This is great news; no matter how restricted it may be initially, I think having a "guaranteed-free" tax filing system will be great for most people, especially lower-income people.
The private companies have demonstrated pretty clearly that they will do everything they can to avoid people actually having free tax filing, and while ~$50-100 might not seem like a ton of money, keep in mind that at the current United States minimum wage ($7.25 as of this writing), it would take upwards of working 6-14 hours just to pay for tax filing. $100 is a lot of money when you're not a yuppie software engineer.
I suspect I did enough crazy stuff with stocks this year that it probably won't apply to me at first, but hopefully by 2025 or 2026 I can stop giving money to Intuit or Jackson Hewitt.
Jackson Hewitt Online isn't terribly pricey (Cost me a total of about $25 last year), so that's what I've used for the last two years. Keep in mind that Jackson Hewitt Online is a different thing that the vanilla Jackson Hewitt
Still, I kind of feel annoyed that I have to pay any amount of money to do something legally required of me to avoid going to jail. I think the IRS should provide a free option for filing, and TurboTax/FreeTaxUSA/Jackson Hewitt would be forced to provide a better service than "the bare minimum".
FreeFillableForms is basically like doing the paper forms by hand and it's much easier to make a mistake than using something like turbotax. I've used both that and the excel files at https://sites.google.com/view/incometaxspreadsheet/home in the past but I realized that the hassle if I screwed something up was much worse than paying for tax prep software.
I'm very glad that the IRS is going to be making something that's more comparable to turbotax now.
I think the URL is freefilefillableforms.com (note the "file", the "FreeFillableForms" domain is parked by someone) based on some light googling and a contact email I saw on the irs.gov site.
Glad a digital equivalent to paper forms exists, the US tax code is far less hellish than I previously believed.
The actual tax code is still hellish. Physically filling out the forms is the easiest part. Figuring out what to put in the forms is all the effort. Each page of form usually has many pages of instructions, which are long and complicated because the tax code is long and complicated.
If you are a typical tech employee and have highish income, incentive stock options, interest, dividends, capital gains, etc. don't think you can use freefillableforms to do your taxes in a couple hours.
I'm a self-employed highish income person, no stock options (that was long, long ago), interest, dividends, capital gains, rental property income, a spouse who also has to file schedule C twice.
Takes me about 2 hours on ffff ....
.. mostly because I've done my own taxes for the whole 34 years I've lived in the USA (including the first year when I got the US government to pay me the excess of what I'd paid the UK government, and the year I paid taxes on amzn stock that exceeded everything I had ever earned until that time).
This stuff is not as complicated as people make out, though I would concede that it is likely easier for a software developer-type person than a personal grooming specialist or firefighter. There's a whole industry out there predicated on the idea that you can't do this yourself.
It's not that it sucks, it is error prone. Completely ignore a knowledge of tax law for a moment. Data has to be copied from one form to another, copied for calculation (whether you do it on paper or with a calculator), copied from one line to another, and finally copied from the form into the government's tax software. Each step produces the potential for error. Properly written software does not have the same potential for error.
I'm not following the point of this comment? TurboTax's correctness is battle-tested by millions of people every year- the odds of you making a mistake carrying over numbers by hand are way higher than TT making a calculation error.
I quit doing paper forms ~10 years ago when I missed coping line 12c from form 5678-e to line 34-f of form 9876-k. The hassle of correcting that was enough to make me quit doing taxes by hand.
It takes longer to do my taxes via the web forms than it did by hand (which says just how bad the UI of tax prep is!), but it saves me from human mistakes.
Note that the ISR already has all the information they need to do my taxes for me. They just don't do them.
Not me! FreeFillableForms is apparently the last piece of software in the western world that doesn’t save your progress as you go. I found that out the hard way about three days ago and immediately switched to freetaxusa.
I can also walk down to the nearby river to launder my clothes and carry back water to prepare food for my family. Instead we use technology to save time and improve our lives. That we continue to allow corrupt businesses to hold us back so a few people can extort/profit is a testament to our failed state.
I've thought about doing that before just to say that I've done it, but it always seemed a bit intimidating. I also have completely illegible handwriting now, so filling anything in by hand is effectively a non-starter.
I find it bizarre that this is even a market in the US. I would think enabling people to do their taxes is a basic task of the government. Where I'm from the government provides a very simple click through filing system. Most information is auto filled from info the government already has or is manditorily shared with it such as my income as reported by my employer and any tax withholdings performed by them, securities holdings at brokers, houses registered on my name etc. I basically just have to click 'yep, that all sounds right', and I'm done. The tax authorities slogan over here is "we can't make doing your taxes fun, we can make it easy".
Just print out the sheet from your broker of all the trades you did with the end result of gains circled. Send that in. You should be ok from doing anything more complex.
I don't know how that could be such a thing. Basically, you don't have to necessarily use any of their forms. You simply list down all income totaled by category of taxation, list out all value appreciation and depreciation that you are considering to be part of the year's gains and losses, and provide backup material of how you came to those numbers (if that is even necessary).
Taxes were made to be done on a simple blank sheet of paper. The forms are more instructional record keepers, than they are systems of procedure every taxpayer must follow.
Every transaction of stock should be listed. The broker will total the gains. If you want to play with the rules with a little bit more finesse (like trying to leverage the 30 day end of year rule), you will have to do this manually.
> keep in mind that at the current United States minimum wage ($7.25 as of this writing), it would take upwards of working 6-14 hours just to pay for tax filing
Relatively few people in the US earn the Federal minimum wage. It's less than 1/2 of 1% of the labor force. It's a very poor reference for anything in terms of personal finance comparisons.
You can walk into a CVS or Walgreens and earn $15 / hr as the minimum scanning barcodes with zero experience, zero job history, as a teenager. You'll get heavily subsidized health insurance, dental, vision, and PTO.
On top of that, the majority of US states have a higher minimum wage than the Federal.
If you're still earning the Federal minimum wage at this point, it's almost always by choice (if you don't want to work for Costco, Walmart, Target, CVS, Walgreens, et al.).
According to BLS, 141k workers earned exactly minimum wage in 2022, with another 882k earning a base rate under minimum wage [0]. The latter category, though, isn't the complete picture, because tips and commissions would tend to push compensation up over minimum wage as a rule.
Of the 141k, 53k are teenagers, so that leaves 88k full adults (age 20+) making minimum wage. That's not nothing, but it represents 0.1% of those paid an hourly rate and 0.06% of the workforce as a whole.
