 200+ years with only one major civil war is a good record under these conditions, and maybe the next one will have official corporate sponsors.
What annoys me now is that if you want a paper booklet you have to request one in advance if you did not use one previously but otherwise there is no free to everyone option to do it. You either request a paper booklet or use 3rd party software.
If you have some amounts you want to regain from losses, etc., you can still do your taxes manually.
That means logging into the free MEX IRS platform, which shows all your tax info preffilled. Most likely the stuff you want to input is already there (all invoices in mexico are signed by private/public keys through the IRS system).
So you just enter your bank account to get your money back. Or get your reference to pay your taxes.
The system is really beautiful.
https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...
This is the system I am looking for. I think it would make the lives of the IRS employees better and would save me time and money.
I'm not a fan of Trump, but the Trump tax changes made it so it doesn't make sense for me to do itemized deductions, because I won't beat the standard deduction unless I have a lot more things to deduct than I normally do, which greatly simplifies my tax filing and record keeping. Since I know I won't be deducting donations, I don't need a receipt when donating them, and that saves paperwork.
Someday our descendants will have sane and automatic filing like the rest of the developed world; I can only hope to live long enough to see the death of this stupid industry.
"File your taxes free! Oh, you have to file an HSA contribution? Sorry, you'll have to buy H&R Block DELUXE ($79.99) to do that!"
Kinda feels like blackmail, really. If I don't file my HSA contribution I'm technically committing fraud, right?
But the companies know exactly how much to charge you so you avoid the hassle; though I won't shell out for state e-filing when I can print and mail.
This is pretty much the only reason I own stamps.
The IRS will send you a corrected tax return, you sign it and mail them a check and you'll hear nothing from them again. Maybe you didn't get the form, or didn't understand the software, etc, etc. There are lots of honest ways to screw up your taxes. The IRS isn't going to assume fraud unless you refuse to pay them when they point it out.
I've screwed up my taxes a lot of times. Not maliciously, but not having all of my forms, I've had clients report paying me a different amount than they told the IRS, forgot stock trades I made, etc. Every time, they've sent a letter asking to pay a balance, plus maybe a small fee, and all is good.
https://www.irs.gov/payments/accuracy-related-penalty
Every piece of news in which Intuit gets slapped is good news to me. I just hope legislators start doing their jobs at some point and spare the taxpayer of this bullshit.
There is an institutional (mainly Republican) commitment to strangling the IRS here in the US. Filing taxes should be free and easy.
Or, ideally, not needed at all. In the UK having an average financial situation like a job (one that doesn’t pay megabucks, anyway), a pension, a tax-efficient savings account and a student doesn’t require any filing at all. Everything happens through payroll. If you do earn a lot or have other things that trigger the need to file it’s free and not overly onerous — certainly within the grasp of a mere mortal.
(And before someone chimes in with “how do you know the government gets the figures right?!”: because the tax code, or at least the parts that face most people, is straightforward and most people have a bog-standard default configuration that is easy to verify.)
They get my income, loans for future capital gain deductions, have calculated in the basic deductions and so on.
I wanted some extra deductions this year, so I simply went and inserted those on their own web site with simple boxes to fill. Even before the tax season. No problems...
It is great when the tax agency isn't actually adversarial, but instead ready to help and even work with you if you are having troubles.
https://www.cnbc.com/select/what-to-do-with-late-tax-return-...
> A long-standing law requires the IRS to pay interest to those who received their tax refunds late — notably 45 days after the typical filing date of April 15. Just as taxpayers must pay interest on any outstanding obligations they owe to the IRS, the rule works both ways if the IRS is late on the money they owe back.
They pay 3% interest currently, which is pretty nice.
In the way there is a revolving door with the SEC, is there a revolving door at the FTC?
> Public Citizen found that just over 75 percent of top FTC officials (31 out of 41) over the past two decades have either left the agency to serve corporate interests confronting FTC issues, joined the agency after serving corporate interests on these issues, or both.
https://www.citizen.org/article/ftc-big-tech-revolving-door-...
Are they reminding BigTech that hey, they have political power and some palms needs to be greased.
As long as the job of Congress is to kiss the ass of every powerful industry lobby, we won’t have good things.
