A few years back I got audited, and it was called an "electronic audit" by the IRS. Which basically meant that they had their computer systems scour a bunch of the bank records and discovered that I had forgotten to claim a 1099 for some contract work I had. OK, so they sent me a computer print out and they had cross checked everything on my return electronically, my property tax deductions, my stock dividends so on and so on.
Ok, so if they can do all that automatically for an "electronic audit" why am I filing a return, just run that thing and send it to me and I can file an exception if there is something on it I disagree with.
I think the answer has already been identified in several other comments here, a heavy lobby effort on the part of Intuit, H&R and whoever else to keep it tricky and complex so you have to buy their B.S> software or services.
This is how is works in Australia. The Australian Tax Office will pre-fill your tax return online with income from your wages, interests, managed fund distributions, dividends etc. That maybe enough for simple tax returns, you can just accept their values and submit.
What they don't know is your income from sources like rental income or crypto. They also don't know deductions you are going to claim. In this case you will have to provide the details. Still free to lodge your returns online.
Pretty much every other major developed country operates like this. Here in South Korea for example filing taxes is as simple as logging into some government portal, verifying that the information they already have on you is correct, and making any corrections if necessary. 10 minutes, done.
The U.S is unique in forcing its citizens to waste countless hours and pay hundreds/thousands of dollars every year doing the useless unnecessary work of "filing taxes". Why is the system still this backwards? Either plain ignorance of there being a superior alternative, or a broken political system that can't get anything done. My guess is it's a combination of both.
For comparison, as an example of how other developed/developing countries do it:
I’m a South African citizen, I get an SMS that a pre-filled-in tax return is available online.
I can then log in to their online portal and accept it or amend it and submit it electronically.
Currently I can usually just accept and submit it.
Some years I might need to add or tweak income and expenses, but broadly speaking they are pretty correct.
They have all the income and benefit details from standard corporate employers, expense and contribution info from medical aids (something like medical insurance, but a bit more sane as far as I can tell), investment and banking contributions from financial service providers, etc.
You can opt for extra deductions which require extra paperwork from your side. And they don’t always have income info from side hustles or correct expense info from “unusual” arrangements between you and your spouse. Sometimes your $BIGCORP’s finance department can declare your benefits incorrectly which needs fixing.
But for most middle-class income earners I suspect they can just log in and click accept.
You can pay money and use a tax consultant to see if they can navigate the current rules for a better result, but unless you have a complicated setup you don’t need to.
Blaming "lobbyists" absolves the politicians of their responsibility. The fault lies with the politicians for creating and perpetuating this broken system.
Like anyone else, politicians respond to incentives. US crony capitalism is a large-scale systemic failure, and the tax filing system (and under-resourced IRS) is just one symptom.
If you want a narrow target, you can blame the GOP activists on the US Supreme Court, or if you want to go beyond that, blame the GOP senators/presidents who appointed them, the Federalist Society, the GOP donor base, GOP-aligned media organizations, etc.
Gutting campaign finance restrictions was a vast judicial overreach, performed for partisan advantage and the benefit of corrupt wealthy patrons.
I'd add one more in there for a tighter focus -- the lobby group "Americans for Tax Reform", which opposes all tax increases, and specifically opposes any effort from the federal or state governments to provide pre-filled tax returns.
The #1 most relevant goal for politicians is to get re-elected. (Personal enrichment is largely orthogonal.) Raising large campaign contributions is of obvious benefit to that effort, and is not directly a bribe per se. But it does have some of the same problems that bribery has.
It’s undoubtedly true that some US politicians have gotten bribes, defrauded partners or constituents, embezzled money from their campaigns or the government, used inside information to trade stocks, etc. But even if all of those were impossible, the nature of the US campaign finance system would create plenty of perverse incentives.
> Like anyone else, politicians respond to incentives.
Sure, but it's not like they don't have a choice. Regardless of any incentives, they're the only ones actually empowered to make these decisions. Lobbying, offers of bribes, campaign financing promises, etc. do not in any sense detract from their ability and responsibility to make the right choices.
Nearly everyone who takes any responsibility or even believes that there is such a thing as personal or professional ethics has been systematically purged from the GOP over the past few decades, and the GOP now has 6 votes on the Supreme Court and 50 Senators (=> effective veto of all legislation), and may well end up with congressional majorities after the next election.
You can’t un-screw a system by just telling the people inside who were selected for their mendacity and corruption to “make the right choices”.
> You can’t un-screw a system by just telling the people inside who were selected for their mendacity and corruption to “make the right choices”.
Of course not, but it's still the politicians (on both sides of the aisle) who are ultimately at fault for abusing their position and failing in their duty to their constituents, not the lobbyists for merely making suggestions or offering deals in their own self-interest. Restricting lobbying or campaign contributions wouldn't do anything to improve existing politicians' "mendacity and corruption". They'll just find other, less public, ways to serve themselves rather than their constituents.
In a democracy, it is the voters who are ultimately at fault.
But perhaps more to the point, it is the system that is at fault, and the system is very complex: institutions, physical infrastructure, social mores, common beliefs, canonical media and stories, traditions, language, ....
You can’t just point fingers at individual people in a large imperfect system and pretend that swapping them would fix it. Troubleshooting and improving large complex systems is really hard and improvements are usually incremental, except sometimes in extraordinary crises.
Intuit isn’t the problem. Politicians are. See Milton Friedman on this subject. A complicated tax code is used to reward and punish people. The tax code was complex long before Intuit came around.
That has nothing to do with the issue at hand. All tax codes are complicated, and you can always spend days minmaxing your taxes (or hire someone to do that for you).
But the US is unique in the developed world as making filing taxes hell even if you don’t try to minmax them, and that is primarily due to tax filing companies lobbying against the IRS doing what everybody else does (and secondarily due to the GOP very much wanting filing taxes to be as painful and error prone as possible, and for it to be as expensive as possible for the IRS).
But the US tax code is an order of magnitude larger than the Swedish one. Which probably means that it is several orders of magnitude more complex (however that might be defined).
In the UK it's so streamlined some of my coworkers were genuienly surprised when I told them it's the end of the tax year - as in, that's something they have never ever think about in their entire careers. Taxes are paid automatically by your employer, if you only work one regular full time job then "filling taxes" is just not a thing you'd ever have to do in your life.
For many who don't have an automated tax return it could be easily. It amazes me the systems like bizum and bank transfers don't have a checkbox for "this ought to be taxed".