There are lots of comments along the lines of "xxx is cheap"
Why on earth do you need a third party for your tax calc and resolution? It is surely the antithesis of the "land of the free" and all that stuff.
In the boring old UK I login to a govt. run website to do my annual tax self assessment. My P60 is already filled in (that's my PAYE - pay as you earn, my normal salary) I'm a company director too so I have dividends and expenses and offsets etc to worry about. It takes around an hour to complete.
Most UK employees don't do self assessment. PAYE is such a simple and obvious idea - routine taxation should be done by routine.
> Most UK employees don't do self assessment. PAYE is such a simple and obvious idea - routine taxation should be done by routine.
Just to double down on this, what gerdesj is describing only affects a very small portion of workers. For those who _don't_ do the steps above the process is:
- It's automatically taken out of your pay, and you don't do anything.
An argument can be made that since Americans are inherently distrustful of any forms of government whatsoever, it emboldens them if they feel like they're the one who has agency when submitting these forms to the IRS.
> Why on earth do you need a third party for your tax calc and resolution? It is surely the antithesis of the "land of the free" and all that stuff.
Because the IRS isn't allowed to tell you what you owe. You're supposed to calculate that yourself... (And it's so damn complicated that it's worth paying someone to do it, unless you were the kid who did the math textbook for fun.)
Eventually, the IRS calculates what they think you owe, and if you underpaid, they send you a bill. You can respond explaining why they are wrong, or pay. The interest is so low that, as long as you don't goof up every year, you're better off risking underpayment than overpayment.
Honestly, the system would work better if the tax prep software could see all the information the IRS has, because then it would be easier to correct their mistakes and harder to make mistakes.
There's a perfectly legitimate reason - citizen's united allows corporations to bribe government officials into writing laws that benefit them.
If taxes worked simply and logically, the whole population wouldn't have to pay $100+ each year to Intuit and H&R Block, which would not please the shareholders.
The vast majority of taxes that are filed by US taxpayers are simple.
I assume you meant "tax returns" (instead of taxes). Have you ever paid income tax in another country (other than the US)? Many highly advanced countries do not require a tax return as long you are a regular salaried employee who makes less than X (usually a pretty large number). Even interest paid from a bank account or capital gains from securities trading would be handled automatically. It is crazy how much work you need to do in the US ... even for a "simple" filing.
> Have you ever paid income tax in another country (other than the US)?
No, but I do know that it's much simpler. We (the US) seem to have a "not invented here" syndrome towards learning from how other countries improve over our system.
> It is crazy how much work you need to do in the US ... even for a "simple" filing.
The old rumor is that drug dealers and gangsters get convicted for tax evasion.
We (the US) seem to have a "not invented here" syndrome towards learning from how other countries improve over our system.
I see this pattern repeat when I speak to people from (physically) large countries: Brazil, Australia, Russia, China, etc. It seems like the larger your country, the most culturally isolated that you become. Small to medium sized countries are more willing to look outside their borders for good ideas.
Seems ingenuous to me. Except when Tele-File was a thing, every time has been 1-4 hours of torture, hoping all the places that are required to send me forms have done so (on time & correct), hoping that I have filled everything correctly, hoping that some unknown change of requirements hasn't made my past experience with some section irrelevant or misleading, and sometimes wondering why for the exact same inputs as the previous year (as occasionally happens) I am now told that instead of getting $X back I now owe $n*X.
I sometimes end up plugging the currently requested info into 2 to 4 tax prep sites (discarding the highest results, unless the lowest seemed to come from a glitchy or confusingly-worded site), because even they can give wildly different results.
What's to say it doesn't start incorporating some of that data in the future? Having an official IRS tax prep tool is absolutely the first step towards that.
You're expecting coherency in the American libertarian mindset. There is none. "why should the government control the means of tax filing! I need to be free to pay a private company to do it!"
I’ve paid taxes in countries where it pre-filled forms.
Guess what I do? I get all my forms together. Look up the numbers on the forms. Double check the entries on the fillable forms are correct.
Then I get my paystubs, I check the deductions, double check the prefilled form is correct.
So what did it save me over the way US taxes are done? The form prefilled the numbers, that’s it. All the rest is the same. Same collecting forms, same doubling checking math.
And why? Because mistakes are made. My employer sent the wrong numbers in, so the prefilled form was incorrect and would have cost me about $1,000 in extra tax.
If you want to make tax filing better, make the tax code way more simple. I’ve lived in countries where the tax form was 2 pages with 12 entires. That’s it.
Now that is the way to go. I could care less about fillable forms.
> So what did it save me over the way US taxes are done? The form prefilled the numbers, that’s it. All the rest is the same. Same collecting forms, same doubling checking math.
I'd wager that ~90% of people where I'm from where we have pre-filled tax forms does their taxes in less than 5 min (ah, looks reasonable, click).
Not everyone is a arrogant cheapskate like yourself. The actual reason is that it's 99% of the time correct due to it generally being a well-functioning system proven over time.
Paying income ta is made into an arduous task so people are likely to vote against taxes or for repeal of taxes instead of being accepted as a fact of life.
Exactly. Here in the UK I get paid a salary and so my tax is just automatically calculated and deducted from my pay. Then yearly my taxable benefits are calculated by payroll and deducted from next years taxes
I've been using FreeTaxUSA for a while now to do my taxes, and I like it very much. (If you use TurboTax or H&R Block or something, I strongly recommend giving FreeTaxUSA a look). I was sort of wondering if the IRS would just buy them wholesale and use that as the free file software, since it's already "finished" and making another one would be duplicated effort. But is there precedent for that, the government just buying a private company for its IP?
US Digital Service and the current White House MO around digital service delivery [1] operates a bit differently. IRS modernization [2] [3] will be owned internally. Their systems are the iceberg under the surface, the website for citizen consumption is the little bit above the surface. They're hiring people who know what they're doing (from page 15 of the modernization pdf):
> Our overall success will depend on several special legislative proposals and regulatory
authorities that we believe are appropriate for an effort of this scope and importance:
> Engaging the Office of Personnel Management to utilize existing direct hire authority for
IT modernization positions and/or broadening government-wide critical pay authority
> Seeking reauthorization of IRS Streamlined Critical Pay Authority that expired in
2013
> Ensuring funding is available for multiple fiscal years at somewhat predictable intervals.