The problem truly is advertising, like you said. The government just cannot out-advertise companies that are doing $9 billion in revenue.
They just don't want to because someone bribed them to not do so.
I, personally, have no idea what the government's "communications" have been regarding taxes outside of news articles.
Either way, though, this is no competition for a year's worth of massive advertising campaigns.
I'm not sure if anyone knows the true amount, but estimates put the number spent on lobbying around a few million dollars. Opensecrets.org estimated ~$3.2m lobbying in 2021.
https://www.opensecrets.org/federal-lobbying/clients/summary...
For a company that makes $2 BILLION dollars a year, the amount they actually spend lobbying and otherwise influencing governments is shockingly small.
And thanks to Citizens United and similar decisions that have driven up the cost of US elections, US pols are very expensive compared to their counterparts in other countries.
It does make me wonder about the efficacy of standing up a lobbying fund to lobby to Do The Right Thing about something. This would be a prime example - I would happily pay $100 to compete with Intuit's lobbying here. I'm also certain there are 31,999 other people in the US who feel the same way.
I just don't have the energy to do the work of learning how to set up the corporate structure around that to make it legal.
Congratulations, you just independently invented the concept of a Political Action Committee.
It's through season tickets to the network of friends that know the politician, it's through donations to the university that gets their child into college, it's through pacs and issue groups, it's through lining up and bundling donors to max out their individual donations to a politician's preferred presidential candidate, it's through flying them out to special events, it's through hiring their best friend, it's through investing in their brother in law's new business, it's through buying things at their husband or wife's charity auction, it's through arranging a job for them after they retire from politics, it's through finding them a buyer for their investment property, it's through an entire network of investments one or two degrees removed from the politician.
The only sliver of that that people typically cite is the amount directly spent on campaign contributions which (1) mistakenly makes it seem like politicians are cheap and (2) is underwhelming, to people who cite those numbers sincerely believing that that's the only economic dimension to political influence.
Here's an old article from 2013 on it, for example, and a letter from Grover Norquist (sponsor of the Taxpayer Protection Pledge) and others.
https://www.propublica.org/article/how-the-maker-of-turbotax...
https://www.atr.org/taxpayer-advocates-issue-joint-free-file...
https://en.wikipedia.org/wiki/Americans_for_Tax_Reform#Taxpa...
You say this like it's just a thing that people can do. But the people you're telling to "Just do this" have already been trained to be terrified of the IRS. Many of them are currently paying huge fines due to missing their returns in prior years. Any small mistake can hang you when you're impoverished, precisely because you don't have any room for error.
"Most Americans" is an umbrella that contains mostly service workers. The people that serve you food, bag your groceries, drive your amazon purchases, and so on. If you've spent a lot of time with people like this, I encourage you to ask them "Hey, do you pay someone to do your taxes, or do you do it yourself? Why?"
I'm pretty sure the conversation will go "I pay. I just don't want to worry about it." And that "worry" is because they've been hit hard in the wallet, because the (American) government is not friendly when it comes to messing up your taxes.
If I am mistaken about this, I would like to know. But this is true of my extended family, and I'm pretty sure it's true for most of their friends.
Why do you say that? I've never encountered people who were terrified nor have I read about it. How many people are paying "huge fines"? AFAIK, the IRS's audit capacity is greatly underfunded.
It's possible that I'm just reacting to a biased sample of people. But my impression was that this is a common mindset for a nontrivial subset of the population. Being afraid of doing something wrong on your government forms isn't really an irrational fear. Anyone who's owned a car in Chicago will tell you that the city's goal is to extract as many thousands of dollars from you as possible – it was still one of my worst financial decisions of all time. And that wasn't even taxes.
The broader point is that "dealing with the government" is a big messy bucket that people usually want to pay a janitorial service to dispose of. Even things like "being reminded to file your taxes right now" is valuable in that situation. Most people don't have a clue what day they need to file by. They don't learn it in school, and their parents either don't know or didn't bother to teach them.
That does not at all match my experience, it's widely discussed every year, and I wonder how many returns are late.
But you left out income. The idea here is that HN users tend to be a biased sample. Most of us aren't impoverished.
I would bet that your family's discussions are due to the fact that you have a stable, fully functional family. Most people outside of tech aren't as fortunate.
