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TurboTax Uses Dark Patterns to Trick You into Paying to File Your Taxes (propublica.org)
608 points by justinpropub 26 days ago | hide | past | web | favorite | 273 comments

They're not perfect, but I've had success filing with FreeTaxUSA - federal is free, state is $15:


Obviously too late for people this year, and my tax situation is relatively straightforward so I can't speak to how well it handles edge cases, but the first year I used it I went through the process with both TurboTax and FreeTaxUSA and got the exact same estimated refund.

The last straw with TurboTax was when I needed to get some details from a previous year's tax return and found out that they would not let me access a return I'd paid to file with them unless I upgraded my plan. Absolute scum. I took the opportunity to also close my Mint account (same parent company as TurboTax) which I barely use and has been sending all kinds of transaction data for them to profit from.

I used Free Tax USA this year, and it ended up giving me the same number Turbo Tax did (since you can do Turbo Tax for free until the end).

My taxes include a multitude of stock sales, losses (from calls and puts), as well as my W2.

It takes a little longer to fill out then Turbo Tax due to the lack of integrations with banks and what not, but I still finished the whole thing in less than an hour. It's free for Federal, and they wanted something like $10 for my state so I did it out of lazyness.

Does Free Tax USA handle US expats who don't have a US mailing address? Some years ago TuboTax did not support electronic filing so I was forced to print out the tax return and send it via a third world postal service. Not a good feeling.

No, they don't - I just tried it.

CreditKarma is 100% free for everything. I've used them the last two years without issue, although they dramatically improved the service this last year. It was a little rough year 1.

I want to try CreditKarma's free filing, but since its free, I'm the product, and i'm not sure what that means, when handing them all my tax info yet..

This statement, "If it's free, I'm the product" is becoming less and less relevant because, "Even if it's not free, I'm usually the product anyway"

Think Comcast, Verizon, various Android phones, various modern TVs, etc.

Okay, granted many companies do it, but you're still dodging the parent comment's issue about this specifically. WHY is it free, WHAT are they doing?

WHAT are they doing?

I think his point is something like "Who knows, but you can be sure TurboTax is doing it too"

Also: Apple.

Do you have any citations for that claim? Anything I can search for?

Admittedly I was a little concerned by that, but since I already use them for credit monitoring I didn't feel like I was handing them all that much more information. Better to give them a little more info, than involve another company who may still use my info even after I pay them.

I do like they're at least pretty transparent about their business model:




Mate, even when you do pay for services, you're still getting your data sold to third-party vendors.

So you might as well utilize companies that provide an actually good product.

Do the offline/desktop versions of TurboTax, etc do this? Not arguing, just surprised

The IRS requires any tax filing software to get your permission to use your information for anything other than filing your taxes. In the case of TurboTax there's a contract they present at the beginning that authorizes them to use your information for marketing. If you decline the contract then you can still use their services and they're not able to sell your information on unless it's related to filing your taxes.

At the very least, they can’t violate IRS §7216 without your explicit consent, which they ask for with the default sync to their parent company. And for now that isn’t required to use their filing.

I'm staying away from these free services after data scandals. My tax return is highly sensitive data. I don't want it to get in the hands of advertisers in lieu of saving a few bucks.

Since it was my first year trying CreditKarma I decided to do my taxes with both CreditKarma and TurboTax to compare. CreditKarma matched TurboTax return amount exactly for me this year. I also found CreditKarma interface easier to navigate and it took me less time to complete. Would recommend over TurboTax (if you're eligible).

CreditKarma requires a non VOIP number before you can sign up for their tax app.

Hm, I've used my Google Voice number without a problem.

It also rejected my Google Voice number.

Unfortunately Credit Karma doesn't let you delete you account; you can deactivate, but your data stays with them for at least two more years.

+1 to freetaxusa. I started using them a decade ago when I first had to file taxes, and I've been pleasantly surprised that they have remained a good choice this whole time. The product doesn't even feel like it has changed much (other than the never-ending tax law changes) over the years, which is a rarity for web-based products. It just does what it needs to do.

I've also been using FreeTaxUSA for the past couple years and have been pretty happy, but this year, for the first time, they went down for several hours on April 15[0] (I know, I know, my fault for procrastinating). I ended up filing via CreditKarma about 45 minutes before midnight, thankfully FreeTaxUSA came online long enough for me to pull up last year's return to get my AGI for the necessary IRS identity verification.

I'll probably try them again next year, but CreditKarma worked out pretty well (they've come a long way since the first version a couple years ago) and doesn't charge for state filing. The big downside is that you have to agree to let them use whatever data they pull in as part of your profile for better marketing etc.

[0] https://twitter.com/FreeTaxUSA/status/1117953907550855168

I used FreeTaxUSA last year and this year. Very cheap, the free support tier was quick and helpful, and they even saved me some time by prefilling applicable fields from last year.

I definitely recommend FreeTaxUSA. I work 1099, and my tax burden was a not-insignificant amount (to me) this year. I went through TurboTax, CreditKarma, and FTUSA’s processes and found:

-Of the three options, TurboTax returned the highest amount owed to federal and state govt

-CreditKarma and FTUSA’s federal totals owed were ~$2k less than TT, and a few hundred $ less owed for state

-FTUSA was the least expensive option of the three, at ~$80 less owed than CreditKarma

I’m not sure why the totals were different, but it was absolutely worth it to go through the process three times. Especially to not support Intuit’s lobbying practices.

I was seriously considering running ads for FreeTaxUSA out of disgust for TurboTax, it is sad that information flows so slowly through the world :/

it can have unexpected benefits too, however. All it takes is one viral movement, like #fuckTurboTax and simple guides to file free (with specific detours around the dark patterns) could spread nationwide in a single afternoon. It's just a matter of capturing enough peoples' attention.

been using turbo tax forever, no more!

if you are CA resident and don't have a very complicated tax return, you could file the state for free using Franchise Tax Board's CalFile.

not to defend turbo tax but you can download the tax return as a pdf when you file.

Not anymore. They paywalled previous returns which were free for the past 5+ years.

I'm no TurboTax apologist, but really? I think you always have access to the PDF versions of past years' tax returns upon signing in to your account.

Just tried it again:

> It looks like you need to pay first to instantly access your TurboTax returns

> For instructions on how to access your returns, click help in the upper right hand corner of your screen and type “Prior Year Return” into the search box

and when I do that:

> To access your prior year return before you file, you have to:

> Be in an upgraded version of TurboTax (or add PLUS to TurboTax Free Edition).

The fact that it makes you search their help system for the answer to your question is just the icing on the cake...

Interesting. Now that I think about it, maybe I've only attempted to do this after paying for the current year's software. I also pay for the self-employed version, which might play a part.

My original thinking was coming from going through the mortgage application process last year, and I was able to retrieve my previous PDFs mid-year without a problem.

It’s especially egregious since the IRS will give you a transcript for free.

TurboTax will also give you the complete return free... if you download it right after you file it.

(This sort of thing is why it's a good idea to do just that regardless of which service you're using.)

I had the same experience. They hold your previous years' filings hostage for some fee. While I admit it was my fault for not having my previous 1040 handy at the time (It was somewhere "safe" and mildly inconvenient) this practice surprised me.

The real dark pattern is their ability to bribe the Congress into preventing IRS from implementing free filing.

Nah, you're missing the forest when looking at the trees. Go bigger. Why the hell is the tax code so damn complicated that it requires certified experts and special software to perform personal tax filings? I can see the case for a complex code for business taxes since there are many different industries that have different rules. But personal returns should never, ever have such complicated rules. And that doesn't mean I agree with business taxes being complicated, merely that the argument is much more reasonable.

> Why the hell is the tax code so damn complicated that it requires certified experts and special software to perform personal tax filings?

My response is:

>Nah, you're missing the forest when looking at the trees. Go bigger.

Why are we even having to file our own taxes? The IRS already checks everything. They have all the information that you enter into these systems (in fact, turbo tax has frequently had my W2 before my employer gives it to me, as well as many other documents).