I gave FTuasa a go after seeing it mentioned here a lot. Unfortunately it seems the investment part is very manual compared to TurboTax. I have a couple of robotrader , brokerage accounts etc. on TurboTax it’s a few clicks and that’s imported, FTusa is tediously transcribing numbers off dozens of forms that I have no idea if I’m doing it right.
If your brokerage reports all of your trades to the IRS, which they likely are, then you can just enter a summary. You don't need to grant access to your outside accounts and import anything.
Right, I've always just entered the summary. However, that process is manual and requires scouring the forms for correct info. With TurboTax, it lets you integrate into the brokerage and just sucks down the info.
A tangential comment given your mention of whatever 99 B form:
Every time HN discussion about US taxes comes, I imagine a sizeable group of users from developed country watch in amusement the craziness that the IRS makes its taxpayers go through to charge them money.
I know in Mexico and Chile everything is highly automated. In Mexico 50%+ of working class dont have to do ANYTHING, as whatever tax stuff needed is submitted by their employer.
Come on US... that we in Mexico have better automation for this is inconceivable. We look up to you for lots of things, particularly technology.
1099-anything, by definition, doesn't come from an employer. They're for other sources of income (brokerage sales, interest, etc.).
The US would need to vastly simply the tax code - remove all the various tax breaks for dependents/spouses, remove the progressive taxation scale, etc. - before it could be successfully automated.
I don't think this is true. For pretty much everyone except either small business owners or the very wealthy with exotic assets, the government already gets all the forms it needs to calculate all your taxes (employers send W-2s, brokerages already send 1099s, your bank sends your mortgage statement to calculate things like mortgage interest deductions, etc.). There's no reason it can't be automated for 9 out of 10 people.
I've got REITs. I've got pension investment. I've got a house I'm getting interest off of, I've got stock, both Mexican and US (TQQQ and chill!), and I work at a company earning enough to HAVE to go into the Mexican IRS portal do do my taxes "manually" (I.e. my employer cannot do it for me).
With all of that, I just get into SAT page, ask it to fill up everything with the data they already collected, review it, and agree on the $$$ they will give me back (yay mortage!).
It CAN be that simple. that's what systems are for: to automate complex processes. Computers excellent at it.
Blame this on the "government can't do anything right" party that gets into power and then proves themselves correct by shutting down efforts for the government to actually do things (because ideology).
Not really because FreeTaxUSA asks questions about whether there are state specific bonds that have already collected taxes, whether the investment qualifies as a foreign investment, etc... That requires digging in a bit.
Foreign taxes are lines 7 & 8 on the summary. A brokerage account shouldn't have state bonds, and I thought those were in line 12, but I can see how that would be more confusing.
Personally, my pain point is the mail-in Form 8453 that comes with the "summary" option. I'd wish for a PDF upload option instead. At least two competitor products have this capability:
Interesting. Unfortunately, from the way she talks about it, the kind of people that FreeTaxUSA hires would probably not be on Reddit most of the time.
Are there any details about their tech stack you can share? I know they're using Java (there were pages ending in .jsp when I filed my taxes through them) but that's about it.
Totally agree. A huge benefit of TT is the automated importing and parsing of forms, both for speed and accuracy in doing taxes. Without that connectivity, FreeTax USA is not much different from just filling out the IRS official pdf's.
There is no secret sauce with free tax usa or any of the others. It asks you questions and auto fills a pdf that ends up being surprisingly short in the end. Setting aside for a moment the window dressing on the ui and having to support all these concurrent users and their accounts, what it actually does is so simple. It really feels like the sort of site where the would make a good assignment for an intro to html class.
One thing I really want to see is an official form where if you answer all the questions, to the best of your knowledge correctly, protects you from liability for incorrectly filing your taxes.
End of the day with TurboTax and co, you, as expected, get a "not our system, not our problem" type response when dealing with the post-filing ramifications.
There seems to generally be a lot of "I'm not sure if I did it right" anxiety in the general population.
protects you from liability for incorrectly filing your taxes.
In practice, it's not really needed. The thing is (and I realize that it's not the general perception) if you sincerely try to file your taxes and you screw up, the IRS will generally work with you to fix things. Sure, if you go all sovereign-citizen/Wesley Snipes and refuse to acknowledge taxes they'll kick in the door and take all your stuff. But if you accidentally report select head-of-household instead of single, and you can explain why you did, the IRS won't ruin your life.
"Reasonable cause" is a pretty hard bar to meet. [1]
> The following factors don't generally qualify as valid reasons for failure to file or pay a tax on time:
> Lack of knowledge. You're responsible for knowing or getting advice on how to file returns and pay or deposit taxes on time. This includes filing requirements, deadlines and amounts you owe.
> Mistakes and oversights. You're responsible for making sure your tax returns, payments and deposits are correct and on time. In certain cases, reasonable cause may apply to a mistake if additional facts and circumstances show that you tried to comply with tax law.
A much easier path is first time abatement. [2] Though of course as the name indicates, it can't be used multiple years in a row.
At the very least, I'm going to contend that it's not a DIY thing. It's something that you should hire a tax pro for, so they can properly assess your situation and present your case.
> In a number of recent Tax Court cases, taxpayers have raised the
argument that they relied on Turbo Tax software as a defense to the
imposition of the accuracy-related penalty. With one notable exception, the
so-called “Turbo Tax defense” has been rejected by the Tax Court.
Many years ago, I screwed up my AMT calculations pretty badly, arguably because the instructions for Form 6251 suck. I was off by several thousand dollars, the difference between a big refund and a big amount due.
I didn't have to hire anyone to get the penalties waived; I just submitted a letter explaining my original rationale, along with an amended return fixing the problem and a check for the correct tax. The IRS was completely reasonable about it.
Edit to add: But then again, I do my own plumbing repairs. Heinlein didn't list taxes in one of my favorite quotes from him, but he should have: "A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects."
same thing has happened to me several times - including a total failure to file AMT when I really needed to. I screw up, IRS sends me a letter saying 'you screwed up, if you just send in X we're good'. Sometime they even send me a letter saying 'you screwed up, here's a bigger return than you asked for'.
For me so far the problems have been easily sorted out except once. The once was a lot of extra and unnecessary calculations but essentially no penalty. Just the cost of my time, which is bad enough.