If you are not getting a VAT refund then you are paying VAT and it is in your interest that everyone does, so most consumers would select the box. The transfer is recorded, consumers would be complicit in the fraud if they didn't tick the box and that's enough excuse for both sides to want to play ball.
Most employees don't need to even submit a tax return as with PAYG your taxes are already collected by your employer.
If you do end up filing your taxes, you can access the prefilled tax statements. Software to do that is free and easy. If you want software advising you on how to get a bigger refund, you'll have to pay maybe $10-20, though the $5 software from Aldi works fine for me.
It can work ok if you're a single person with no children. However, you'll potentially have to pay a lot more tax if you're married where your spouse earns more or less than you. There several other reasons where legally you'll have to complete a tax return (e.g foreign income).
German taxes are really horrible, in general. They expect you to pay in advance for expected untaxed income (based on the previous year's return). Working out the taxes on the income from some ETF is a nightmare, unless your platform does it for you. Unless you really understand the system and can file your own taxes, then low-wage freelance work just doesn't make sense as the cost of doing the taxes can be higher than your income. This means people are trapped into not working.
The fun part about advances is that in the first year they don't have data to set your advances so you have to back pay the taxes for the first year in full after filing the first year's taxes in the second year in addition to now having to pay the advances on that year so even if you saved all the money you expected to have to pay in taxes during the first year you also need to have saved up enough to pay the advances but the more money you made (allowing you to set more money aside), the higher the advances will be.
You can negotiate to have your advances reduced but the government really doesn't like it when businesses (including freelancers and solo entrepreneurs) have a high difference between their advances and the actual taxes. This also goes for declaring your VAT (which depending on how much you make you'll have to do monthly or quarterly as an advance and then alongside your income tax) and while in that case you basically set the advance yourself you'll get in trouble if it doesn't match your actual VAT (difference between charged and paid).
You can file your own taxes and if you're a regular employee there are tons of non-commercial orgs you can go to that will assist you in doing that but if you're a "business" (even if it's just you and you haven't incorporated) they'll often not help you.
BTW the reason you can just forego filing your own taxes as an employee if you just want to be taxed on your wages (and don't have anything else to declare, e.g. interest on savings) is that your employer already had to do the taxes on your wages and benefits for you. So it's not like the government just does them themselves, it's just done by payroll instead of you.
This was semi-true until this year (if you didn't care about the often massive deductions you would have just for living somewhere other than your office desk, and only for as long as the tax office would not demand you to file taxes, which they could do for any reason, and often).
Now, with the 300 Euros of fuel relief, every employee will have to file taxes on said 300 Euros.
This thread was not about deductions, but about the government pre-filling your tax-returns with data it already has about you. Parent was implying that does not exist in Germany, which isn't true. Or are you actually saying that the government will deliberately fill in wrong values, so that you have to pay higher taxes, even though the prefilled values are visible to you and discrepancies would be obvious (and a huge scandal).
There are several ways in which a software can fill data "wrongly".
If you are legally able to claim deductions, pre-filled tax forms that do not contain those deductions are by definition wrong, even though you may agree with individual form items. While this can be related to innocent mistakes and the sheer inability of the state to know the necessary information, sometimes it appears to be deliberate: The classic example is the Pendlerpauschale, which does not appear in Elster pre-filled tax forms even though the state does have all necessary information (address of your flat / address of your employer) to fill it.
If you accept these faulty forms, you will almost always pay more taxes than you have to.
> The U.S is unique in forcing its citizens to waste countless hours
It may be unusual, but it's certainly not unique; I have to fill in a tax-return every year, because I receive rental income. Anyone in the UK that receives income that isn't taxed at source by their employer has to complete one.
The last one I completed was 21 pages long, with notes for each page; a lot of the time I spent was scrabbling through my filing cabinet searching for my evidence.
That rental income plus my state pension and bank interest are the only taxable income I receive.
At one time I was a company director, and had to fill in personal tax returns. I folded the company, and returned to salaried employment, taxed at source; it took me a decade to get the tax authorities to stop sending me tax return forms that I was required by law to complete.
The various allowances are certainly helpful but £1,000 doesn’t really factor in when you’re dealing with rental income. Almost every landlord will cross that threshold and should expect to fill a return in.
Hearing about how taxes work in other countries makes me grateful for the system we have here.
Most people never have to file a return. The people that do have a more complicated arrangement and probably need to summarise expenses, etc.
There is another reason: a group of Republican lobbyists (Americans for Tax Reform) deliberately want to make taxes more difficult. The idea is that 1) if taxes are difficult, you will spend as much as your time trying to get every deduction and 2) a prefilled tax form from the government would look too much like a bill, so people will pay it without contesting.
Of course, TurboTax/Intuit also lobbies to keep taxes more difficult to protect their profits.
I dunno. Most people I know are 1099 / contract workers, and a lot of them get paid cash off the books. The government might have a rough idea of what they make, but it definitely doesn't know down to the penny. I keep very good books, but I have foreign bank accounts, crypto trades, subcontractors I paid over Paypal, people who paid me over Paypal, and there's no one system I'm aware of that could figure out what I actually owe in taxes. It still costs me about $800 a year through an accountant to file my taxes. (Luckily, you can write it off).
Until or unless everything is centralized and cash ceases to exist, I don't know how they'd really do it. In South Korea do waiters live on tips? Because in the US, almost all money made in the restaurant service industry comes from unrecorded cash tips; the actual wages are extremely low. The restaurant will attempt to estimate their workers tips and cover the taxes out of the fixed wages, but... this doesn't even get into all the other cash industries like stripping or moonlighting as a dominatrix. The US's tax attitude seems to be: You're on your honor, and most of the time we won't catch you, but not even Jesus can help if we do.
We should keep a broken tax system because many of your peers are paid illegally? Or because edge cases exist?
I should be a pretty typical middle-class example. Two salaries (me + spouse), a mortgage, limited other deductions. Yet every year I have to wait for various forms that the government already has, enter the values on paper or pay for tax software, hope I don’t fat finger a value, and wait 7-10 years for an audit. Heck, since Trump increased the standard deduction, I’ll probably be taking that soon (mortgage interest is near that threshold now), but still can’t just click a button at irs.gov that says “yup, that’s right, here’s my bank info for refund/payment”
Oh no. I'm just explaining why it's more efficient for the IRS to do it this way. I'd personally like to abolish income tax and only tax sales, with up to 100% tax on luxury goods and no tax on food, etc.