So having us, or some middleman, doing it is double work. Let the IRS do it (because they determine if there is fraud or not), they send you a copy and you send it back either as is or with modifications.

If taxes are done this way who cares how complicated it is? (I'll hedge that in that it is harder to check the IRS's work, but I think less people care about this)

Stolen from Twitter [1]:

"Government: You owe us money. It’s called taxes.

Me: How much do I owe?

Gov’t: You have to figure that out.

Me: I just pay what I want?

Gov’t: Oh, no we know exactly how much you owe. But you have to guess that number too.

Me: What if I get it wrong?

Gov’t: You go to prison"

[1] https://twitter.com/jordan_stratton/status/11181414550616719...

I'm very happy this sentiment is becoming more common. It is just insane when you think about it.

I don't think the IRS sends people to prison for filing incorrectly. There's a difference between misreading the instructions and “willfully [making and subscribing] any return, statement, or other document, which contains or is verified by a written declaration that is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter.”

You realize that only a portion of people get audited right?

Sure, your government could calculate everyone's taxes but I'm guessing those taxes would need to go up...

The IRS does in fact compare the data you send them to the data they have. Presumably the IRS, famous for it's computer system, isn't hand-checking every return.

The government does exactly that for the majority of tax residents in most countries in the world. US, with its Byzantine tax return system, is an outlier.

Try filing your taxes using different numbers than on your W2/1099 and see what happens.

I guarantee you'll get a discrepancy letter.

Why are we even having to file our own taxes?

Supposedly a political gambit from the right. The idea is if paying your taxes is painless, you will cease to notice them. But the more painful paying them becomes, the more attention you will pay to what you are paying, and then the more you will object & vote to lower your taxes.

I've heard this too, but also that Regan supported this style of taxing. Which seems like part of the Republican ideal: cut out the middle man.

A Planet Money episode went into this. It's basically:

- We (R) don't want taxes

- We will make filing taxes the most cumbersome thing possible

- People will hate taxes

I helped my sister do her taxes this year, since it was her first year. We just used the H&R block software since that is what I used to mine.

They rejected her return because I kicked two of the numbers on the EIN of one of her employers. The rejection was quick too, as we got the email about 20 minutes after submitting the return.

I always knew that the IRS checked your return, but I always figured it was something that eventually happened. I didn't think they checked everything as you submitted it. I don't know why I though that. Guess I pictured the IRS computer as an old IBM S/360 with core memory that did everything in batches.

> I don't know why I though that. Guess I pictured the IRS computer as an old IBM S/360 with core memory that did everything in batches.

I think that idea is common. But why wouldn't they automate it with modern(ish) hardware? It saves them money to do that. Just like it saves H&R block by creating a program. In fact I'm more surprised that H&R didn't flag it before you hit submit.

There's something to be said for making sure the government is doing it accurately. I bet there's a lot of people for whom the IRS is wrong about. Also, if you have other income with no W2 it needs to be reported.

> There's something to be said for making sure the government is doing it accurately.

>> Let the IRS do it, they send you a copy and you send it back either as is or with modifications.

That's why you check it.

And to respond to a possible next question, do we trust TurboTax (or others) more?

> Also, if you have other income with no W2 it needs to be reported.

All those other forms that are handed to you are ALSO already handed to the IRS. For example the 1099. The W2 was an easily verifiable example of how they already have this information before you receive it. The gov already has copies of all those forms. So really as tax payers we're paying for the IRS to do our taxes and we're paying for companies like TurboTax to do it as well (assuming you don't do it yourself)

It's a bit more complicated than that. For example, rental income and capital gains on sales of property or owned items don't typically have reported forms associated with them. But for probably 90% of tax filers, the IRS should already have everything it needs and know the exact amount owed.

That's fair, but I think if it works in 90% of cases that's a huge win. And it seems like it'd be pretty easy to close that gap (with multiple solution methods).

100% agree. A simple "here's what we think you owe" postcard for 90% of people and a "we think you might have unreported income based on your bank transactions - please fill out a full 1040" for the other 10% would be a massive improvement over today's system.

Right now the system is that everyone gets a "we think you might have unreported income" and I don't see any problem with that.

What I don't understand is why we can't have the IRS running their own tax prep website. The government seems to be capable of running other websites just fine.

You don't need an expert to file a personal return.

But, the core problem is that in the US we use the tax system as a method for distributing subsidies for various things. Buy a solar panel? Instead of writing you a check, we give you a tax credit. Have a kid? Tax credit.

You could certainly simplify the act of filing taxes, but HR Block and Intuit lobby heavily against that. As far as moving away from using it as a distribution mechanism for subsidies, that complexity could be removed from the tax code but it will get pushed somewhere else instead. I think most people would prefer getting their child tax credit through taxes than having to apply at a welfare office and get a check.

What complicated rules? The basic 1040 is perfectly straightforward, even if you have a few sources of income or special deductions/credits.

If you do it quick and dirty, then yeah. But I am pretty sure most people would find even the 1040 a bit intimidating. The problem is that the tax code is more than 75,000 pages long. No one knows all of it and there are parts that are up to interpretation and self-categorization. If you want to basically ignore all that (legally) you can go the quick and dirty way and just take the standard deductions and exemptions and not itemize or claim anything and the government will have absolutely no issue with that. But to do it "properly" for most people - where properly means getting the most back that you can legally get back - then it's quite cumbersome and involves a lot of reading.

For example, my tax situation is not terribly complicated. But looking at what I paid my accountant to do, there's precisely 0% chance that I would be able to do what he did and get back as much as we did without spending weeks of my life reading tons of IRS regulations and rules. This is exactly why I pay him to do it for us, and exactly the core of my point - doing it right and getting back the most is not easy at all without assistance whether that be software or an actual licensed professional.

> But to do it "properly" for most people - where properly means getting the most back that you can legally get back - then it's quite cumbersome and involves a lot of reading.

I would bet that the majority of Americans get more back through the standard deduction than with itemized deductions.

Agree, but there's more than just itemization that can be done.

Agree, but there's more than just itemization that can be done.

Cool. Like what?

Capital losses, correcting of cost basis for employee stock purchase program shares, handling multi-state income...

Just curious: how much do you pay your accountant? A single federal/state personal return done by a pro goes for anywhere between $400 and $800 around here, compared to $80 or so with TurboTax. I can’t imagine the difference between an accountant and me doing my taxes to be more than that, especially with a “not terribly complicated” return. Are your taxes really hundreds of dollars less just from hiring a sorcerer to do them?

I used to use TurboTax and painstakingly enter everything imaginable and read everything to make sure I wasn't missing anything and would consistently get back around $4,500 to $5,000 in total between Federal and state. Using him, we got back $6,500 total. Also, with the Trump tax changes taking effect, a bunch of coworkers of mine said they got screwed and got back like half of what they used to get back. A few said they were about on par. We got back more than usual.

He actually just does them for free because my wife has an LLC in her name and we pay him to do the LLC taxes and other stuff. And he said the hardest part is doing the LLC work and we were already paying him for that - so since our returns were actually quite simple he'd just file them for us because the hard part was done (and paid for). Not sure what it normally goes for. I think you're correct that it's around $400, though. And in that case, we definitely net out much more than the $400 we would be paying if we were paying. I'm sure every situation is different, but for us it's a clear win. And if you're wondering - no we aren't funneling losses through the LLC or anything like that. The LLC is profitable and only increases our income which is why we figured we would get screwed like my coworkers with the tax changes, but somehow did not.

Comparing the refund amount isn't very informative. Effective tax rate or dollars paid is a better comparison, especially in years like this one where the witholding tables got kinda weird so lots of people over/underpaid their taxes over the course of the year.

Good point. I took a look. He appears to be 0.5% more effective than me doing it myself with software. Doesn't sound like much, but it's far more than the $400 or so we would normally be paying for this.

EDIT - 0.5% meaning my effective tax rate is 0.5% lower.

Wow, does he provide any explanation of the delta between the two returns? Side by side comparison of what’s being filed?