If I'm mistaken about this, and your family isn't middle class or higher, then that's an important data point though.
For what it's worth -- and it's possible I'm living in a bubble, but -- the only family member I know that watches the news is my dad. Everyone else quietly switched to netflix long ago. The news mostly comes from the drama of the day; things that show up on facebook. (The recent Chris Rock drama, and other nonsense like that.)
I recently followed CBS on TikTok though, to my surprise. They had some of the best coverage of the Ukraine war I've seen. I even joked to my wife that the circle of life was complete: not only have I never watched the news in years, and not only does my dad have no clue what tiktok is, but now I'm watching the news on tiktok.
Thanks for pointing out that the news is sometimes a valuable thing to keep on one's radar.
I grew up impoverished. Impoverished people talk about tax filing time way, way more than well off people because they need the money (refund) much more. A very pleasant memory of my early childhood was at my aunt's house celebrating her tax refund with her by making strombolis.
Every single wall or desk calendar I've ever seen has "Tax Day" labeled on it.
The irony is that -- as you said -- the IRS hits people of modest income harder, because the IRS doesn't have the resources to take on many battles with wealthy people who can afford lawyers. This means the IRS mostly goes after easy targets who won't fight back. Yet another tax on being poor.
If it sounds unbelievable, I don't blame you at all. I wouldn't have believed it myself until seeing just how Kafkaesque "dealing with the government" can be. Especially when penalties are involved.
For the rest of my family, it's a little awkward to find out. It's mostly on my wife's side; my father was always very fastidious about taxes, as most families of most HN readers probably are. I only wanted to point out that there's a large number of people where this isn't true.
I'll try to dig up direct answers for you. Thankfully most of this pain has been not-mine for many years now.
I think in reality, a way to get the “civilized country” (as referred to by another poster) tax experience is just file an incomplete return, the IRS will bill you the correct amount along with a negligible “fee” (interest) a few weeks or months later.
Maybe doing this repeatedly would upset the IRS, I don’t know. But it definitely works a few times without issue.
That said, I wouldn’t do this on purpose :)
https://www.chicago.gov/city/en/depts/fin/supp_info/revenue/...
However, those options aren't advertised and these companies like to do "Free" but then upgrade you as you fill out options.
Follow the lobby money.
So it's not totally arbitrary, but I certainly agree that the US tax system is messed up.
It's nuts. Intuit isn't worth that much.
The fact that our government has made such a process for fulfilling a legal obligation speaks volumes about the mafia-like nature of our federal government.
I pay lots of property tax where I live. But its just a bill. I can and sometimes do dispute the amount owed. But imagine if each year instead of that process I had to hire an independent team to determine what I owe, make a case for that, then submit that to my local tax authority. That's basically what the IRS does with individuals.
If they precalculated your taxes and sent you a bill (or refund) it would (a) be easier, (b) be more accurate and (c) encourage simplification of the entire system. I consider that both more effective and more fair.
Not in a free society. An ineffective government is a conspicuous drain.
If you're an eg. independent contractor, you have to fill out a full report (income, expenses, income tax already prepaid, benefits paid, etc.), but you also do it on a governments website and sign it using a digital certificate (that is free for citizens).
No 3rd party software, no paying anything (unless you have an accountant do that for you, but it's relatively simple to do it by yourself), and the most time-consuming task is calculating all the yearly earnings and expenses.
More discussion over here: https://news.ycombinator.com/item?id=30846884
https://news.ycombinator.com/item?id=30842175
The argument I've heard is that so righteous indignation over the "staggeringly high" taxes "stolen from the hardworking American people" or whatever. This is one of the same arguments as to why sales taxes shouldn't be included in the shelf price of an item or service.
Except it doesn't work. People can be mad about taxes regardless of whether they're easy or hard to file. (Paying taxes is straightforward; the vast majority of us have it done for us from our paychecks every interval.) And where I live, public votes to raise the sales tax for various projects, often public transit, rarely if ever fail.
It seems to me just to be an excuse to not actually deal with our busted as hell tax collection system because that system benefits people who themselves have an excuse to rile people up about taxes.
I think this would provide the transparency that conservatives want, along with the simplicity that liberals want. My only concern is that the data would be fudged, like the social security “statements” are.