The IRS could generate online forms (or snail mail) with what they know and let us add deductions and other income. They should know salary/wages, they could know investment income (not sure if broker report to the IRS, or just send forms to filers).
Even if the filer has to manually enter deductions, credits, etc, doing it on an IRS site has several benefits... no $50+ fee for H&R/TaxCut/etc, no $500+ for a CPA (for fairly typical tax situations), no worrying about whether online submission processed correctly (because you'd be submitting directly to the IRS instead of relying on a 3rd party to submit for you). Multiply that time/money/stress savings across the population and it's a MASSIVE benefit to society.
No, I mean, the efficiency is partly amplified by keeping people in constant fear. It costs them less and it increases compliance. Like, those fuckers just put a question about crypto on the front page this year and I just decided not to lie on a sworn document, and basically spent 2 months figuring out what the fuck ridiculous chain of events led to me selling some bitcoin in 2021, to be on the right side of 'em. And they probably never would have known. But it's the fear that they might've known, you see, that makes them so efficient.
Well, really it's progressive if it only taxes stuff you don't need to buy. Here's what I think:
Fuel and food, no tax.
School supplies, shoes, clothing, any item under $100, no tax. Over $100, ramp it up.
Diamond rings, 100% tax.
Alcohol and cigarettes, 20-30%.
Used cars, no tax.
New cars, 10% up to 100%. Credits if they're electric or extremely fuel-efficient.
Playstations, high end sneakers, Smart TVs, iPhones, rims, jewelry, expensive furnishings, rugs, anything better than your basic washer/drier: 100% tax.
Books: Free and subsidized by the government, as many as you want, any book ever written.
Healthcare: Free.
College: Free.
Basically under my plan, as long as you get stuff you need for your family, you pay no tax. If you get stuff you want for your pleasure, you pay tax on it.
How's that regressive?
The only real downside I see is the potential for a massive black market in luxury goods, tobacco and alcohol. But legalizing and taxing pot and prostitution should take some of the sting out of that.
Well, that's a very glass-half-empty way of looking at it. I'm saying that high earners have to help subsidize lower earners the more luxuries they accrue in their life. It's not the earning after all that makes the difference between rich and poor; that's why the wealthiest people in America pay no income tax. They're not earning anything, officially. But boy do they spend.
So maybe, I don't know, if you're really concerned about people getting that one luxury in life then there could be an exemption, like if you make under $50k a year you get refunded the VAT on $2k of luxury purchases. Ok? But it has to be small enough to prevent the ultra-wealthy from using it as a loophole.
> Why is the system still this backwards? Either plain ignorance of there being a superior alternative, or a broken political system that can't get anything done.
Neither. There is awareness of the alternatives, and the political system can get things done for it's real constituents. The problem is a malevolent political system that primarily serves a class whose interests are opposed to the mass of the citizenry, to wit, a narrow capitalist elite.
(People will point to the tax prep industry, it's lobbying, etc., and that is part of the problem; an bigger part, however, is the political faction favoring lower taxes in general for the elites that likes to maximize the perceived pain of taxes for the masses to generate support for elite-favoring tax cuts; they are adamantly opposed to procedural simplification that minimizes the pain they leverage.)
Yes. So see my “methodology” above. It is the systematic way for you to do the part that is missing. With various weird-ass forms, this is STILL a lot of work. But it will be substantially correct, where substantially means that the IRS will correct any errors without considering you a miscreant.
“Capitalism” does not mean “every use of money that I disagree with”.
It also does not mean “greedy immoral bastards who sell political influence to the highest bidder”.
There are lots of corrupt things about the US government. That’s not capitalism; it’s corruption. It can happen in any form of government; in the US it just happens to be much more visible.
However, Capitalism inherently rewards corruption. If you are a corrupt politician and earn $10 million through corruption you can invest your money and the capital gains alone will exceed any politician's salary and this is ignoring that you will earn more every single year due to compounding.
You can burn the amazon down and then invest the earned or saved money and economists will tell you, you are doing well and that you have a god given right to that wealth.
Communism doesn't even try to address the root cause, it's actually making the problem worse by concentrating everything at the top.
Almost like all the "isms" are total garbage. The best route forward would be to examine all the "isms", find the parts of each that can be brought together to make a new path forward. Unabashed capitalism is a scourge, just like any other "ism" if left unchecked.
Since we're having the semi-annual "how do taxes work in other countries" thread, here is my experience as an American living in Switzerland. Though I have been here a while, I still find it interesting and a little weird.
At the beginning of the year, you get a bill for that year based on what they think you will owe. This bill is due on October 31, i.e. you need to pay your estimated income tax before you have earned all that income. This is especially strange because most people will get a 13th month salary at the end of October (your annual salary is split into 13 months, the extra comes in time for Christms presents?). You are expected to save adequately to be able by the end of October.
Banking secrecy is not dead in Switzerland. There are no longer anonymous accounts, and banks share information with foreign governments. However, there is banking secrecy between the banks and the government. On the other hand, we pay a wealth tax each year (it's small), so you need to declare each account and how much you had in it on December 31.
To create an equal playing field between house owners and renters, house owners pay an imputed rent cost for how much they would have paid in rent for their house. This is added to their income before taxes are calculated. In my case, this means my assessed income is around 25k higher than it otherwise would be.
There is no automatic form filling in my state, but there is free tax software (Java app which runs everywhere), and it is pretty easy to use. If you have questions, the local tax office will nicely respond via "secure email" in 1-2 days.
Taxes are very progressive and family friendly. With 4 kids and one income we pay 6.5% combined local/state/federal on income of around 120k (plus imputed rent).
There are no property taxes. For the wealth tax, most people who own houses never pay off their mortgages. They will typically have a mortgage for 50% of the house value (which can be quite high, a typical house where I live is between 800k and 1000k, and more in bigger cities). The interest can be deducted, and the mortgage amount from the wealth tax.
You forgot the part where you need to also file and pay US taxes although you may no longer be living there, have any income or assets there but you still need to pay as long as you hold a citizenship or green card.
Are you sure about the dates? As far as I know, you need to file your tax declaration for the previous fiscal year by mid-March, and pay before the end of March. But as you say, you're supposed to pre-pay most of it before based on an estimation (though you have to do the estimation yourself, not the government). You don't have to pay all at once though, you can pay in monthly installments with no penalties.