I ask because I once did go to a CPA, after first filling out the forms myself. The tax bill he computed was identical to what I came up with, so I concluded he provided no value over doing it myself!

He just files for us so no side by side because I'm not going to do it in tandem to compare because that's what his job is. But I think for us the reason is that he plans in advance what we should be doing during the year to minimize the tax impact on the business side of things - i.e. do this now, do that later, and do that other thing next year, take this disbursement now, pay this estimated tax, write off that loss now, etc. So I think it's more that the critical stuff is done throughout the year rather than just doing a post-mortem - proactive rather than reactive.

For the overwhelming majority of people, the standard deduction will be way more than an itemized version. It sounds like your accountant went through and found some deductions/exemptions in the overly complicated tax code that wouldn't exist in a simplified tax code, so you would have paid more. That is, unless your version of "simplified" means "only those parts that benefit you".

The notion of deductions (Schedule A) is complicated enough. I did not know, for example, that state income tax was deductible (pre-tax reforms). If I hadn't just happened to use a tax software (I almost never use one), I would have been overpaying in taxes.

Now of course, once I learned this, Schedule A was a breeze. But it's not something I expect a common person to know, and it's unfair that some of them may be overpaying in taxes due to a (nontrivial) piece of knowledge.

And then I'm always wondering if there are any other deductions I should be aware of.

Unlike any of my w2s, my -DIV forms look completely different with different boxes and different names for these boxes. Some have a dozen boxes, some have one or two. Some dont even send me a proper form but an “equivalent” or something to that effect. Every time I file taxes its a gamble that I parsed the form I got from the brokerage correctly.

The complexity grew over time. Democrats want to add more taxes or tweak the distribution in favor of progressive policies, not remove old taxes. Republicans want people to hate taxes so they can slash them (mostly for the rich, i.e. regressive taxes).

Thus, no one is simplifying, for their own reasons.

But how can I incentivise people to do things like buy hybrid or electric cars, solar, etc without tax breaks, and how do I do tax breaks without complicated calculations based on laws pseudocode) and a bunch of other numbers?

I'm in the camp that there should be no incentives for taxes for anything. Similarly there should be no difference in filing married vs separately or with children.

To me it just feels wrong to incentivise living a certain lifestyle by getting a discount at just existing. It is great when it incentivises the things you want, such as hybrid cars or something, but what would happen if someone wanted to give you a discount for purchasing gas cars when they become less common because of relations to the oil and gas industry?

Or maybe tax incentives for purchasing private telecom service if/when municipal networks ever become commonplace?

If you they can lower tax liability for a certain amount why not lower it to the actual level needed across the board instead of keeping some cushion to give away coupons?

It depends on whether you subscribe to the progressive ideology that people should be encouraged to do things that we see as good for them. For the record, I do. But if we decide that we want a society where more people make the uninformed decision to buy a gas-powered car or a diesel generator because it's understood to be a social good then that's fine. That's precisely what that tool is meant to be used for.

Whether or not we can imagine a world where buying a gasoline-powered car or private telecom is considered a social good is less of an issue than whether we want to be able to incentivize those things should they become necessary.

The point is they aren't all based on societal good. The ones we use as individuals and like might be, but how many corporate tax incentives exist that are bad for everyday people?

It shouldn't be the IRS's business to reward people. If there is a reward for doing X then there should be a fund specifically for giving money to people in those scenarios completely independent of taxes.

Its much more transparent to say "we have a fund for X, mail us the required proof and we will send you a check", then it is to add layers and layers to the tax code. That also means everyday people are aware of what our representatives are arguing about and the dollar amounts being held responsible for the programs.

Then we get simple taxes without all of the itemizing nonsense.

I'm in the camp that there should be no incentives for taxes for anything.

Would you argue that potato chips shouldn't be taxed, or that produce should be?

I wasn't talking about sales tax, only yearly tax filings. Anything that is on an itemized tax return should be moved elsewhere into programs specifically for giving money for that instead of being given a coupon off of what you owe.

If there is some reason you report produce on your tax documents then no, it should not be there.

Gotta pass out special privileges. With complexity comes opportunity.

One of the most complexity inducing areas of the tax code, The Alternative Minimum Tax, has a lot more to do with taxing certain people extra than handing out any special privileges.

That and form 8960 (Net Investment Income Tax Individuals, Estates, and Trusts) are both direct contradictions to you assertion.

The fact that we still tax capital gains way lower than personal income should already tell you volumes about who has special privileges in the tax code.

There are a lot of very good reasons to tax capital gains at lower rates than ordinary income. Among them:

  - The problem of notational vs real gains
  - The fact that capital gains are already taxed once at the corporate level
  - The fact that taxing capital gains is a tax on savings and we want to encourage savings and investment
  - All of the theory on how differentiated taxes on present vs future consumption is a flawed idea
    (see https://en.wikipedia.org/wiki/Optimal_capital_income_taxation)
Note that it's not just in the US that capital gains are taxed at a lower rate but in virtually all other modern economies. It's not just some trick.

These are all very good reasons, but in practice it mainly means that the richer you are, the less you pay in taxes as proportion of your overall income, and there's a point past which taxation is essentially regressive as a result. So any such argument has to demonstrate that the obvious disparity that already exists in that arrangement is less of a problem than any of the hypothetical problems from taxing capital gains more.

Especially since there are countries that do tax at least some capital gains at the same rate, and they don't seem to be doing appreciably worse than other countries in a similar economic bucket that do not. Indeed, it seems to be more popular among economically liberal countries with flat income taxes.

there's a point past which taxation is essentially regressive as a result

Perhaps, but the US is not past that point. Every level of income pays a higher rate of taxes than the level below it according to IRS reports.

Separately, none of the issues I listed are hypothetical.

> Every level of income pays a higher rate of taxes than the level below it according to IRS reports

Does their definition of "income" include capital gains for the purpose of those reports? I don't see how this could possibly be true if it does, given that capital gains constitute the largest part of overall income past a certain point on the scale.

Does their definition of "income" include capital gains for the purpose of those reports?



It doesn't show up in their data, because they cut off at 0.1% - the hump is slightly higher than that. This shows where it was as of 2014.


I'm not sure where it is today, exactly. But it's easy to see that it's always going to be there, simply by virtue of increasing proportion of capital gains at higher income levels.

While Intuit definitely feeds Congress some money in support of their corporate goals, the lack of free tax filing is probably more Grover Norquist's fault. He strongly opposes anything that would make paying taxes easier, and he has a lot more influence than Intuit.

Norquist is just twisted, sabotaging the government to convince people that it doesn't work. It would cost the IRS almost nothing to send out pre-filled forms, and giving them enough money to audit the wealthy (i.e. ensure they aren't cheating) would more than pay for itself.

While I think the IRS should do this, it would require a lot of additional work and resources, as well as a reshuffling of filing deadlines throughout the system. The IRS currently does not have all the information it needs to prefill forms, and inly has the resources to review a fraction of the 140M+ returns filed each year.

I don't know why so many people in this site seem to think this is a trivial thing for the IRS. 100% review after the fact isn't even feasible right now, let alone having the information in January.

So, another thing that the richest country in the world can't afford, despite the fact that just about every other country can do it.

First off, I never said anything about the US not being able to afford it. I said the IRS can't do it with their current resources. Big difference.

Second, the IRS processed 247.8M total returns[1] and 3.59B supporting documents[2] in 2017. While I think the IRS could do a better job (like, well, the entire rest of the US federal government), what other tax system processes anything near that volume?

Also, I'm not buying "just about every other country". Not even close. For starters, I find it hard to believe that more than a handful of African countries manage to do it.

[1] https://www.irs.gov/pub/irs-pdf/p6292.pdf, page (3)

[2] https://www.irs.gov/pub/irs-pdf/p6961.pdf, page (4)

How about "every other developed country"?

The volume doesn't really matter, because it scales linearly with population - a larger country just needs more bureaucrats, but it can afford them because it also collects more taxes from more people. There's nothing unique in that regard in US.