My main complaint (which is still fairly minor) is that they still too often presume that "it" (the reason why they want more money) is the fault of the individual taxpayer. No need for them to consider other possibilities. Once, a client provided poor numbers on their 1099 and I used my version. Both versions based on my invoices. IRS doesn't bother to ask for a clarification. Just sent me a bill and fine. And I suspect in the end after my response letter, they audited the client. Not the best result but only a little stressful on my side.
Unfortunately, this is the fantasy but it's not the reality for some Americans. USA is a very complex country where blanket statements like this can be so far from the truth for some that you'd be surprised. Tax education in our country is next to 0 but our taxes are extremely complicated. Many Americans have non-USA ties (even some Americans who lived in the USA their entire lives can have family members outside the country, but definitely Nth generation immigrants and recent immigrants) and what you said is not true if non-USA finances (bank accounts, inheritance, income etc) are involved. It is possible to make a tiny honest mistake and have to face huge $$$ penalty consequences. Such as FBAR, Form 8938, Form 3520 to name a few, these are things almost no American knows but if your grandpa from Mexico dies and you don't report his property in Form 3520 you may be billed up to $100k penalty. Sure, if this was an honest mistake they'll waive this penalty but not always and certainly not without a tax lawyer fighting for you. Now you need to hire a CPA and a tax lawyer and this is not cheap.
I personally find it misleading to undersell how high stakes taxes are in the US. Sure for 95% of the people if you make a tiny honest mistake nothing will happen, but it's not like a small error in your taxes can't cause a huge ordeal. I tell my friends, taxes are an extremely high stakes deal and you need to understand what's happening on those papers and IRS website. I'll tell my kids the same once they're of age to understand.
It could be so much easier. In most of Europe "filing" your taxes involves getting a short letter essentially saying you made $x, and <owe/are owed> $y, with short return forms to either agree, or file an appeal.
Every time this comment is posted about non usa geographic area, somebody will post, but in US you have deductions, allowance, dividend, smaller profits, gifts. Which for sure all other countries too have, and somehow they have sorted this out. I think its the lobbying and the general mistrust of government "telling" a number vs calculating the number yourself. (Although if that is a wrong number, government/IRS tells the correct number).
If you make a good faith attempt at filing your taxes, you won't need liability protection. If you screw it up, you'll get a (relatively) polite message from the IRS that your taxes were screwy and you owe them money (or, occasionally, they owe you money).
This is only tangentially-related, but I know I'm asking the right audience: I switched, blissfully, away from Quicken/Quickbook/Xero/all that heavy crap to very simple and elegant textfile-based accounting (ledger/hledger) and it's been the best and most flexible accounting experience I've ever had. I finally feel completely in control of my companies' books.
Is there an equivalently-blissful tax-filing software/service? I don't want to go back to TurboTax, and with several single-member LLCs I'm probably beyond the scope of the IRS' free service.
If you're looking for the same level of manual control because you don't want the "wizard" interface, you should use "Free File Fillable Forms" [1], which is the product of a public-private partnership with the IRS.
It's literally just filling out the paper forms except in a web interface and it does most of the math for you. And then you can file electronically for free regardless of your income level, and it produces a final PDF with all forms filled out for your files.
It can be tricky to do your taxes the first time around depending on their complexity, but the good thing is that once you figure it out, you just use the previous year's PDF's as a reference for the current year's. The lines move around a little bit year-to-year but it's usually the same idea. And it becomes pretty obvious what has changed (that requires research), and you can figure out if anything has changed in your own financial situation that warrants filling out a new line or new set of forms.
(I don't believe there's anything specifically textfile-based. But this is definitely the electronic version of doing your taxes "manually" with full control.)
That's interesting. Apparently submits electronically sometimes - but if you need attached statements, for example for f1116, you have to print the product and mail it. Otherwise supports surprisingly MANY forms - many of them with some limitations which are enumerated for you. Some schedules are not included, for example this year f1116 requires 1116 Schedule B for carryovers and that's not provided here. So again if you need f1116 then you'll be printing and mailing that. Really... Many forms are included.
With Beancount, I use metadata tags in my chart of accounts for the tax form and line number, e.g.
2017-01-01 open Expenses:GA:Insurance USD
tax_form: "1040 Schedule C"
tax_line: "15"
tax_description: "Insurance (other than health)"
I can then report my transactions based on the tax_form and tax_line attribute, which gets me much of the way there. I still have to do the math on derived lines on the forms, but this at least makes sure the inputs are gathered correctly.
Being able to write comments is also super-useful. A real life example:
; We can make a "Section 1.263(a)-1(f) de minimis safe harbor election" to
; treat repairs and improvements to tangible property as an expense, which
; would otherwise have to be capitalized. A statement that we are making the
; election must be attached to our tax return and should include name, address,
; and Taxpayer Identification Number. Under the election, we must apply the de
; minimis safe harbor to all expenditures meeting the criteria for the election
; in the taxable year. The limit is $2,500 per invoice.
;
; https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations
2016-01-01 open Expenses:RD:Hosting:Repairs:DeMinimis USD
tax_form: "1040 Schedule C (R&E)"
tax_line: "21"
tax_description: "Repairs and maintenance"
I don't supposed you're also familiar with GnuCash and can compare and contrast? I've been using GnuCash for a couple of years. I like that it's free software and I control it, and I like that it stores its state in text files (XML?). That said, there's some annoyances. It's difficult to automate anything (e.g. all transactions that have a string X, should go into account Y). Also I don't think it supports labels (???!)
I'm considering whether to move away from it but it would of course be a considerable investment of effort.
For me, the beauty of Beancount[0] is that it's just text files in Git. There's a web UI I use for generating reports, and a Python API with which I hacked together some import/export scripts, but 99% of my interactions with it are via Emacs[1] and Magit. GnuCash may use XML to store its data, but I'm pretty sure it's not designed around editing those XML files directly.
A ton of repetitive bookkeeping tasks become so much easier when you can copy and paste, or use keyboard macros or something like multiple-cursors[2], rather than have to click tens or hundreds of times in a GUI. Many years ago I used QuickBooks, and basic tasks like importing a bank statement took at least an order of magnitude longer than they do now.
Having my company's books in Git is also huge when it comes to auditing, concurrency, backups, and figuring out where things went wrong when accounts don't balance. As mentioned in another comment: `git diff` is a really powerful tool and it's awesome to be able to check out the books as they existed at a particular point in time. `git blame` is great for when you're trying to figure out where a number came from. Writing meaningful commit messages and comments keeps me sane when I try to remember a year later why something is recorded the way it is.