It’d be nice if my 1099s were electronically filed with the cost basis. But they’re not. So the IRS, every year, thinks I’m going to owe way more than I do.
The IRS also has zero idea about the $4000+ of sales tax deductions I’m filing for this year.
And finally, if you do get it wrong, you don’t go to jail. They send you a CP2000 letter. (Remember those 1099s? I forgot one one year.) You fix the problem or show them their error. They’ll even waive the penalties the first time. It’s a somewhat easy process.
I agree. The IRS definitely does not know how much I owe each year.
However, they do have an estimate and the vast majority of people would accept this estimate. So I think it's reasonable to suggest it ought to be provided.
I think the strongest counter-argument against this approach is in regards to bad actors and who discloses first. If you're thinking about hiding income and the first step is the government telling you what it thinks then you're very likely to continue to conceal and/or have a defense against a charge of concealment down the road ("I just used the IRS figures!")
It's a much more difficult situation for a bad actor if they have to disclose first without knowing for sure what the IRS knows.
"Estimate" implies someone is trying to... estimate something. The IRS has partial information. They don't have anything approaching something that anyone could reasonably call an estimate, and this isn't just an example of HN pedantry, it's an important distinction.
They know some of your income, but not all of it. Your 1099 income for the year is getting filed by your clients at the same time you're filing it, so all they know is what your AGI was last year. They know your expenses from last year in terms of the numbers, but they haven't been checked (last I saw, they were 3-5 years behind on cross-checking and validation depending on type of return). So they could plug the number in, sort of.
So they have your reported info from previous years, and a best guess at some of what this year's information might be.
So give me a partially filled out form with the information they do know then. Fill in the standard deduction, let me do the extra credit work for itemized deductions if I really want, eg I find taxes fun to do. (Some 90% of filers just go with the standard deductions.) Don't buy into Intuit's nonsense that the current system is good for anything other than their bottom line.
So the IRS calculates for each filing status, and you choose one. This would be a lot to ask years ago, but nowadays many citizen-facing government processes are web apps. Think TurboTax pre-filled with whatever has been reported.
A best effort calculation done with partial information is a type of estimate.
I agree, this won't work for a big class of people. It won't work for me. But it will work for the majority of tax filers who don't have a 1099 and who don't file a schedule A, B, C, D ...
My tax return last year was a half inch thick, printed out. I had to file on paper. I very much understand that this doesn't work for everyone. But it works for most people.
Where I'm living, the government does the taxes for you and then sends you a notice to check them.
That last bit? That's important - you get to check them. You can adjust if you should need to. Guess what most folks don't have to do? Check them. This works because most folks have simple returns. They work, might or might not own a house, might have a bank account, might have a retirement account - and that's about it. The government already has what it needs for most people. But you can check them and adjust if they are wrong. Of course, you can just not bother, too.
Is the system perfect? No, but it doesn't need to be. It merely needs to have better overall tax compliance than another system. When taxes are easy for the vast majority of your population, the governement has a better collection rate and can spend manpower auditing those that need audited (perhaps audit more complicated returns from the well-to-do instead of Ordinary Married Citizen that makes 50k jointly) and they can generally spend less money doing things like printing forms and manning question lines that don't give answers that constitute legal advice.
And seriously, in these systems, hiding income is still a crime. So those folks that just "used the IRS figures!" still have the chance of going to jail. Even if they never get caught, the automated system still wins because of the other benefits.
This would be true if it weren't for the standard deduction. Something like 90% of all filers opt for the standard deduction, obviating the need for itemized expenses.
Almost everyone would be best served by IRS calculated taxes. It's the wealthy and those with non-wage income who need the alphabet schedules.
Ok- If you have extras you are going to claim- do it. You are the exception. Why force everyone else who doesn't run a business or claim expenses to do it.
Obviously it's a joke, but if you get it wrong, they send you the right amount and then you pay it (or they pay you). As long as you are close with your on-time payment, the interest is very reasonable on small differences. It's probably cheaper than paying for turbotax if you would have to pay for that.
What’s crazy is that unreasonable taxes is one of the main reasons _why_ the British settlers rebelled against the Crown and went on to found America. The fact that nearly 250 years later we have an absurd, convoluted tax system, that literally requires specialists and companies with absurd market caps, for example Intuit has a $137B market cap, shows just how broken the system has become.
The central problem is the refusal of US governments (state & federal) to pay people money to do things they want to encourage rather than give them tax credits and whatnot.
Taxes shouldn’t be used to get people to do things or not do things. Taxes should be used only to fund the essential services of the government: common defense, a legal system to enforce contracts, and that’s about it.
When taxes are used as a means of control, that’s totalitarian. Tax policy should always be neutral.
Technically there's no difference between the government deciding to:
1. give everyone who does X US$300
2. give everyone who does X a US$300 tax credit
Both rely on the collection and disbursement of government revenue, which is typically accomplished via taxation.
However, 1. does not introduce any new clauses to the tax code. 2., by contrast does, and it generally functions as a slow steady drip, drip, drip of new clauses.
We therefore end up with an extremely complex tax code, instead of a simple tax code, and legislative acts to pay people for doing things we choose (via political process) that we want done.
The main difference is that not all credits are refundable. If you have a $7500 nonrefundable credit, but only have a tax liability of $5000, that extra $2500 just vanishes.
Tax should also control for externalities. Especially 'common good' pollution/destruction/captation.
It's too easy to make a company go bankrupt with LLC, so taxes are the only way. Unless you have a better idea? (I once had a libertarian explain to me the owners/investors should be liable for externalities, and in this case, taxes shouldn't control for it. I couldn't really disagree, but even staunch communists understand the issue with that).
So you wouldn't be in favor of a carbon tax? What about a tax on tobacco sales in a universal healthcare system? (to offset tobacco users' additional healthcare costs)
I believe that tobacco use is actually beneficial under a universal healthcare system. Dying early from cancer is a bummer at an individual level, but much cheaper than getting old and the additional care needs that come with that. So you'll be paying almost as much in taxes as someone who doesn't partake,while getting a smaller amount of retiree benefits in return.
Maybe there should be a tax rebate for smokers, so they can buy more cigarettes?
You don’t just drop dead of cancer. There is an extensive treatment process involved which is rather expensive and not guaranteed to work. So this argument doesn’t really hold.