But if you want something in the same ballpark, we can look at, say, Russia (population of 150 million), or even at Nigeria (200 million).

Agreed. In fact the IRS would likely save money, because of all the followup enforcement actions they could avoid.

There may be many arguments in favor of having the IRS sending out pre-filled-in tax forms, but this one just isn't true:

> It would cost the IRS almost nothing to send out pre-filled forms

Enhancing the IRS databases to actually plug in the information used on a typical tax return almost certainly would not cost "almost nothing." Back when it existed, less than 20% of people filed a 1040-EZ (the simplest tax form). That means you need something beyond just "plug in the numbers from the W-2" for the vast majority of tax filers. The IRS almost certainly doesn't have all that machinery already. Some of that data, the IRS doesn't have at all. (How many children live with you for purposes of the EITC?)

The US government currently takes in about $1.7 trillion in individual income taxes per year, so even spending $500 million to pre-fill forms would be almost nothing (0.03%). Heck, that's less than a useless aircraft carrier or a Facebook consent decree violation.

The IRS already has W-2s and 1099s, which cover ordinary pay and retirement investments, and enough money has probably been automatically withheld already. Remember that this isn't automatic billing, but automatic filling. They'll send you the form, and you can insert the number of children. If your taxes are much more complicated than that, you can probably afford TurboTax.

For the record, the IRS (in partnership with various tax companies) already providers for free filing for people making less than 66k/year.


The whole point of doing it this way - via the tax companies' own services - is to make it an advertisement for those companies, so that once somebody starts earning more, they would preferentially pick them. It's also a form of mild lock-in, since already having their return history etc there makes filing that much easier, creating an incentive to pay.

In the meantime, the same lobbyists who created this scheme are trying to prohibit IRS from developing its own free filing system:


The proposals I've seen for having the IRS prefill returns are that they'd just do the equivalent of the 1040EZ for you. If you want something more comprehensive than that, then you'd still have to do your own taxes.

I think that's a very reasonable approach.

> Back when it existed, less than 20% of people filed a 1040-EZ (the simplest tax form). That means you need something beyond just "plug in the numbers from the W-2" for the vast majority of tax filers.

Or it means that lots of people who qualified to use the 1040-EZ didn't know about it.

Or it means that lots of people who qualified to use the 1040-EZ kept on filing 1040s because that's what they were used to doing.

Or it means that lots of people who qualified to use the 1040-EZ were using tax software that just generated a 1040 for everyone, regardless of their eligibility to use the 1040-EZ.


The IRS releases aggregated information on what % of people take various deductions or use various aspects of the different tax forms. This information does not support your various alternative hypotheses.

For the record any of the following disallowed someone from using the 1040-EZ

  - being over the age of 65
  - having any dependents/children
  - making over 100k in income
  - claiming any deductions at all
It was a very limiting form.

Adding one more

    - claiming EITC

Lower income people with cash business are far more likely to cheat than wealthy people. (Of course the return for the IRS going after the small player may not be worth it.)

> Lower income people with cash business are far more likely to cheat than wealthy people.

The statistics I've seen indicate the opposite. But I suppose it depends on how you measure. Perhaps on a per-incident basis, you may be correct. But I don't think you're correct if you measure by the amount of money.

"Likely to cheat" usually means something like "the probability of a person cheating is higher," meaning it would be based on the number of incidents, not on the amount of money.

If the poster has meant the amount, they might have said "Lower income people with cash businesses cheat more than wealthy people" (which is ambiguous) or "The IRS loses more money to low income cheaters with cash businesses" (which is unambiguous, and, when you phrase it that way, truly sounds ridiculous given the high level of wealth inequality I would expect one wealthy cheater to cheat the IRS out of more money than all of the other cheaters in the world)

Yes, your interpretation is likely the correct one. In terms of societal impact, I don't think it's the important one.

Maybe it is the important one. There's a culture of cheating among many lower-income self-employed workers, and they feel they're "entitled" to it.

That may depend on what your goals are. To put myself in the IRS' shoes, their goal is to minimize the amount of revenue lost due to fraud. In that view, the important thing to do is to go after the people who are cheating them out of the most money.

If the goal is culture change, that may be different -- but the IRS is probably the wrong entity to address it.

I will say that I have not noticed that lower-income people have any greater sense of "cheating is OK" than higher-income people. My observations are not necessarily representative of the wider culture, but it looks to me like the percentage of people who think cheating is OK doesn't change based on income.

That's exactly why I said "(Of course the return for the IRS going after the small player may not be worth it.)"

Do you have any evidence to support this? It could be true, but any cash business owner (low income or not) is likely to cheat precisely because it's not feasible for the IRS to prove exactly how much cash income you made.

Here's one data point. 24% of the people who claimed the "EITC" did so fraudulently (or, at best "in error") No high earner can claim this.


It's the inevitable consequence of strengthening corporate rights relative to individual rights: corporations take ever larger ownership of government.

I dont even understand how corporations have rights... My understanding is that in a democratic system the individual voter is the unit of currency.

Sadly this gets muddied in a sea of "representatives" and lobby groups which claim to represent people...

Because corporations are just groups of people operating as one legal entity as is required for many ventures which would be too expensive or risky for one person to take on by themselves. Do you think corporations like the New York Times should not have freedom of speech? Do you think the government should be able to arbitrary power against corporations like Planned Parenthood? Should governments have arbitrary power to limit what information corporations like your local internet service provider can transmit? Should whatever political party who is currently in power be able to steal all the money from the opposing parties corporate entity?

Its good to keep in mind corporations include a large class of entities like public colleges, newspapers, internet providers, charities, political parties, organized religions, public interest groups, and of course for profit businesses. Saying all these entities should have no rights is advocating for the state to have unchecked and arbitrary power over all of them.

> Do you think corporations like the New York Times should not have freedom of speech?

I will admit i have not thought long and hard on this. But on the surface it seems like the answer is "Yes".

But the individuals working in those corporations do. So when a journalist submits an article their free speech is protected as an individual rights extended through the corporation. Similarly for property rights...

I think the idea i'm trying to get at is that these corporations shouldnt have influence beyond the voting power they represent, ie the people.

Speaking of ideals, for example a hypothetical single employee business w/ billions in wealth should have 1 unit of political power, whereas a public interest group with a few thousand of dollars but 100 people should have 100 units of political power.

Edit: Corrected my "No" --> "Yes" because the question sentence was confusing

Regardless of the reasoning behind Citizen's United, one outcome has been an extraordinary increase in corruption.


It is immaterial whether the increased corruption was an incidental side effect, or the whole point. From the perspective of the individual citizens being exploited, it doesn't matter whether it was the government exploiting them or a corporation exploiting them after having bought the franchise from the government.

But the NYT itself still makes legal decisions, like which articles to run. Lets say they decide to run a particular article which is later claimed by the government to be libelous. Since the NYT has no rights under your ideal the government could simply find them guilty of a felony without giving them due process of law and end their corporate existence.

I would argue that so long as corporations continue to exist they require a minimum amount of rights, such as a right to due process, or else they just become tools for the state to act without any of the restraints our current system has developed.

You are making a straw man argument. No one is saying "corporations should have no rights of advocating and the state to have unchecked and arbitrary power over all of them."

The idea is, should corporations have all the same free speech rights as individuals, or can we limit them? I can think of at least one reason why maybe we should limit them: accountability. If I yell fire in a crowded theater I can be charged with a crime. A corporation can be as well, but in practice enforcement is problematic. There is also the question of moral accountability. If I write an Op Ed saying kids should smoke cigarettes I have to live with it. If a company runs an ad campaign it's hard to know who really is responsible.

But I understand why people disagree. This isn't a simple issue.

Your argument seems to be that "since some speech can be prohibited, it isn't correct that corporations have absolute free speech rights."

That's absolutely true. Neither a corporation nor an individual can engage in libel, some types of obscenity, true threats, etc. Furthermore, there are indeed cases where corporate entities are treated differently than individuals, and no one seriously argues that it's inappropriate to do so (there's no corporate right to bear arms, for instance, and corporations don't cast votes in elections). On the other hand, there are obviously very important situations where a corporation must be treated as a legal "person" (to sue and be sued, to own property, etc.)