The biggest downside—or advantage, depending on how you look at it—is that there's no default or built-in chart of accounts, so you need a certain level of accounting acumen (or professional advice) to set things up at first. I'm pretty sure GnuCash aims to be plug-and-play, whereas Beancount is more akin to a programming library that you use to build an accounting system. I agree with the grandparent commenter, who said that text-based accounting is "the best and most flexible accounting experience I've ever had." But the cost of that flexibility is that there's a fair amount of DIY involved.
Interesting idea, but wouldn't you be better off creating abstract categories and then assigning/verifying where they go at tax time? Line numbers can change from year to year.
Those are abstract categories (accounts). Transactions get assigned to accounts, then (at tax time) accounts get assigned to forms and line numbers.
Remapping a transaction to a different tax line item (e.g. if tax law changes, as it did this year with § 174) is just a matter of updating the account metadata. This is much more convenient than having to go back through the books and reassign transactions to different accounts.
It's plain text in Git, so I have the usual tools available. For example, `git diff` can tell me what changed between tax years, and I can check out a copy of my books as they existed at the time a past year's return was filed.
Oh I see! I'm not familiar with Beancount syntax so I didn't realize that your example metadata pertained to an account rather than a transaction. Of course looking it at more closely that's obvious now.
> I switched, blissfully, away from Quicken/Quickbook/Xero/all that heavy crap to very simple and elegant textfile-based accounting (ledger/hledger) and it's been the best and most flexible accounting experience I've ever had. I finally feel completely in control of my companies' books.
I love the idea, but not being an accounting expert (maybe you are), I'd be afraid that some immaturity or lack of expertise in the software would cause a big problem in a critical way. What makes you confident in it?
Also, how do you share data with accountants, etc.?
> AZ, CA, FL, TX, NY alone gets you to about 120m people.
Not quite; ~71.8 million constrained to just individual income tax filings based on 2022 stats[1]. Excludes estate, corps, gift, tax-exempt orgs and excise, but includes both paper and electronic filings.
AZ 4,197,918
CA 23,209,479
FL 14,563,047
TX 16,750,330
NY 13,115,425
---------------
71,836,199
===============
US 204,434,236
See, this is the thing that gets me. For almost anyone who fits in this box, you shouldn't have to file in the first place. Not "shouldn't have to pay", but literally, "should not have to send documents to the government telling them how much you owe them" - because they already have all of that information. They should just give you an itemized breakdown and ask if it's correct.
Yeah, this has been my frustration too; I got audited by the IRS in 2021 because I forgot to declare stock sales, and so I owe about $8,000: $7,000 for the missing taxes and a $1,000 fine.
I wasn't terribly mad about the money (if I owe $7,000 then that's what I owe, it was my fault), but what I was mad about was the fact that I had to do anything in 2021 at all. If the IRS knows enough to know what I owe them, then why exactly do I have to file, just to have them validate that the numbers I give them match the numbers that they have on file.
They don’t know enough to know how much you owe them, but they do know that you got $xx,xxx from a brokerage account and that the tax would be $7,000 unless there were some things unknown to them that would make it a lower amount. You didn’t tell them about any of those things, so they assumed the full amount but were perfectly willing to be shown that that this assumption was wrong.
my favorite part is how brokerages like morgan stanley don't report the cost basis when they report your sales to the irs, and for no reason I can find.
This means that if you don't report sales from your side so you can note the cost basis, the irs assumes a cost basis of 0 and calculates owed tax on the entire sale value - this applies to stuff like RSU grants as well, and trips up a great many people entering the tech sector ( especially young people who may not have much tax filing experience )
I legitimately don't know why brokerages don't all include the cost basis by default ( or why they aren't required to by law )
Cost basis is not so cut and dry. In fact, the IRS (federal law?) allows you to use almost any reasonable method for determining it as long as you are consistent.
An example of where the brokerage wouldn't know:
You buy 5 shares of stock at $X and then a few months later buy 6 more shares at $Y. Later on you sell 3 shares for $Z. What is your cost basis? It could be $3X or it could be $3Y. Or maybe a blend of the two $(2X + Y)! The IRS thinks that you should be the one to decide, not the brokerage.
>They should just give you an itemized breakdown and ask if it's correct.
I'm sorry, but this response comes up every time, and every time the answer is "yes, that's why I said you should be able to just tell them it's correct." It doesn't have to be any more difficult than checking a box.
90% of people are just going to use the standard deduction (no, seriously: in 2019 it was 87.3%[1]), and for most people their filing status will only change a handful of times in their lifetime. It makes no sense to waste everyone else's time for what should be at most 3 or 4 yes-or-no questions.
And in each case those additional deductions apply to a small minority of people, and they are often things the IRS can probably already know. All of which you can choose to add with a question or two. You're missing the point, though - the IRS already has 90% of my data. Under no circumstances should I be having to re-enter my W-2, a document they already have on file, and stress about making errors in data entry.
...Which is exactly how it is now, because there's nothing stopping you from not reporting payment under the table. The marginal increase in the number of people who might decide to commit tax fraud because they see the government doesn't know about all their waitressing tips (but were previously dutifully doing all the bookkeeping to report them?) is negligible compared to the hundreds of thousands of potential economic activity the current system wastes per year.
Especially meaningful savings with taxable interest.
Yes, most people with more than a few hundred bucks in savings accounts will get a 1099-INT, but a lot of people just use checking accounts and if you're at a big bank like Chase even savings account interest is so low you still might be under the $10 threshold.
The average American's investments (if they have any at all) are in retirement accounts so they'd avoid those taxes too.
It looks like about half have brokerage accounts although some of those are probably just 401Ks and there's obviously a strong correlation with income levels.
I'd bet once you start digging down into the details, having a brokerage account becomes less and less relevant as a metric for who can pay simple taxes.
For example, how many of those respondents in the Gallup poll answered yes only because they have a Simple IRA? For those respondents, their contributions don't preclude them from taking the "simple tax" branch when filing taxes. (That's the "simple" part-- well, one of the simple parts, at least for the employee.)
Moreover, there were some changes to simple IRA administration in Secure 2.0 act that make automatic enrollment mandatory (for the employer to do 3% matching or whatever). So the category of respondent I mentioned above-- who technically has a brokerage account but can file simple taxes-- is likely to grow quite a bit in the next few years and decades.
Edit: I'd also be interested in how many people with simple IRAs contribute anything more than the 3% matching-- I'd bet its more than a majority. Perhaps that could change now that Secure 2.0 lets them contribute to a Roth IRA.