And “sin taxes”, i.e. tobbaco taxes and carbon taxes are a logical fallacy.
Tobacco tax won’t offset the additional healthcare costs for smokers on average, so it ends up just being a penalty for having a bad habit, and carbon tax will simply put a price tag on high carbon emissions.
Kind of tangential - the tobacco tax is a fallacy in another way: without taking into account quality of life adjustments, smokers are actually a net benefit for society in healthcare costs [1]. The simple reason is because they die earlier and most healthcare costs are incurred near the tail end of life, so by shortening those final years it becomes much cheaper for society to pay out.
The "essential services" are kind of the big thing in dispute -- you say "common defense, a legal system to enforce contracts" and that's a typical libertarian perspective, but certainly not the only set of essential services that reasonable people could posit for their government.
While I absolute believe that Intuit and others are responsible for the lack of (1) free, highly functional e-filing and (2) response filing, the complexity in the US tax code is beyond their purview and precedes their existence.
well, I am walking around free so, for sure you don't go to prison but you pay a penalty perhaps. In my case I just paid it. It was an honest mistake and they did not bust my chops over it, they did charge interest, which is stupid. But, fine, if your computer can figure it out why not just send me the bill monthly like my city government does?
ya, so why not just send me a statement once a month, the power company does that, the cell phone company does that, the city I live in does that, etc.
Just send me a statement, you made this, you get this much deduction for the other crap or whatever.
No stupid W2, W4 1040, bunch of mumbo jumbo from the 1950's that a few companies are ripping us off over IMO.
There is a formula in the law that specifies how much if your salary gets deducted every month based on specific criteria such as your marital status, your religion (yeah church taxes), whether it is your primary or secondary job etc.
That amount is calculated to be enough (a little bit to much in fact) to cover taxes for most people employed with a single job.
Unless you have extra income or deductions beyond a certain amount you don't have to file any tax return.
If you want to file one (pre filled with what they know) the government calculates what you need to pay/are owed and you have the right to dispute that.
You can use the free digitalised version of the former paper form or you can use a number of (often inexpensive) commercial programs
I like it, my city government sends me a statement once a month, says
you owe this amount for police, that amount for fire, some other amount for sewer and water, some amount for schools. Maybe I disagree with some of the amounts, fair to discuss, that's democracy. But they don't play that idiotic game the feds do, you owe a certain amount, if you guess it correctly, or if you on purpose short it but we don't catch you at it, then nothing happens. But if we randomly catch you getting it wrong then we fuck with you. I hate that.
You do not have to guess “what the government knows.” Download your income transcript. See the “methodology” I replied above in response to this comment.
My employer pay taxes for me based on either a table or percentage (this is up to me). At the end of the year our tax authorities sums everything together (income, capital gains, ownership, debt and so on) and sends me my preliminary tax report for me to verify and make changes to. For normal people it's usually correct with most deductibles already accounted for. It's easy to fill in any other deductibles or income that is not already accounted for. This year it ended up with the government owing me approx. $2000.
The best part is your employer already sent them the income tax money you owe them but you still have to tell them how much money someone else gave them. Its an absurdly brain damaged system.
Having to spend our own time, money and effort in order to work out how much money we have to pay the government for their crappy low quality services. Just yet another humiliation the government imposes on citizens.
> EDIT: I can't find the podcast I heard this in, but pretty sure the tax professor that spearheaded this pilot got followed by people hired by Intuit.
This feels somehow like it should be illegal to willfully and knowingly make the common good worse in favor of your company. Perhaps via antitrust.
It's well known fact that the government can auto-file for most people, it's not really a secret. Many other countries do it, it's been proven to work just fine.
In Canada, when I file my taxes electronically, all my income (salary, interest, etc.) is pre-filled. I basically enter my deductions and hit "Submit".
That's just it, when I do my annual taxes (I should do that within the next month btw), all the data - from my employer's wages, all assets at banks including checking-, saving- and investment accounts, and things like mortgage interest (which is still partially deductible) etc are all filed.
The only thing I need to manually add is the EUR value of crypto assets on Jan 1st of the preceding year (good luck figuring that one out, the exchanges are kinda shit), and any charity donations I may have done. (my dad will pettily write down any speeding ticket cost as charity donations)
The funny thing is that Intuit makes FreeFillableForms. It could have a much nicer interface, but they choose not to, so that you go and pay money to use Turbotax.
- the IRS helpfully corrects their errors, and sends the form back
- they sign the corrected form, send it back
- the IRS accepts the second round.
This is basically the same "pre-filled" workflow as every other developed country. The difference is that we have a first round where you put in a semi-plausible effort to placate the tax preparation lobby.
Has anyone with a normal job (not self-employed, regular paycheck from a company registered with the IRS) ever been fined etc for this?
The main thing in this strategy is that your estimate is pretty close to the amount owed. So you may overshoot or undershoot, but likely by a pretty small amount, which is likely to make the difference owed small. I guess it could be considered a cost of filing taxes.
If they are charging some absurd (say 20%) interest and you're off by 10k, you might pay them a few hundred in interest if the process is prolonged a month, which is on par with a tax prep service.
I had the same situation once (a missed 1099) and my biggest complaint is that they waited almost a year to let me know. And of course by then it was quite late so I owed them even more money!
Even if they can't tell me what numbers they expect when I file, it seems like they could at least let me know within a few weeks if they're pretty sure I missed a 1099. Heck, I typically file at least a month early. They could let me know before April 15 and I could have just fixed it! Ugh.
They could send me a monthly statement like my city government does.
Instead, they wait a year to let me know I slipped up and then charge me interest.
Guys, if you know I slipped up now you could have told me a year ago.
This is not purposeful but likely a side effect of them still relying on ancient COBOL mainframes that seem unable to keep up with the growing population (and thus growing number of tax filers.)
The thinking is that the more painful filing your taxes is, the more people will have a negative perception of taxes in general and be opposed to tax increases.
There was an interesting Planet Money episode about this [0].
I have a $165k notice of defiecency bill from the IRS due next month that is a complete joke that I have had to spend days figuring out. I almost dropped thousands on a lawyer for it until I understood Tax Court better.
Why? They think I sold a house and kept all of the gains. Like I didn't have a mortgage, and like it wasn't my primary residence.
It's ridiculous. I can't explain how stressed out getting a $165k bill when that's practically my yearly income made me. I wonder how many wealthy people get these completely incorrect $165k bills and how often they come after the person with $10k in the bank.