The crux of the argument that won in Citizen's United is that, among all types of speech, it's political speech that must be jealously protected. Even though there are serious arguments against allowing corporations to participate in campaign-related speech, it was found that there was not enough of a compelling government interest to overcome the strict constitutional scrutiny that is required when the government seeks to limit political participation. As corporations are just groups of people who form an entity to pool resources and share in ownership, those groups of people do not lose their rights because they pick one social and legal structure over another (for instance, a school, non-profit, or a church). The important example was of a corporate entity producing a video that was critical of Hillary Clinton within some amount of time before an election.

The "you cannot yell 'fire' in a crowded theater" argument makes it seem as if others are denying that the government can regulate any speech, but that is not true, people understand the current state of the law.

I think I can rephrase your argument as: "I cannot shout 'fire' in a crowded theater, so obviously some speech can be prohibited. Therefore, since we're only talking about where to draw the line, it can be drawn over here where I'm advocating it be drawn." This ignores distinctions between situations that have been acknowledged for a long time. You cannot shout "fire" (falsely) in a crowded theater because it would be illegal to say something false when you know it is likely to cause immediate harm. It is also illegal to do other things that are kinda-sort-of free speech related if you look at them the right way -- you can't lie for financial gain, you can't lie to obstruct an investigation, you can't lie under oath, you can't file a false police report, etc. etc. Because these are all true, it doesn't mean that in a different situation speech can necessarily be regulated because we've already crossed the line out of absolutism and into situationally-dependent regulation.

My argument is that corporations are uniquely effective ways to avoid accountability for your speech. So perhaps that speech should be regulated differently than speech directly attributable to an individual.

Reading your post helped me think of a more concise way to say this. So thank you. And again.. I am not really sure and I see both sides.

The irony of strengthening corporate power over government is that corporations will naturally rush in to occupy the most malignant aspects of government.

In the case of Intuit, the government opts out of providing a service so that a corporation can seek rent.

> Because corporations are just groups of people operating as one legal entity

A corporate entity has rights and powers that ordinary people do not, so they are more than "just groups of people". They are independent entities all their own.

Further, they can only exist because the government grants them that privilege, and the government can technically place any restrictions they like on them. In the past, the government used to require that the corporation serve the public good as part of the conditions for their existence.

I don't think it's right or accurate to characterize corporations as just "groups of people" and therefore they should have the rights of people. The law and the courts don't think so, either, which is why corporations are treated differently (with fewer rights) than people are.

Curious as to what extra rights you believe they have?

Well, corporations have a level of immunity to punishment, for example. When a corporation breaks the law, the worst that happens to them is a fine -- which just makes it a cost of doing business. The corporate shield ensures the no human in the corporation will suffer consequences unless they also, individually, broke a law.

That isn't true, corporations can be charged with crimes and they can have their corporate charter revoked. Human individuals working for a criminal corporation do not have to directly break the law to face criminal prosecution.

> The responsible corporate officer (RCO) doctrine holds that a corporate officer is indirectly liable for a subordinate's criminal conduct when the officer is in a position of responsibility. The officer can be prosecuted if he has the authority and the ability to stop the offense and yet fails to act.

The RCO doctrine does not require proof that the officer either participated in or authorized the crime.

It's more accurate to say "individuals don't cease to have rights just because they act through a corporation." There are some rights that don't make sense applied to a corporation, and people don't have those rights when acting through a corporate form. (E.g. the Fifth Amendment right against self-incrimination.) But for most rights, deeming them inapplicable when people are acting as a corporation would be an extremely effective way to eviscerate the underlying right.

The ACLU, Sierra Club, etc., are all corporations. They need to be corporations in order to enable their fund-raising and nationwide scope of activities. Nobody really thinks the ACLU shouldn't have the right to free speech. (Note: The ACLU was on the winning side in Citizens United.) What people are opposed to is the content of the speech that some people speak when acting through the corporate form. (Citizens United was about a movie critical of Hilary Clinton.) But if free speech means anything, it means you can't single out speech based on content.

I don't think corporations shouldn't have _any_ rights, but I don't understand why they should be allowed to donate money to politicians. They can't vote, so why can they buy influence? All of the individuals owning the corporation _can_ vote so why does it not suffice that they themselves can donate with their own money?

Some corporate rights make a lot of sense and are practically necessary. The right to enter into contracts and make use of the legal system, for example.

In reality, the law and the courts do not really consider corporations to be the equivalent of people generally.

Corporations are just the proxies of their owners. The corporation has rights on behalf of those owners.

> Corporations are just the proxies of their owners.

This is not actually the case. Corporations are entities separate and independent from their "owners". That fact is why there's such a thing as a corporate shield that mostly prevents the owners from being held responsible for the misbehavior of the corporation.

> Corporations are just the proxies of their owners.

Corporations are proxies for some combination of their shareholders, their management, and their chartering government, but not simple proxies for any of the three.

I can't imagine how horrible a single captive solution from the IRS would be compared to one spawned by the competitive marketplace.

Now why our tax code needs to be so complex that it requires software like Turbo Tax is certainly a fair question.

I would imagine it would look like European solutions; which pretty much work perfectly vs whatever bullshit a market would put out.

> I can't imagine how horrible a single captive solution from the IRS would be compared to one spawned by the competitive marketplace.

I see literally no reason to think the IRS would do a worse job of it than the commercial services.

But regardless of that, there's no reason why the IRS couldn't provide services alongside the commercial services. It's not an either-or.

Of all the government agencies, I think the IRS actually has one of the best track records for caring deeply about UX. Compare the federal tax forms and instructions to just about any state tax forms, the federal forms are miles ahead in terms of usability. Relative to the complexity of the tax code itself, of course (which the IRS doesn't control).

And it'd probably cost a billion dollars. Government contracting is way more corrupted than the shenanigans alleged by this article.

Remember the healthcare.gov debacle? TurboTax isn't that much and it saves time and headache. People think in binary of free vs not-free while not considering the cost of time.

It "saves" time that is taken away from you by intentionally complicated tax code and filing procedures, that are pushed by lobbyists hired by the same company that sells you TurboTax.

So we're blaming TurboTax for a corrupt government. If the government is supposed to represent the people, it's doing a shit job, and I can't blame TurboTax for cashing in. About the only thing we can do boycott TurboTax.

When corruption involves two parties, we generally blame both of them, yes. Giving a bribe is illegal, not just receiving it.

But will the UX/UI actually be good and how will we hold them accountable? My city's site for filing is absolutely terrible and I'm surprised I can even make it through to the end and submit payment. I'm actually surprised they have online filing to begin with. I'd rather pay for good UI/X than a crappy experience that wastes even more of my time.

The point is that it is an option.

But return free filing is honestly the goal for most people and it already exists in many countries.


The real dark pattern is the propagation of antisocial behavior that spreads the idea that you don't owe society anything.

Society isn't the government, though. This conflation is a nice trick when arguing, I'll give you that.

Government is elected by society to represent. Yes governments are flawed and inefficient and corrupt at times, but generally speaking governments do an acceptable job at providing basic services to most people. There's countless examples of them fucking up but they get more right than wrong.

> Government is elected by society to represent.

Some people are selected by some other people, neither representative of society as a whole.

... to pay for public services you're using? Roads, schools, firefighters? Of course, I'm not happy with plenty of other things my taxes pay for (Predator drones, e.g.), but I'd like to think that can be fixed via legislation, eventually.

And if I'm not using them?

You're not using or deriving benefit from the existence of roads, schools, the EPA, or the FDA?

Most I don't. And many of them work against me as well.

Unless you've never been outside, eaten food that was grown or raised outdoors, consumed water, used medicine or medical services, lived in proximity to other people or done business with...well, pretty much any business, I think you're mistaken.

The servitude model: after all, anything and everyhting is provided by the state, so the state owns you!

What if you don't live in the country?

Aren’t roads paid for by gas tax and schools by property tax?