As an expat, I assume that there will be no soon changes to the complicated tax filing that I have to do. Although I am exempt from paying taxes to Uncle Sam, the "tax" that I have to pay to an accountant to fill out the complicated forms is more than enough to make me want to get rid of my citizenship, if that in itself wasn't so expensive.
>Arizona, California, Massachusetts and New York have decided to work with the IRS to integrate their state taxes into the Direct File pilot for filing season 2024.
There's the notable point. If states integrate into it, it's a game changer. No need for the vast majority of filers to use any 3rd party.
I hope this is good! I've been happily using FreeTaxUSA for the last several years, which has a small price for state tax submissions and no gotchas after H&R block jumped me with over a hundred dollars in fees at the end.
Will this system integrate with all the banks, exchanges, registered businesses, and etc? I find that 90% of the time spent on tax filing is gathering data. Turbotax does offer some integration, but the experience was not necessarily smooth.
Is a CSV not a good API? Most systems will allow you to export data in a columnar CSV format. Being able to then import these would solve the problem. "Swivel chair handoff"
In that case I'll have to log in to each account, find the right place to download data, download them, and import them to my tax system. I'd rather have a turn-key solution. And I definitely have no interest of writing a program to automate such task.
> eligibility to participate in the pilot...will be limited to taxpayers with certain types of income, credits and deductions – taxpayers with relatively simple returns. The IRS today announced it anticipates specific income types, such as wages on a Form W-2, and important tax credits, like the Earned Income Tax Credit and the Child Tax Credit, will be covered by the Direct File pilot.
This is what I was mostly curious about. So, I'm guessing things like ISOs, AMT, capital gains from investments etc would not be supported by this service yet.
I'm glad. I've used Cash App Taxes the past few years, and while it's free (including state) and an easy interface, I'm well aware I'm the product. Presumably/hopefully that will not be the case with this new system. I'm in one of the listed states, so I'm ... not exactly looking forward to trying it out, but definitely curious!
Businesses will still need tax assistance. But there is no reason for a person whose income comes only from a salary, interest on savings and a brokerage account to need paid help to file taxes. The IRS already has all of the numbers. They could pre-fill the forms with those numbers and just have the taxpayer approve them.
The IRS processing of the data sent to them by various reporting requirements is much more like what we'd call "eventually consistent". If you ask for a transcript of your tax account ("what does the IRS know about my tax situation?") on April 15th and again 6 months later, the second report is very likely to be complete, while the first is not nearly as likely.
So, do it anyway and let the IRS eventually send a correction (refund or bill) in the rare cases where it makes a difference. Or allow the taxpayer to make corrections if they know about them. But probably the number of errors will go down; well-intended taxpayers often copy numbers wrong, and that probably happens more often than "eventually consistent" issues.
If anything, this will compel the tax preparation software companies to get even better than before, and offer an increased value proposition.
Competition benefits the consumer, and for a long while there's been limited, mostly fixed competition (via Brand awareness mostly).
FreeTaxUSA is amazing, and cheap, but it does not yet have the brand power the incumbents do.
It's unlikely the IRS offering will be as easy to use or as pleasant as the existing offerings, but it will be a huge shot across all of their collective bows.
Keep in mind the IRS offering a free online service for tax filing does not reduce the complexities of the current tax code - nor does it make for a more fair tax system (one where having means to access professionals reduces your perceived tax liability). This system merely means fewer people need to pay $49 a year to file taxes...
Can you elaborate on that, perhaps with some substantive example?
I believe that these companies lobby to keep IRS from providing free tax prep, but I do not think that they lobby to make the tax code more complicated.
It’s my understanding that the tax code is complicated as a result of disparate efforts to increase support among voting blocks, to encourage/discourage behaviors, and to reward supporters/backers.
Knowing that the economy is only going to get larger and more complex, how is the constant lobbying to keep the system inefficient not making it more complicated?
Did you have a specific counter-argument, or just thought-termination?
This whole thing reads like insanity to me lol, I live & work as a contractor in the UK and I'm taxed directly through PAYE on earnings. Beyond that I just file my tax return through the Gov website.
The US has a long history of tax credits and deductions that people finagle to pay as close to their actual tax obligation as possible. (ie. if you do not do this, then you are quite literally paying more than your actual obligation according to the tax code).
The government isn't aware of your donations or losses, or whatever. So you have to tell them about it. Tax preparation software, historically, was designed to make this process easier by prompting you for all sorts of details you may have forgotten or were un-aware of. In essence, the software was supposed to replace a paid tax professional.
Today, most people use Standard Deduction since it was raised so high by the Trump Administration, and the need for credits and deductions has been greatly diminished. However, the need is still there for many folks, and not all tax filings are simple.
The nirvana for tax filing would be a single page online that disputes any facts the IRS already knows (such as informing them about donations or the like). But, our tax code itself needs to be vastly reformed and simplified before that can become a reality.
I don't think you are actually disagreeing - the GP was saying that if they can't differentiate themselves enough to make consumers choose to pay, then no real loss.
This is overly optimistic. Intuit is the leader in this space, and they haven't produced a compelling new feature in decades. They have spent far more of their energy fighting the government to maintain their status quo than doing anything material for their customers. They even have gone as far as to lie to their customers about their eligibility for free filing just to skim a little bit off the top of the lowest earners. Even in the presence of competition, the barrier to entry is so high that Intuit has maintained a virtual monopoly on home tax preparation. They will fight to uphold/regain that before they ever fight for you.
Yes, there are alternatives, but what possible enhancement could any of them provide that is worth anything? Tax preparation is largely deterministic, and maximizing deductions is a largely human-lead task that is only beneficial to higher earners who have an accountant that does their taxes for them and don't care about services like TurboTax and FreeTaxUSA.
For most working class Americans a guaranteed free solution provided by the IRS itself is a no-brainer. You know that the government isn't in the business of maximizing profits at all costs, and you get the peace of mind that the IRS itself calculated your taxes, and that you are unlikely to get the blame if there is an error.
Tax collection is a critical function that the government relies on, it should overwhelmingly be a government-lead process that doesn't cost people any more than what they owe in taxes. I hope all of these predatory tax filing businesses go under, because paying taxes is a civic duty that people shouldn't be reliant on private organizations to fulfill for them.
FreeTaxUSA is the one I use and recommend to everyone else.