I highly recommend that you keep everything related to this, securely, for several years even after it is resolved.
State governments are not necessarily believing the same set of facts that the federal government does. I got caught in a multi-year cycle one time where the state government kept coming after me every year for the same thing, even though I had the federal return and the evidence that it was correct.
Each year I'd send that thing in, in response, and I'd never hear from them...until the next year, when they'd do it again.
Felt to me like each year somebody would receive my response, decide it was too much work to deal with, and then file it away in the "hit them again next year" pile.
Thanks. Like you, nobody has ever responded to me other than them "upgrading" me from being able to prove my taxes via fax to having to petition the tax court directly.
I'm sure this will be a nightmare for the next few years. As if selling that house wasn't a bad enough experience.
I shouldn't have to spend $5k or whatever else on a lawyer to deal with this. Insane. I walked away with $13k after paying everyone/mortgage off.
Did you report the sale? When I sold my primary residence in 2018, it ended up on Schedule D and Form 8949, and there were no questions asked. The IRS does have a tendency to assume zero basis when there's a capital sale reported to them that doesn't appear in the tax return; which makes for scary bills, but can usually be resolved by reporting the sale and your basis on the appropriate form. (although I see from further replies that you are now having to deal with this in Tax Court, so that sounds like a terrible time, and I'm sorry for your tedium)
I don't believe I did, it was my primary residence so bypassing a lot of the tax implications from capital gains. It was my first house sale so I was really expecting to companies involved in it that I paid a small fortune to to handle things of that nature, or at least send me documentation to send when I did my taxes. Unless something got lost in the mail I never received any sort of tax docs, which in my obvious-now ignorance might have been very wrong.
I did these taxes in the height of the pandemic in March after being laid off and living out of airbnbs for 3 months so it very well may have just been missed unfortunately. I'm not even sure what they need or who to talk to, I'm just going to mail them everything I have including the Statute stating I don't need to pay capital gains on a primary residence house sale under $500k.
I'm not a tax person, but probably all they need is an amended tax return (1040X) with the sale reported. Grab the instructions for schedule D for the tax year you sold your home, and follow the section for "Sale of Your Home". It says you're only required to report the sale if the gains exceeded the exclusion amount or you received a 1099-S; but I'm guessing the IRS must have received a 1099-S even if you didn't. You might be able to get a copy of that through the IRS Tax Transcript service?
They probably don't need a copy of the Statute, but eh. :)
Just as an update, apparently it takes 1-3 months for docs to the IRS to make it to where they're supposed to go. I just got off the phone w/them (took 1hr:45mins to get a person) and found out I only owe $20 after faxing them my house sale docs in November!
Blaming "lobbyists" absolves the politicians of their responsibility. The fault lies with the politicians for creating and perpetuating this broken system.
they had their computer systems scour a bunch of the bank records and discovered that I had forgotten to claim a 1099
I assumed they did that automatically for everyone -- does that mean that if I "forget" to attach a 1099 then they IRS won't know unless they do this special "electronic audit"?
I don't think that's actually how this works - most times when you get a 1099, the issuer is also required to file a copy with the IRS. As such - no bank account scanning required.
That's what I thought, my SSN is on the 1099, so it should be trivial for the IRS to match them up. That's why I was surprised when he said that they only caught it during an audit.
I suspect the term "audit" is being used loosely here. One man's audit is another man's reconciliation - did they just send you a notice of deficiency?
Yup, dumb mistake on my part, so I track it better now. The point is, do I really have to do all this work tracking everything to guess which card they are hiding behind their backs. It's kinda dumb IMO.
They probably just sent you a letter asking you to pay it with a smidgen of interest and that was that, right? Probably hardly worth doing extra work to be super thorough unless it was a large amount.
ya, it was stupid, the interest was about $300 or something. I would have paid the original amount but I just screwed up and mis-placed the 1099. It was a gotchya game. I think this could be why people hate taxes so much, of course we all hate taxes but the way you do it matters IMO.
This is literally how it works here in the Netherlands.
Every year I get a reminder, log into an app with my government ID, click "next" a few times while checking the numbers and submit. It literally takes 2 minutes if you don't have anything to adjust.
Methodology:
1) Download your income transcript from the IRS using your IRS account.
2) Make sure all claimed income on the transcript is included.
3) Do the puzzle.
4) Print and file.
Be sure you have a copy, either scanned or electronic, of all documents on your computer. Ditto all tax return filled in forms. Use the fill-in pdf’s the IRS provides.
Do not miss a filing date. File a tax return missing important documentation if necessary, but file. Similarly, pay the tax you owe, or estimate you owe on time. The penalties for late filing and owed taxes are severe. You will not make a serious error if you work from the income transcript.
To add to this even if you can't pay, still file your taxes. It's so much better to only be on the hook for not paying than both not paying and not filing.
It's impossible to automate the tax filing process unless you simplify the tax code.
And I've filed taxes in countries with simple tax codes where the government pre-fills out the forms. Guess what? You still need to go and double check everything because the information comes from your employer. I've found mistakes before. So I pretty much "do my taxes" myself to make sure what the govt sends isn't wrong.
This is a misunderstanding of the actual ask from the federal government and "automating" is a bit of a misnomer. The reason the IRS could theoretically fill out your taxes on your behalf is because someone else already submitted their part of the forms. Your employer reports your income, your broker reports your capital gains and assets, your bank reports interest, etc.. The ask is less about automation more not having to do those parts twice. The IRS could send you everything they've gotten about you and you just fill in the rest and/or dispute -- for normal single income wage earners there would be nothing else to add so it's effectively automated.
The gain is that we can make "doing your taxes" a non-issue for most Americans. Sure some people will still need accountants for complicated situations but in one swoop we can eliminate hundreds of millions of hours of useless work every year for basically no downside -- it's pure gravy.
It isn't just the lobbyists, certain ideologically anti-tax politicians desperately want their constituents to think of taxes as a Great Evil perpetrated upon them so they can present themselves as the solution. Making the process as much of a pain in the ass as they can is part of their reelection strategy.
> Ok, so if they can do all that automatically for an "electronic audit" why am I filing a return, just run that thing and send it to me and I can file an exception if there is something on it I disagree with.
That's how it worked for me in France when I was an employee. As a freelancer there is a bit more work, but nothing like the puzzle that tax declaration seems to be in the US.