In my experience this year, TurboTax prompted me that I could save money by upgrading to a paid plan via taking advantage of some extra deduction. I thought, "if it's going to save me more than I pay for it, why not?"

I clicked through and found that this deduction wouldn't actually save me any money. I then couldn't find a way to get back to the free plan (they only charge you after you file, so this should be possible).

After struggling for a while, I called Turbotax support, which had me download screen-sharing software and kept telling me to press some button to cancel the paid plan, and it wouldn't work, telling me that it wasn't possible to switch back. He couldn't figure it out, couldn't switch it off on his end, and eventually told me I would have to create a new Turbotax account and start over.

Oh, and for the icing on the cake, he never stopped the screen-sharing session, and saw me input my SSN when I recreated my account. (Yes, I'm aware that I'm a fool for not closing it out myself, but I was really stressed, and it would've been professional to end the screen-sharing after we ended the call.)

They lost me as a customer this year because of this exact reason.

I started doing my taxes in turbo tax this year. After a few screens I got the upgrade option for extra deductions and saving money. I clicked ok and got upgraded. I followed through the entire taxes and my return didn’t change. NO WAY to downgrade. Clearly, they got theirs.

I opened up Taxact and filled up their forms and my returns were the same without upgrading (to their equivalent option). I filed with TaxAct and removed my info from TurboTax. I will definitely use them to compare my taxes if I ever have to but I will not file using TurboTax. POS.

To downgrade you need to delete all the info you entered and start over. That's definitely a dark pattern

I had a similar experience. I wanted to compare the results (in terms of taxes owed) from the two plans. As I recall, my only option to get "back" to the free plan was to start over completely.

Same thing happened to me! A few years ago, in addition to my normal job I had some 1099 Misc income. It was the first year I had taxes that I wasn't familiar with, since I wasn't sure how the 1099 Misc would come into play. As I was filling it out, TurboTax prompted me to upgrade to a paid plan, and they estimated they could get me an additional $1200 dollars back on my refund. Even if they are overestimating, paying $80 and getting $400 back is worth it. So I went with it and filled out the new information. I got absolutely nothing added to my refund: $0. It's a ridiculous dark pattern, and I'll never give TurboTax another dime.

The paid plan upgrade is based on which forms you input, not necessarily which deduction you get. So hypothetically, even if your best choice is the standard deduction, they expect you to pay if you have some of those other tax forms.

I guess my question is, if you know the standard deduction is the right choice, can you just not input the tax forms that you don't need for that?

Everyone should just use freetaxusa.com. I've used it for years, the UI looks almost the same as TurboTax and costs like 12$ total to file both state and federal.

Can I point on the inherent irony of recommending a site called "free"taxusa that costs $12 to file?

In Texas, or any other state without state income tax, it's $0. The federal part is always free.

No, you need to file every tax form that applies to you. I assume you are talking about forms like the 1099-B, which TurboTax charges you to file (~$80 IIRC). If you don't file a form and the IRS knows about it, you will have a bad time.

I don't know if the standard deduction is right for me (after the latest tax reform it probably is, but previously my deductions were close to the line so I needed to do my forms both ways to find out)

I wonder if they "fixed" something - I remember them trying to sucker me into the paid plan and there was a way to click back enough/reject their advances to get free again.

I switched to taxact a number of years back because of this shit. They aren’t perfect in the upselling either but at least you can start as many new returns on an account as you want.

I couldn’t import shit from many things anyway so last couple of years I’ve just used excel and the fillable PDFs.

Oh this year wasn't the first time I saw it. They basically tempt you with possibility and then make you redo all your work when you realize they were lying. Stopped using them this year, fuckers.

What?! You can't just "start a new account" can you? What if you used their other services, which they use a single sign on for?

Your SSN is not a password

Well, it certainly shouldn't be, but the corporate machine has more power than I do in what my SSN is used for, sadly.

Hey, just an FYI.

You never have to pay to file taxes. Like the forms are free on IRS.gov. You can fill in the information and mail it in with any money you owe too. There are help guides that step your through the process of filling out the forms as well, like worksheets to calculate deductibles if you need it.

It's very important that you go to IRS.gov and look at your options before you ever pay someone to do your taxes. https://www.irs.gov/forms-instructions

It's good to have free software and keep forms fillable, but we as a society NEED to know how to perform taxes and that the process DOES NOT COST MONEY. You most likely can do it yourself.

The reason we're in the mess now is because people have been so willing to believe that taxes are too hard and impossible for the individual. Who's telling you that you shouldn't do taxes on your own? Look at their motivations.

Nobody has to pay money to file their taxes. Anybody could figure it all out on their own.

But I have a new & deep appreciation for how complicated taxes can get. If you have W-2's and 1099's, it's pretty easy. But holy cow, I ran a rental property and there is a huge step function in complexity when you venture beyond the W-2 & 1099. And that was only just dipping my toes in the pool of business taxes.

So a hired accountant, or a software-accountant (turbotax, h&r block), really can help you out where you might otherwise have to pour over IRS documents every weeknight for months.

Even for people operating exclusively on wages/salary, it's amazing how fast things can snowball.

Did you work remotely for an out-of-state employer? Now you get to worry about the interplay of taxes in multiple states. Did you change health insurers mid-year? Now you're working out how to prove you were ACA-compliant at all times. Did you have some obscure deduction like rent payment deductions from state taxes? Several people I know lost hundreds of dollars this year by simply not knowing that deduction existed.

Obviously, filing with a paid service instead of simply getting a bill in the mail has a cost. But working out what one owes under the current system also has a pretty significant cost, both in hours spent and potentially in dollars.

Several years ago I tried following this advice, and inadvertantly double-reported some income. This was after attempting to read all the relevant instructions and forms. I then spent dozens (multiple) of hours trying to clean up the mess. There probably would have been a more efficient way of doing it, but that's kind of the point. Professionals know their way around the system and understand the vocabulary.

I have no doubt that it's technically possible for anyone to do their own taxes. But if you're inexperienced, it's fraught with peril. And my situation was one that most people would call pretty simple.

Similarly, it's often easy to miss some deductions altogether. Not only is the paperwork often confusing, but deductions are an unknown-unknowns situation where you might never even see the relevant form. Several people I know ran into that this year and overpayed by enough to wipe out 5-10 years of TurboTax fees, which really calls into doubt the cost-benefit of doing them by hand.

And as you said - those people were formula-happy programmers with simple W-2 income from one job. It's the absolute lowest level of complexity available, and it's still easy to get wrong.

It's a tradeoff between money/convenience, or money/time. Of course no one NEEDS to pay the $49 for TurboTax. They do it because it is easy.

The reason Intuit has been able to make so much money is that no one wants to waste hours poring over verbose IRS instruction publications, which are not trivial for a layperson to fill out correctly.

> The reason Intuit has been able to make so much money is that no one wants to waste hours poring over verbose IRS instruction publications

And because Intuit spends a lot of money lobbying to ensure that the IRS won't make things any easier.

I quit doing my own by hand because one year I forgot to copy line 13b of form 123a: to line 26d of form 987d... The software does this automatically for me. I generally think software is slower than doing everything by hand ( I use TaxAct, I don't know how turbotax is different) because of all the stupid waits while it asks questions that don't apply (retirement income...).

New Jersey used to have a PDF form with JavaScript that would copy around all the duplicate values automatically. The only annoying thing about it was that it only worked in Adobe Reader. This year they went to a poorly designed plain PDF form that only let you fill in individual digits for each line item, with tabs needed to shift each place value.

FreeTaxUSA offers a service for $15 that saves me 2+ hours of time, and optionally offers to give me a professionally bound return for $10.

Recently I paid a small business $20 to wash my car. It probably saved me an hour out of my day.

Why is the second business's services more valid than the first? I know how to wash my car, i know how to do my taxes, but I also value my time.

Because the IRS is forbidden from making take less time because of tax prep company lobbying. How much of those two hours are spent giving the IRS the same numbers they already have?