Though, I also do my taxes on TurboTax to double check my work (I don't submit until both programs report the same amounts to the penny). I just don't submit using TurboTax.
> nor does it make for a more fair tax system (one where having means to access professionals reduces your perceived tax liability)
It's not that deep, man. Not everything in life has to be an all-or-nothing scenario. This is a big win for a solid percentage of Americans who have a relatively straight forward tax situation.
Tax fairness, IRS tyranny, bought-out politicians, corporatism -- let's leave that for another day.
Let's learn to celebrate wins no matter how small.
>If anything, this will compel the tax preparation software companies to get even better than before...
This implies that the state of tax preparation software is "good", which really doesn't line up with overall consumer sentiment. Personally, I hardly consider clunky UI/UXs loaded with dark patterns to be anything but good.
I agree and they already do to some extent. I could easily do my own taxes. I pay for a service because they take on liability when it comes to my tax return being correct. If they screw up, and they have, they fix it. That is worth 50-100 dollars to me...
People focus on the insurance side of health care in the US - but that ignores the reasons the system is so broken (Medicare + Pharmaceutical Companies).
Just as in tech we build things that will get refactored and thrown away, it should be expected certain private sector components might be eventually deprecated when government steps in to provide as a public good.
> it should be expected certain private sector components might be eventually deprecated when government steps in to provide as a public good
I support many public goods, including this one, but they are a tool with appropriate uses just like private enterprise is. I don't want operating systems to be a government-provided 'public good'. Also, I think freedom is the core, but not only, value here, including in commerce. When government takes over, it's no longer a free market with free people.
I don't think governmental functions like tax collection should be subject to the free market. Where does this end? Do we end up with private militias that compete with municipal police departments? Do we end up with private militaries that compete with the US military? Do we end up with private court systems that compete with the DoJ?
Some things should not be privatized. The government allowing corporations to profit off of a civic duty like taxation, while offering no free public alternative, just anoints a handful of corporations with the gift of extracting profit from a mandatory governmental process. You should not be required to understand the intricacies of tax code, or pay for someone who does, just to file your taxes as required by law.
If a criminal has the right to be provided a public defender, then every American with an income should have the right to be provided with public tax preparation service from the same government that mandated tax collection in the first place.
> I don't want operating systems to be a government-provided 'public good'.
Huh. Interesting example. I actually do want to see a government produced public good operating system.
Where we're going, operating systems will either be ad filled messes or locked down walled gardens. A public good option would be required to meet high bars for interoperability while also not ad funded.
It's one thing to regulate away a market (make things illegal) and a very different situation if the government is just setting a bar for quality within a market.
Funny you bring that up, because 27% of all US Government systems run Linux. The problem is that the government doesn't give back any money, or contribute much code to the FOSS projects that they rely on. If they gave back proportionally like Linux Foundation Platinum sponsors do, they would get a return on their investment just in that they run enough Linux to benefit from contributing.
China has given money to FOSS projects far more than the US does, and there is an official Chinese Linux distro available to Chinese users. Nobody is forced to use it, outside of Chinese government employees on their work machines, but like a library, it is something of value that the state can provide to those who might need it.
If an industry exists because of the government and it can be replaced by a public service, then it doesn't deserve to exist.
FWIW, public defenders are a public service used to interact with a government-created system, but the private legal defense industry is alive and well. So, it's not like making a public service is sufficient to kill any government-created industry.
> If an industry exists because of the government and it can be replaced by a public service, then it doesn't deserve to exist.
It's a start, but I'd need to think of examples. I'd say if the government creates inefficiencies, such as for basic tax filing, it should remove them if possible regardless of the effect on businesses profiting from them.
Off the top if my head, there could be cases where government makes a change that shifts the demand from one industry to another (that donates more to politicians).
> I'd say if the government creates inefficiencies, such as for basic tax filing, it should remove them if possible
The complexity of the US tax code is certainly inefficient from the perspective of someone trying to get through their taxes, but many economists would argue that it enables a very economically efficient way to soft-enforce policy and influence behavior without resorting to regulation and law enforcement.
Whether the economic efficiency outweighs the bureaucratic inefficiency... I'm not sure. I guess that's where public tax software comes in.
Most of the inefficiency comes from the implementation rather than the policy, and the use of an income tax rather than a consumption tax.
If you had a national VAT instead of a national income tax and the government wanted to subsidize e.g. solar panels, they would simply exempt solar panels from VAT and individuals wouldn't have to file anything, they would just pay less for solar panels because the seller wouldn't have to collect VAT.
The system we have now is unnecessarily complicated because the subsidy is essentially always for something you buy, but then you have to go and file paperwork to deduct it from your income tax. On top of that, then penalties have to work differently -- if you want to impose a penalty on cigarettes then you can't just change the amount of the existing VAT on that product, you need a whole new tax with a duplicative collections infrastructure.
The justification for this is nominally progressive taxation, but you could get a progressive effective rate curve just by giving everyone a fixed "standard refund" (i.e. a UBI) against an otherwise flat rate consumption tax.
Everything you're saying sounds great, but afaict VAT doesn't have the power to rework a society the way income tax does:
* Marriage is incentivized via the advantageous married-filing-jointly option.
* Donations are deductible.
* Employers are incentivized to replace part of wages with benefits packages including health insurance, which incentivizes people to not be unemployed.
(I'm not saying any of this is a good thing, especially that last one :)
> Marriage is incentivized via the advantageous married-filing-jointly option.
For 99% of people the 2023 brackets for married filing jointly are just double the ones for being single, and actually penalize two-income married couples in higher income brackets. Moreover, this wouldn't even do anything in a system with a flat marginal tax rate.
But if you actually wanted some marriage bonus you could increase the amount of the UBI for married couples.
> Donations are deductible.
So you don't charge VAT for donations or let the charity buy things without paying it.
> Employers are incentivized to replace part of wages with benefits packages including health insurance, which incentivizes people to not be unemployed.
This is definitely not a good thing and should be burned to the ground. But you could get the same effect if you wanted it by not charging VAT when e.g. employers pay for healthcare.
The better solution would, of course, be to not charge VAT when anyone pays for healthcare.
I agreed with everything the parent said, but to deal with the points you're implicitly raising: just send people checks instead of offering tax credits.
Do X? Get Y!
instead of:
Do X? Fill out 3 forms, cross-reference to 2 others, be eligible for a tax credit if you earned enough, file ....