> Except it doesn't work. People can be mad about taxes regardless of whether they're easy or hard to file.
"that can't possibly be a fair representation of that ideologue's position, there's huge gaps in the logic!"
look, positions way out on the fringes don't have to make coherent sense to the rest of us. PETA runs kill-shelters that euthanize millions of animals every year, sometimes multiples of other kill shelters. It makes sense to them, they have their own logic why that's good.
Making Americans hate every aspect of taxes - the amount, having to spend a couple quality hours with a tax program every year, getting sales tax rolled on top of advertised prices, everything - is the goal here. Just make taxes suck so that people hate them. Because then people will oppose taxation.
Abolishing income tax because it is hard to file is quite absurd. You can have a flat percentage income tax and then you wouldn't have to file. Then you could implement an automatic deduction via tax credits ala Milton's negative income tax. For me that would be an acceptable compromise if my goal was simplifying taxes.
https://en.wikipedia.org/wiki/Starve_the_beast
For this plan to work, people have to really hate paying taxes. So, despite the fact that Norquist and his allies often talk about things like "reducing the burden on the taypayer", they have in fact acted to make paying taxes as unpleasant an experience as possible. This means deliberately underfunding the IRS and ensuring filing taxes is slow, complicated, and expensive.
He is also the architect of the Taxpayer Protection Pledge, which is endorsed by the vast majority of Republican politicians currently in office. The pledge prohibits them from supporting any legislation that would increase taxes on people or corporations. The idea of "starving the beast" has been endorsed in as many words by a number of politicians, including George W. Bush.
https://en.wikipedia.org/wiki/Americans_for_Tax_Reform#Taxpa...
Any time a Republican politician starts talking about reducing the deficit, know that they are lying. Over 95% of them have publicly signed a pledge meant to deliberately increase the deficit. This isn't a conspiracy theory. The plans are public.
Sources would be nice.
https://www.propublica.org/article/how-the-maker-of-turbotax...
His stated reasons are so fantastically stupid that I can't imagine them being legitimate. Return-free filing is the best tool we have to achieve his claimed goals of reducing the complexity and confusion of tax season. Can you think of an innocent explanation for his opposition?
Reminds me of Grafton where the population didn't care about cutting government services and only cared about lower taxes. Liberals all over the country moved there and it ended with bear attacks because everyone was disposing their trash incorrectly and the only policeman in town had a broken down car.
https://www.vox.com/policy-and-politics/21534416/free-state-...
Wouldn't it be the opposite? Having a complicated tax system makes it harder to find out how much you're paying. If things were simpler it would be much more apparent.
Of course most people have no idea how much VAT they pay for Amazon purchases in a year, but that's mostly a product of them not knowing how much they spend on Amazon in a year. If they know the latter, the former is trivial to figure out.
FWIW, usually in the US it's just a line item on the receipt or checkout screen.
Which is a long way of saying that even if you knew the total you spent at Amazon, you wouldn't be able to derive the total amount of sales tax paid.
Due to complexity, all larger stores with multiple geographic locations would never have separate pricing signage for every single store, so they don't. Other stores do the same. It's all calculated at the register as things are scanned in the computer.
It may be weird for you when you visit, but, as we all grew up with it, it's just normal here.
I never have to think about calculating or filing tax, but I always see it and know exactly how much it is.
https://www.propublica.org/article/how-the-maker-of-turbotax...
Fuck these companies.
Keep in mind that every service worker is terrified of an audit. The cost is much higher when you don’t have resources.
EDIT: I think I didn't phrase this very well. My point was that the average service worker is trained to be terrified of the IRS. These people are already usually paying hefty fines because they missed their returns in prior years. That's why they take the path of least resistance, and just pay someone else as a shield against this.
So it's not particularly surprising that TurboTax has swindled this person out of $600 with their upsells. Nor should she be condemned as a fool. If you were in her shoes, you might do the same thing.
Being audited isn't much of a concern if your only source of income is a typical W2 job. The average service worker isn't throwing money around in stocks, crypto, blackjack, and corporate entities.
The vast majority of the people who qualify for free tax filing have nothing to audit. The government makes enough money off their deductions, not to mention what they generate having to spend >50% of their income to stay afloat, to overlook a few unreported tips or sneaker sales.