Filing taxes is crazy complicated though. When I got my first job in high school, it was still confusing, even with turbotax (which is free under a certain income). There's so many bits and peices even for individuals with "simple income structure". The vocabulary is unfamiliar, how do I report my savings account earnings? Do I need to if they were only 50c?

My buddy has to report expenses of a certain kind, and it's complicated to do that even with turbo tax too.

Haven't even gotten started on people with crypto-investments, freelancing, multiple jobs, dependants, etc.

Yes you can totally learn that stuff on your own, but there's 0 chance you can expect the general population to be capable of doing their own taxes without messing stuff up.

Have you looked at the OMB filing time estimates on each form? That's a significant investment of time. I've done it many times and I think everyone should do it at least once so they can verify the software's work in the future, because despite what you think software does make egregious mistakes (data flow related, not math) and miss opportunities due to opaque questioning.

But, doing it that way every year is not a practical option for anyone who doesn't already qualify for the free filing options anyway.

It takes hours more to do it by hand, which is way more valuable than $60 for turbo tax.

I want to take this opportunity to mention that the IRS Free Fillable Forms service is completely free for anyone.

It might not be the best choice for everyone, but I found that despite all these tax services' low cognitive load, they ask so many questions with so many steps that the actual time that it takes to file with TurboTax wasn't actually any faster than just biting the bullet and reading some instructions.

Again, I think it's not a great choice for many people but it's the one I'll be using moving forward.

I've looked at that section on the IRS site every other year for twenty, still can't make heads or tails of it. I end up opening another tab and downloading 1040.

It's not much different than logging into any other tax website provider, except that it's less slick and nice, and you have to actually fill out the forms rather than answering questions.

This is the actual direct link to the site in case you actually haven't been able to find what you're supposed to use:


That seems reasonable. However, it looks like a third-party rather than the IRS, which doesn't inspire confidence.

TaxAct has one dark pattern where they slide in a question in the middle where they basically ask your consent for marketing stuff to you. It's confusingly worded in a way to make it sound like you'll unlock additional savings.

But the good part is you can decline that, and the rest of the time they stick to the task at hand. Now they do have separate pricing tiers based on your needs but I don't find that dishonest. In fact they have a quick selector to help you identify which tier you need to get based on your situation.

The entire dark pattern is creating a fucking painful and confusing q+a that is incredibly difficult to go back and edit, instead of just showing me a form to fill out, with hover over info bubbles that show me the actual IRS explanations of each field. But that would show the only reason why we are using them is to e file, because their system is much more difficult than the IRS', and they have been able to keep anything but the most rudimentary e filing off the IRS site.

Next time you use them it will be worse. That's how these things seem to operate.

They are required by law to let you know that you can opt out.

I almost got burned by one of those myself. Until I checked the fine print at the end, I didn’t realize there was a separate $40 charge for paying for TurboTax out of your refund (rather than with a credit card). That can’t cost anything on their end and seems designed to target people who don’t have the money lying around.

I mean, that sounds like a pretty fair service to me: offering short-term credit while also streamlining the customer acquisition process.

A few years ago my finance class had a homework assignment which was to calculate the interest rate you were paying for this "service". It was a good assignment, because there is no "right" answer, because it depends how you define certain values, but all the figures came back with this "service" is like a loan with a 40-80% interest rate.

A 40-80% rate per week!

If it's just regular filing, that's something like $70, and the IRS pays the refund in about a week. TurboTax claims they vouche for the validity of the filing, so there's little risk of it not coming through, and even if it does, they can just say, "oops, we can't file for you until you do XYZ" and boom, they didn't finish providing the service.

So, that's a $40 loan on $70 of principle, or 57% for that week. Annualized -- to make it commensurate with other interest rates -- that's (1.57)^52 = a f---ing lot.

It's a little better than that: 1.57^52 - 1.

R_n = (1 + R_0)(1 + R_1)...(1 + R_n) - 1

It's easier to just use log return:

r_n = r_0 + r_1 ... r_n


r = log (1 + R)

Anyhow, compounded returns aren't the best way to think about this. It's not like they could extend the period and realize the compounded returns.

Sure, that's a pretty high interest rate. If you have the liquidity, you definitely should pay upfront. But it's conceivable that for some (small) segment of the population, that loan is worth it.

Payday loans are a similar situation, it seems exploitative to many/most people. But those people who think it's exploitative are the ones who don't need the service in the first place. If you can avoid it, you should never ever get a payday loan. But if it's between a payday loan and missing a rent payment and living on the street, it's a pretty attractive and rational proposition.

Would it be better that a certain segment of the population not have any access to credit? Or is it better that they have access to expensive credit? Moreover, if they want some (expensive) credit, it's pretty paternal and condescending (and sometimes racist) to say that they aren't rational enough actors to deserve it.

It's not (only) that it feels explorative because of the rate; it feels explorative because they use dark patterns to make it non-obvious that there is a fee in the first place.

It's absurd to compare a simple interest rate to an compounding interest rate on revolving credit.

If it's a fair service then they should be able to be obvious and upfront about the difference between the two options.

Right, especially since it's so counterintuitive -- paying with a credit card usually costs them more so you don't expect that paying out of the refund would be the more expensive option.

In fairness, I may have missed something more obvious in the UX.

> In fairness, I may have missed something more obvious in the UX.

You didn't. It's phrased on purpose to not make it sound like you're paying for this "service". And the lettering does not stand out (compare to say all their annoying ads to make you upgrade).

Wrote this up last year describing some of these tactics employed by Intuit:


Very nice writeup!

This kind of condescending flow is exactly why I stopped using TurboTax about 10 years ago. Apparently it got even worse since then.

You can still file free if you make over $66,000 per year, it's just a more limited edition. I have used it for years with no problems. If you are comfortable with filling out the forms yourself and reading the accompanying IRS form instructions, you should be fine. It's federal only.


Protip: some of the forms do the math for you, but some don't. Also, there are no worksheets available. So, I use a spreadsheet to do the math and calculate the worksheets.

Credit Karma does a good job providing free federal and state tax filing.

Disclaimer: I work there but not on tax

If you work there, maybe you can pass this along to the right people: I tried creating an account for filing taxes, CK told me my SSN needed to be unfrozen (that shouldn't matter for tax filing purposes), I temporarily unfroze my SSN and kept retrying to create my account on CK. For the next two days, it kept telling me my SSN was frozen. Then, I gave up!

I’ll definitely pass that along. Thanks for taking the time to share.

I don't work at Credit Karma so I can second this, disclaimer-free!

Not for me, since moving to a different state within the year is apparently too complicated for them.

I hate to look a gift horse in the mouth, though.

If there was a way to sign up with a VoIP number I would definitely try it.

TurboTax has a pretty troubling history of working against the best interest of taxpayers, from stuff like these dark patterns to their constant lobbying to ensure that the IRS won't offer any taxpayer services that would be of wide benefit to people.

I know very little about filing tax and I was helping someone equally clueless this year. The 10+ prompts and tricks to try and get us to upgrade was fine, but we suddenly ended up in a page that was asking permission to request free credit score. I wanted no part of it and the person with me was frustrated enough and wanted to just accept it. Clearing browser and re-logging was the only way to get out of that screen and it put us in the initial page. No idea what that was about but I figured that is the `price to pay` for dealing with free software.

For us Canadians out there too, SimpleTax[0] is complexity free as well! Super simple design, easy to file. We've used it for a while.

[0]: https://simpletax.ca/

SimpleTax is awesome!

Definitely experienced this helping a friend who qualified for FFA. I ended up contacting them on Twitter and they gave me a promo code after recognizing the site was misleading.

The solution probably entails making it illegal for them to upsell folks below the income bar, and require them to provide the free filing option based on the forms entered.

> "The solution probably entails making it illegal for them to upsell folks below the income bar, and require them to provide the free filing option based on the forms entered."

In the current environment where they appear to have enough political influence to block the IRS from allowing people to file their taxes online, it seems unlikely that any constraints will be imposed on their pursuit of profits.