> just run that thing and send it to me and I can file an exception if there is something on it I disagree with.
This is how it works in Australia. Taxes are filed online with the government authority (ATO), and everything is pre-filled. You just need verify it's correct and make any claims you want.
In every country I know where taxes are collected by the employer you still have to file, to square things up and settle the tax bill (often you’ll get some money back, if you have other sources of income then you may have to pay taxes on those instead).
This happened to me, except the IRS calculated that I owed an additional 5-figure sum. not all information is sent to the IRS and they don’t yet have a way to determine a person’s situation. In my case, a form was missing from my filing that provided that context.
Lobby certainly doesn't help but "just tell me what I owe" is not practical or possible, and is an overly simplistic view of everything about the system. Most importantly, the 1099 your client filed telling them you got paid more than $600 was due the same time your taxes were due, so they didn't know about it until after the fact.
The feds have no idea how your deductions (and to a lesser extent, your income) have changed from the previous year. They don't have a full picture of your finances, but you do. In the abstract, with those constraints, the system of "tell us everything we need to know, pay us, and you get in trouble if you lie so egregiously that you get caught" works pretty well.
> but "just tell me what I owe" is not practical or possible
Note that there's a whole lot of countries that send you a prepared tax return that you adjust if necessary, and most people don't need to. There's no fundamental reason we couldn't do this here.
A pretty damn large portion of people claim the standard deduction. They are paid on W2. Their investments are on 1099s. The cost basis are in supplemental documents that could easily be provided to the IRS in a format they can handle.
Yeah, it doesn't work for everyone. So they could offer it to you, and you have the choice to click "ok", or to click "add additional income and deduction". If your situation is so crazy that neither of those options work, you can then do it the classic/hard mode way with an accountant.
It's how it works in plenty of countries. The US is a bit unique with one of the more complex tax code in the world, but it would still work fine for a large portion of the population.
This is how taxes work in many other countries, and it's how taxes could work here if we were willing to make minor changes. For example, adjusting the deadlines you mention to be sequential would not be a hard change.
Oddly enough conservatives see that as a problem. They want this to be a big process for two reasons. First, taxpayers understanding the process is a good thing. It means they’re not getting gouged and they’re aware of their taxes. Second, they don’t want taxes to be something we just say “k” to like a cell phone bill. That could lead to it being extremely easy to raise taxes.
There is a logic here that's visible with salary talks in the EU: people only care about what they receive, not taxes; so all salary talk ignores taxes, all raises ignore taxes, all tax increases are irrelevant as long as they get in-hand the same amount. This is basically a population that sees taxes as magical money only the employer pays.
People should definitively understand how much taxes they are paying so that they demand some accountability for their money.
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!
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.
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.
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.
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.
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.
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.
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.
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!
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 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...
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.
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.
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.
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.
> 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.
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.
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).
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.
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.
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.
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 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.
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.
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.
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.)
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.
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.
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.
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.)
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.
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.
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'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.
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 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.
I think that's actually somewhat standard- even FreeTaxUSA (my personal choice) does this because they're essentially letting you use their product on credit.
I think the objection is not that they're charging a fee, it's that the fee is $39. TurboTax (just the basic federal edition) is what, $30? And yes, this is essentially credit, extended for what, a month? So ($39/$30 * 12) is yearly rate of like 1,560% for that credit, aka., highway robbery — that, I think, is the parent's point.
(I might be a bit off on the price, but not enough to change the result. TurboTax's loss if the debtor here "defaults" somehow is … what, even?)
Plus they themselves have calculated that you're due a refund that will cover that cost already at this point, and they're going to directly pull their fees out of it... while not 100%, it's got to be pretty near the bottom in terms of risk. Especially if they still wait to pay you the balance until the refund is actually paid by the Treasury.
a) that you have an outstanding tax bill, or other garnishment, and while you overpaid, you will not be receiving a refund, and they'll need to find you to make payment some other way.
b) the return is fraudulent and they're going to have to pick up the pieces when the IRS figures it out and reverses the deposit. Plus, they didn't get paid.
Is that $40 of risk? Eh, probably not, but it's something.
Yes, the highway robbery of it, that’s my point. That is a huge percentage of the base price of TurboTax, and it is in no way less convenient than paying with a credit card, and they hide that fee down in the blah blah text.
That is a payday loan that has 100% AAA collateral at loan shark rates, on a system that you are trusting like your dentist to do the right thing. Nice.
I guess? But I think it would also be weird to have the “Pay Now” button right below the content for “Pay with Refund” (and then the “Pay with Refund” button below that one).
I mean, ideally the buttons would be immediately below the corresponding content.
But if both buttons are going to be at the bottom, I can see arguments for either order.
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.
> 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.
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.
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.
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.
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.
> 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.
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: ____".
> 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.
> 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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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 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.
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.
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.
Good. Fuck them and their predatory business model.
I know this is where we’re supposed to decry the system of which this is symptomatic, and talk about campaign finance and such. And all that stuff is true, sure. But Intuit has been such a consistently abusive actor that they’re normalizing regulatory capture, with enormous financial, time, stress, and legal repercussions for the entire population.
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.
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.
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...
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.
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.
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!
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.
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...
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.
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.
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.
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.
> 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.
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.
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).
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.
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.
> 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.
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.
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.
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.
It isn't perfect since its a young project, but I've attempted to simplify and modularize the process of creating/maintaining forms to allow for that part to be crowd-sourced as much as possible (and I'd love your help!).
Perhaps so. Though I found structural things with each of those projects that I did not like. For example, opentaxsolver's logic is a bunch of 'monolithic' C code, and I haven't been able to find any tests. UStaxes is better in that respect, but there I couldn't get past typescript, honestly, and they have code like https://github.com/ustaxes/UsTaxes/blob/master/src/forms/Y20... where they're relying on position of an item in the array to indicate which field it is. Not trying to disparage anyone, but I did not see evidence of an attention to detail I felt I could trust (and maybe that's just me and NIH syndrome).
What I would really like is to somehow extract out a representation of the tax logic into something separate from the business of collecting the data from the user, or even calculating the results. I'm not entirely sure what that would look like, maybe it would have to be some domain-specific language (eww) in order to be able to fully express the relationships and dependencies between different fields/forms.
But I think that tax logic portion is the difficult-to-maintain part, and also the portion different projects would benefit the most from sharing.