(I agree with the rest of your comment. While I disagree with the parent's perspective, I think the FTC's here is that Intuit's advertising leads people towards their not-free products, instead of the actually free stuff that does exist. I don't think most people have the self-confidence to do the 1040 by hand.)
Like with your health system, a lot of us are slightly baffled by how broken things are in the US.
I'm not mad about owing the money, but what annoys me is if they have enough information to know that I underreported, then why am I part of this equation to begin with? Clearly they have enough of my tax data to know I screwed up, so why don't they just send me a bill once a year? I don't see why Intuit (or HR Block or TaxAct or Jackson Hewitt etc) need to be part of this transaction at all.
[1] It was an honest mistake on my end, I forgot to report a sizeable stock sale I did in 2020.
By comparison, the needless busywork that the IRS puts the tax payers through is nothing short of ridiculous really. It only serves to waste time and effort, and there is plain and simple no reason whatsoever why the IRS could not do it like Norwegian tax authorities does. Our system here in Norway is not perfect either, but the citizens of the United States, and the US government, would benefit hugely from a tax filing system built to help you file taxes the way that ours does for us.
The busywork comes mostly from the arcane and convoluted nature of US tax code, notably the parts that describe deductions and credits. US governments use such things as a way to implement policy, and the crap just piles up over time. Can you deduct X? How much of X can you deduct? Are you eligible for a credit? Or just part of a credit? Or none of it? etc. etc.
I believe your best chance is dialing in right when they open, before the call queues build up. Also the folks answering the calls are in a better mood then, and you're more likely to get the outcome you're looking for.
General penalty relief: https://www.irs.gov/payments/penalty-relief
I just went through this for an honest mistake as well, though I didn't qualify for a first time abatement. It took months to get a response as well.
Because Capitalism, in essence, is the optimization of one particular group’s ability to alter how people live their lives in a way that transfers the most wealth from the working class.
America’s economy is a house of cards built around financial middlemen.
I have looked, and I am still waiting.
Americans would probably still decry it as socialism or communism even though it is very far away from those.
For example: RSUs and NQSOs (employee stock grants) are in my experience handled extremely poorly by default. If I have RSUs vest when the stock is worth $10 a share, then I pay income tax that year based on income of ($10 x share-count). If I sell those shares later on, my brokerage reports to the IRS either: unknown basis value or $0 basis value. The correct basis value is $10 per share. There's a spot in the tax forms where you can tell the IRS that you have the corrected basis, but if you don't do this, you will pay extra tax, and it's an easy one to miss, especially if you're just importing the 1099-B.
At tax time my brokerage does send me additional forms beyond the 1099-B that include the corrected basis values, so its not that they don't know the right value, they just don't give it to the IRS directly. I assume this is due to IRS/congress rules and not my brokerage being obnoxious.
Sure, and I'd be ok with giving people the option to deny the default return and file their own using Intuit or something. For people like me, who don't have the ambition to try and do anything clever with taxes, I'd be ok with the default return that they generate from all the information sent via my employer and banks.
> A broker or barter exchange must file Form 1099-B for each person: > For whom the broker has sold (including short sales) stocks, ... etc., for cash
https://www.irs.gov/instructions/i1099b
To elaborate on the GP comment, the issue is not whether the brokerage reports, but how they do it. You generally compute capital gain income as (sale price) - (acquisition price). If you buy a stock on the market and sell it, brokers generally report both sale price and acquisition price to you and the IRS.
But for employee stock compensation, the broker can report sale price without acquisition price to the IRS. If you don't report the acquisition price yourself, the IRS will think that it's 0, and assume your income is much higher than the real value.
Then people in that situation can do it from scratch like they're already required to do now. This is really not an issue anywhere else - this change wouldn't make the process harder for anyone.
The overwhelming majority of people do not have complicated taxes. That is the exception and as others have pointed out, they could hire an accountant just like they do today.
Having the IRS mail out your bill would eliminate the need for most people to purchase accounting software each year, which is exactly what Intuit doesn't want.
There's some chance that they didn't have enough information to know that until you filed. Maybe.