Realistically, if they can be required to provide free filing to eligible people, a significant benefit to them over the IRS helping directly remains intact: Most people who file their taxes for free will use the same app once they're no longer eligible.

Or people could, like, not use TurboTax if they don’t like it. My tax returns are pretty simple (my only income source is my salary) and it’s trivial to just file them myself. People have some mental block about taxes even though that for 90% of people, filing taxes yourself is trivial.

The state to which the US tax system is an absolute hellscape becomes crystal clear when/if you move abroad. I currently live in one of those small european countries touted (often accurately, sometimes not) as a utopia, and sure enough filing taxes is basically 99% automated. The more complex your income the more work is involved - of course - but for the vast majority of users who own 1 piece of property and derive most of their income from an employer, it's basically ready out of the box.

The hardest part for me - by far - of filing income tax is and remains filing my US taxes, which unsurprisingly becomes extra complicated and burdensome as an overseas citizen.

We can only dream of the day when the bizarro hydra that forms the anti-tax-reform lobby is somehow defeated, but that realistically feels like a not-in-my-lifetime kind of deal.

I used the Free Fillable Forms to file my taxes this year. However, it seems that the backend for the free fillable forms is provided by Intuit. It seems you really can't escape them unless you file on paper and mail in the forms.

Yep, I fell for the 'audit threat' and paid $19. Even if I was pretty confident that I wont get audited or even if I did there won't be any problem as my tax return is as simple as it gets and I have nothing to hide.

I have never used TurboTax, but I have used H&R Block online filing every year of my adult life, and haven't had any issues.

One year I was curious about my refund (thought I was paying more than I should) and brought my return in to an actual brick & mortar H & R Block office, and they told me that my return just about perfect, but they urged me to increase my monthly withholdings to avoid paying taxes at tax season, which turned out to be good advice for the next year (would have had to pay much, much more than the previous year, my withholdings were WAY too low).

Not sure why you were downvoted. I used to use TurboTax until about a decade ago when I switched to H&R Block. In my opinion H&R Block's UX is superior to TurboTax's and I didn't run into nearly as many dark patterns as I used to. Granted, TurboTax's website could've (and apparently did) change a lot in the time being.

It's always best to try and get a $0 refund with $0 owed. Big refunds may seem cool but you are really just making an interest-free loan to the government.

H&R Block seems very poor quality. It isn't capable of keeping track of state non-taxable income that's taxable at the federal level, and consistently tells me I owe my state thousands more than I really do.

I used Credit karma it was pretty painless for a 1040. e-filed both state and federal and didn't cost a dime. Albeit I bet they hope to get revenue from credit card recommendations.

They don't support all states unfortunately.

I know there's slight irony in using google for this. But if you want to add an annual reminder to use freetaxusa.com


I signed up for Inuit’s Self Employed Quicken that comes with TurboTax just to handle quarterly estimates, and it turns out they don’t support states. They told me there’s so many of them.

Not that I appreciate government websites, since the quality is pretty shoddy, but when a company has no incentive to handle any smaller markets how is this a good system?

Regardless of whether Intuit is willfully or accidentally using dark patterns to get paying customers, their incentives completely explain how they ended up with such a complete garbage endpoint.

Of course, that is being very generous, because they are also directly influencing the policy makers that establish the incentive structures for Intuit.

You think they accidentally tripped and fell into their website design?

No, it is likely intentionally bad. Angel's advocate.

The real dirty secret of tax software is that even after all they've done to try to make filing your taxes as difficult as possible, I still find just using the IRS's "FreeFileFillableForms" software to fill out and submit my own 1040 far easier than any software I've ever used.

In particular, every piece of tax software I've used has had trouble with figuring out what I owe on scholarships and stipends, and letting me enter it in the software. After four hours fighting H&R Block's "free" software one time, I swore I would never do it again and just do my own taxes now. Far easier, and faster.

Plus since I'm a California resident filing state taxes is as easy as reading numbers off the 1040 to put into the FTB website.

It's bad even when it stays free. Massachusetts has a tax site (which seems to be created and run by Intuit) which you can use to file for free. It, however, has been built purposefully to make it much, much more difficult to use than the paid version (that they push hard when you file your federal taxes with TurboTax).

The free version does very little error checking prior to submission. It won't even check for things like empty fields that are required for everyone (e.g. the field for your birthday on the state health care form).

The state paid for the free version with tax money and it lacks fundamental usability.

  * Doesn't perform basic validation
  * Doesn't calculate fields that can be automatically calculated (though there is a button you can press which will fill some of them)
  * Takes 24-48 hours for "processing" after submission before you are notified of acceptance.  In actuality, this tended to be 4-15 hours, but still... it's just doing basic validation.  I got rejections for empty fields and miscalculated fields (ones that I shouldn't even have to enter at all.)
  * Reports errors in a obscure manner, which makes it a chore to determine what is wrong (violates "Business Rule F1-1025", etc.)
  * Amounts to an electronic version of the paper form, where it only really does exactly what you put on it... add incorrectly: won't be detected, skip a line: no problem
  * I could go on, but you get the idea
If you use the paid product that is available from the same company (Intuit), it will handle all of the above automatically. So really we have is a company that has made a crippled version of software they are already selling. They double-dip with a lot of people this way and they don't compromise sales on the paid product. If you wait until the last day to file using the free site, you are unlikely to get it accepted in time since you won't have a second chance for submission.

The product built for the state could just be a really poorly written and managed contract, but knowing the way Intuit behaves generally, I doubt that is all that's going on.

I used turbo tax and had to file multiple state returns. They showed a few blatant pages saying I could maybe get higher deductions with an upgraded version, although I suppose I knew enough to know that wouldn’t be the case. It wasn’t hard to file everything on the free tier. They won’t let me get a copy of the return without paying anymore which is dickish, but they did say that would happen pretty clearly so it’s just a matter of downloading a copy while it’s available. You can upload that pdf copy next year so that’s fairly convenient.

The dark patterns are bad... but I really have no reason to look elsewhere?

Well except passing bank login credentials. That was uncomfortable, but hey, just change them immediately after as it’s a one time service.

> I really have no reason to look elsewhere?

TurboTax actively lobbies the government to make filing taxes difficult. So one reason to look elsewhere is simply to avoid giving money to a company that behaves that way.

If you reread my post, I haven’t given them any money. Their free tier is fine.

I encountered this with H&R block when I had a particularly complex tax situation a few years back (had worked as a contractor for several corporate entities and also had the tail end of full time work plus investment income). H&R block quoted me 3-4 rates, insisting I pay them more money at each step to finish the process.

I realize it's hard because the number of complications that can come up in filing taxes is difficult to enumerate and customers may not know their exact status.... Even so, I'd say the current setup that these companies use is very scammy and unethical.

If your taxes are complex enough to warrant having a tax preparer handle them for you, I recommend avoiding H&R Block. Instead, ask your colleagues, friends, and family for recommendations for an independent tax preparer rather than a chain.

Just so you know, that independent tax accountant probably uses the pro version of TurboTax.

Not all. Mine certainly doesn't.

Yes, after that experience I've found a single proprietorship that I'm quite happy with.

Most of what you’re paying for as a TurboTax customer is not the benefit of the software. You’re paying for the company to lobby the government to make filing your taxes more expensive.

Intuit has the perfect scam.

When I was young my mom would go into H&R Block to do her taxes. She was a single parent raising 2 kids on minimum wage income. She wasn’t tax savvy at all and English was a 2nd language. I recall her paying $89 at the time. I always found it odd that someone as poor as her had to pay money to file taxes. I was too young to say anything at the time. So much for free tax preparation. I wonder how many millions of Americans and for how many decades have been ripped off by these scumbags.

Another example: when you're done filing, TurboTax offers you the option to pay your taxes via credit card -- e.g. if you want points/miles -- for a fee of 2.49% (or more, haven't checked recently) The verbiage seems like it's the only way to pay via credit card if you filed via TurboTax.

However it's not true. You can file via TurboTax without paying. Then directly go to the 3-4 IRS authorized payment providers who will let you pay via card for less.

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