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 stopped using TurboTax after it told me I owed $20,000 to the District of Columbia. I went to an accountant and DC ended up owing me money. Clearly I entered something wrong in TurboTax, but the experience was enough for me to decide paying someone is worth the money and frankly saves me much time as it only takes me minutes to send my information by email and another few minutes to review the results and digitally sign.
Most of my income is from W2 and some 1099 here and there. As others mentioned, America is backwards and the politicians and 1% keep fleecing it towards Romes fate.
I love seeing those on the top get fleeced for a change, unfortunately this will just be a slap on the wrist.
I wrote an article [1] a few years ago to vent about how messed up and backward the experience has been for especially foreign filers. The “free” options provided by commercial companies are as TFA states unusable by large portions of the population. Besides those, the IRS provides “free fillable forms online”, which looks like a scam website and also has many limitations (one of which, in my case, was that you must provide a US phone number).
It’s all beautifully messed up.
So there wouldn’t be this problem with Intuit if the government got their shit together. Why not spend efforts to improve the system rather than litigation? The answer? Lobbying.
This is all in stark contrast to the system which exists in Denmark, where I live, where taxes are all filed online and the government automatically fetches most information so that you mostly only need to review it and add deductions.
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.
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.
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.
> 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).
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.
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.
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 :)
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.
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.
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.
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!
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.
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.
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.
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.
Not at all affiliated but Free Tax USA appears to be a great alternative. They have been around for quite a while, but I have only used them this year as it was the first I heard of them.
Biggest downside is no import from brokerage, so if you trade a lot it could be annoying to create your schedule D.
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.
A dark pattern I just learned about with TurboTax, is that if you attempt to downgrade from paid to free when it is time to file (even without utilizing paid features), they force you to completely start over from scratch. For a lot of people, they may not even know they are in "paid mode" until it comes time to punch in the debit card.
In my country, we rarely use software or professional services for filing personal income tax. Not for most people unless you have special circumstances which are usually reserved for super high networth individuals.
What my local IRS did is sensible default. Employment income are submitted electronically to my IRS from most employers. Deductions and reliefs are automatically factored in if it relates to other government services (e.g. reliefs for child).
What I love most is for information that they don't have information on, such as deductible expenses for rental income, they suggest a default of 15% expenses where we don't have to provide any proof or documentation. It is a 15% deduction over the rental income that's just given to you. Of course, we can challenge it if we feel we should have higher deductions, providing them with the necessary documents.
From an outsider perspective, the US tax system is nuts.
Here in the UK, the tax year runs from April to April. Your employer reports exactly your taxable earnings to the government every month. You can log in online and see exactly what you're taxed on. You do not need to fill out a self-assessment at all - it's all done automatically, except for under certain circumstances which don't affect most of the population, but roughly:
* You have earnings over £1000 a year from outside of your normal employment (e.g. from interest on savings, selling things on eBay, whatever).
* You are earning above £50,000 per year but want to continue claiming child benefit (which phases out between £50,000 and £60,000, so some needs to be repaid).
* You earn over £100,000.
First Intuit lobbies to prevent free tax returns by claiming that can provide their own (very sketchy) free service for that.
Then they have the gall to opt out that very program which they used to prevent free tax returns in the first place.
Many users of this site aren’t especially price-sensitive; if you’re one of them and in the habit of using tax filing software, I urge you to consider hiring an accountant for your taxes. You’ll pay a couple hundred bucks, which may be offset by the CPA finding deductions or credits that your software didn’t highlight, and that money goes to someone you’ve picked out and hired rather than a corp that’ll use your money to lobby against your best interests. And you’ll save a bunch of time, which may be enough to make this worthwhile in and of itself for you!
What are some concrete examples of these deductions that people keep talking about? I'd actually like to know, so I can perhaps convince myself to get a CPA next year. The only deductions I have seen as a salaried person with some minor stock trades are things for home heating credits and such which I am always ineligible for on the basis of income.
In Europe (in most countries as far as I can tell), electronic filing is administered by the government, and it's easy to use (often prefilled for simple situations). As mentioned in the article, in the US, electronic filing is offered for free only to taxpayers below a certain income threshold, and the service is offered by private companies. They often pay themselves back with tax advances at usury rates. I can't help but think that it is another example of how the US tax system is beholden to private interests.
This is band-aid for a fracture. Suing Intuit does not address the underlying problem.
It's not hard to collect income data automatically. Here in Singapore (as in many other countries) I get a message reminding me to check my tax data before the filing date. I just login and click "Submit". If I forget to do this, I may miss some deductions, but it goes through anyway.
Tax filing can be made simple enough that a layperson can do it without employing an accountant.
Dang - it might be nice to include this in the "Related" comment pinned to the top, it's just the "level up in the filesystem" above the courtlistener link you already have in it.
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.
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.
Oh shit didn’t even realize this “ ntuit has elected not to renew its participation in the IRS Free File Program and will no longer be offering IRS Free File Program delivered by TurboTax”
Go to hell intuit. https://freefile.intuit.com/
So glad to see TurboTax held accountable for this deception. I have to help 24 of my friends get to the actual free version while filing their own taxes... The solution, use an adblocker, and click in an non-obvious area
If it is anything like my experience they will just add you to their bulk email list, and possibly send you a letter saying thanks for your comments. Unless you pay to play, your ideas will not influence them significantly.
Pro tip: when I was doing my taxes TurboTax asked me for a survey. I complained bitterly about their lobbying. I was suddenly able to file fed and state free.
Intuit was begging to be sued though. Literally the only word in the ads is "free", and they say it like 100 times to emphasize just how free it is. And of course it's not free at all. It can't get any easier than this.
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.
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.
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)
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.
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.
I like paying taxes to the State because that money goes to military and entitlements, and keeping the lights on. I do not agree with every military action, or every entitlement, but it's not my place to decide what direction the country goes in, it is my place to push.
I wonder how many orphanages Intuit runs, how much welfare they pay, where the bases they operate are, how many men they've put on the moon, to have the gall to demand taxes. That is an literally an act of sedition, literally a racket.
Deceptive is right. I filed using TurboTax today. Federal return plus two state returns. Their "free" service ended up costing me around $180 even though I suspect my return is much simpler than most.
https://storage.courtlistener.com/recap/gov.uscourts.cand.39...
https://arstechnica.com/tech-policy/2022/03/turbotax-maker-s... (via https://news.ycombinator.com/item?id=30846884, but we've merged the threads)