I stopped using them last year because it was just too much. I can easily see how someone could end up with a multi-hundred dollar bill from them. Many of the popups are tailored to look like you need to say yes.
I personally use it because my taxes are too complicated to do it myself on paper.
I hope they are correct, I honestly do a good faith job but it's too complicated.... the pdf download for 2020 was 426 pages... that includes state. and it will be even more next this year about to file my 21.
way too complicated I only own a small s-corp (technically 2) and do some really small level investing with active trading.
The sad part: she didn't think anything of it, and thought that's how it was. The reason for the screenshot is because last year, her daughter's dad basically stole her child tax credit. So she was celebrating getting her return accepted before he could pull the same thing.
For reference, her return was also five figures. I'm guessing these companies aim for a % of the total return. So perhaps a "$149" upgrade was $249 because of her return size. Like how online retailers bump up the price for goods based on zip code. I'm speculating though.
Intuit: OK.
Intuits exec to its employees: Make this free system, but hide it from the public. Provide links that are broken, make sure it doesn't show up on search indexes.
Scott Cook and all those involved should have all of their assets seized. About as slimy as you can get as a person. Made billions off of scamming United States citizens.
[1] https://freefile.intuit.com/
That's why despite my bookkeepers protests, we moved to another accounting service and when they bought MailChimp I pulled my whole company out of that too.
I understand workplace is not always a place for activism, but I could switch with reasonable effort and it made me feel good not to fund this sort of behavior.
Currently, many Federal tax forms are supported, as well as tax filing for the state of Illinois. Filing for Oregon and California is under development!
Sounds like yet another thing the e-filing lobby worked to ensure their monopoly...
How does the project plan to keep up with that? Will it require volunteers?
Right now, we're focusing on tooling to make onboarding new tax forms simpler and require a lower threshold of project understanding to allow a larger, less technical group of people to contribute
If you have questions and the README and CONTRIBUTING documents do not specify a way to communicate, then open Issues on GitHub with your questions. Try to avoid asking questions unless you’ve read everything and cannot figure out how to proceed: remember that everyone working on the project is volunteering their limited time, just like you, and try to be respectful of their time and energy.
I am unaffiliated with this project, this is just the general procedure for contributing to open source projects.
IME everything else stays the same (e.g. the 8000s forms), but there are so many of them that it's a lot of work to just see which ones have changed and if you have to care about them. The forms also become less formulaic. E.g. If you file 6251, you need to keep your own records about Alternative basis, so you can't just fill them out based on w2s and 1099s.
I'd like to contribute, but don't feel like building someone's business for free.
It's interesting because having a group of disparate humans come together and say "yea, we hate the current thing, let's build something better and not commercialize it" doesn't typically happen. Kudos to you folks!
It's entirely possible for the rights holders to say "we're going private now" and pivot the project into a for-profit business.
In terms of future proofing against the project "going commercial" (i.e. changing the license going forward), it doesn't get much better than this, because pretty much all the copyright holders would need to agree on a license change.
Ideally, the bulk of the copyright does not reside with a small number of authors - the more authors, and the more evenly the copyright is spread among them, the better.
Last year I used http://opentaxsolver.sourceforge.net/
It did the job, mostly, but had some quirks and didn't quite get everything right with the rounding when I set it to use whole dollar amounts, so I had to correct a few totals that ended up being $1 off, which was annoying. Probably won't use that one again.
But the freefilefillableforms supported by IRS rounds all input and then does addition based on that. For now we just maintain all cents and do math with the precise numbers, then round at the end when the numbers need to go into the forms. We have some work in the pipeline now to make that user-configurable too.
Can any free app do all of this?
Better yet is there a free app that can log into my Turbotax account, fetch all the data and then generate the forms and file them?
Not only is it cheaper, more importantly, you’re not giving money that’s going towards maintaining the tax code that prevents the government from “competing” with TurboTax.
Obviously the Government already has what it needs to pretty much do all of your taxes, and they already must do this anyway. They could ask you like 5 short questions and your taxes would be done…they already have all your info.
Stop paying the lobbyists to continue lobbying against your interests. Start getting in the habit of calling or emailing your reps around tax time.
0: https://sites.google.com/view/incometaxspreadsheet/home
[0] https://www.npr.org/sections/money/2019/04/03/709656642/epis...