Ehh I can see GP's point though, 'can' comprises public opinion, taxpayer money; you can (try to) nationalise internet service provision say, wiping out ISPs, but it'll be a political issue and need support.
The point is that there is nothing you couldn't subsidize with tax revenue and thereby destroy the unsubsidized industry, so it doesn't serve as a useful test. You could have the government provide everyone with unlimited free coal and that would be the end of the private coal mining industry, but that doesn't mean we should do that.
The reason public tax filing software makes sense is that the government imposes this cost on the public so the government should collect the money to pay for it in the usual way (i.e. from taxes paid in proportion to ability to pay) instead of imposing a fixed fee on everyone.
Enriching oneself at the cost of others really seems like the business modus operandi in the USA these days. It is a win, although only a beginning of what should come.
Will the IRS version also do my state taxes? Can it "slurp" in the statements from my brokerage accounts? Can it do rental income? I have no love for Intuit and all the rest, but even with the constant up-selling and the other BS you have to put up with, it does help me tremendously with what would otherwise be a complicated task that I dread doing every year.
> If an entire industry can be killed by a public service, it probably didn't deserve to exist in the first place.
It was created by a public service. It would be better if they'd just made a rule that those with super simple tax affairs just didn't need to file, as we have in the UK. But there's probably no pork in just making things better.
The Tory government introduced this filing BS in Britain a while back. You never used to have to file anything with the Inland Revenue before the Tories.
Can you cite this? I thought you just have to file if you make over a certain amount, or you have a setup that requires filing (e.g. you rent part of your house out, or you're a sole trader).
That and also it's not so useful if it can't import from bitcoin.tax and TurboTax exports, since there's so much in tax prep that depends on numbers from the year before, and ultimately the value of tax prep software to me is roughly the time I spend on tax prep vs. what I could get in terms of hourly rate as a hypothetical software consultant outside my day job.
If I have to manually input 5 billion crypto and stock transactions including every damn weekly staking reward just to pay taxes it's just bleh.
NM state tax filing online is an absolute gem of web-based government interaction. The last 3 years, my state tax filing (I'm self employed) have taken less than 5 minutes each time.
It might suck initially, but that doesn't mean a lot. Healthcare.gov works pretty well today (not perfect but gets the job done for most people), despite the shoddy rollout.
How will I know the software is properly optimizing my deductions without a 30 second animated progress bar with the words "Optimizing Deductions" flashing on screen, while also advertising to me that I could be leaving savings on the table unless I upgrade to the TurboTax Pro Ultimate package for no up-front cost*
* cost of TurboTax Pro Ultimate will be deducted from your refund amount, plus interest.
Generally speaking, if you are in a position where deductions and credits matter (ie. not standard deduction), you really aught to seek a professional to review your filing before submission, or at a minimum use two different softwares to compute your taxes and look for any disagreement (in theory, they should have the same output).
Either way, the $49 to use the software is trivial (under this situation) and often is only paid if you use that software to submit your taxes (meaning you can "get a second opinion" for free).
The model is that someone with a W-2 and a 1099 or two and just taking the standard deduction should be "Yep, looks OK." If it gets more complicated than that you probably need to either spend a bunch of your own time or hire a professional.
* deducting turbo tax fees from your refund amount incurs a 59.95 convenience fee (hopefully they don't do this anymore. They did it to me a few years ago and wouldn't refund the charge when I didn't notice and called to cancel it).
Also, my wife paid a joint filing online under my SSN, and the system couldn't figure that out
It's not surprising the system couldn't figure that out. There is no such thing as a joint-filing under a single SSN. You need to include both spouse's SSNs or ITINs on the 1040 to file jointly, and the return is treated as a "joint" return (meaning, equally by both spouses).
We did include both, but we either had to make an account under one of our names, or the check had a name that didn't match on another spot (it was quite a while ago). Despite the IRS having our filing records, they couldn't match it to the payment. It's really not a hard problem.
The check doesn't have to match either name, since names are not what the IRS uses to match payments to returns. The check simply has to have the SSN (or ITIN) of at least one of the joint filers.
It's really not a hard problem.
It's actually an extremely hard problem if you try to match payments by name, since there are a lot of people with the same exact name, many of whom even live in the same state or same city. Most checks don't include an address, and even those that do don't always match the address the taxpayer gave on the return.
It sounds like you failed to include your SSN on the check, which means this problem was one of your own making. That being said, if you could provide proof that payment was timely sent and the check details (check #, account, etc.), the IRS can match the payment received and will void penalties and interest that were assessed.
They weren't. The account had the SSN. The payment came under the other SSN. The filing was joint with both of our SSNs through the accountant. The agent I finally got on the phone after days confirmed that the problem was some mismatch between SSNs in the account, check, or filing.
Of course it was cleared up, but the point is that at least one of our SSNs was on everything. That should be a trivially easy for record merging or linking.
A lot of these services offer a “if we can find a better refund, pay us; if not, no charge”.
That model could still exist and if you are right, these business will still continue to be useful.
I would not go that far, but it is hard not to notice how bad the main competitors in that space have gotten. They are using just about every single dark pattern they can possibly get away with. Some competition from a public service may be warranted in this case.
Why do you think this? NYC, which spends extraordinary amounts of money on the NYPD, still only spends 10% of its budget on public safety[1]. The 4 largest categories are education (20%), transportation (15%), environmental protection (15%), and housing and economic development (15%).
That seems like an overly broad statement. If the companies producing tax filing software were solving a problem for their users then why shouldn't they exist. Even with this new option being offered by the IRS there is still likely room for private companies to solve the same problem (tax filing) in a way which is perceived as better by some users and so still justify their existence.
>If the companies producing tax filing software were solving a problem for their users then why shouldn't they exist
Because the "problem" they're solving has been solved in other countries without a profitable middleman. Intuit's continued existence in this space is dependent on their lobbying team.
That's a slightly different issue though. Just saying that because the government has offered a solution to the problem of filing taxes doesn't automatically imply that no other organizations that are solving the same problem deserve to exist.
I suppose if you are arguing that the one and only reason that tax preparation software is needed is because of Intuit's lobbying then that could be true, but Intuit's lobbying is only part of what has led to a complex tax code.
Yes, the one and only reason tax preparation software is needed for normal people with normal incomes and expenses in 2023 is because of Intuit's lobbying. That's why people are upset about it.
Completely agree that fixing the government is the real solution, but until that is done, why shouldn't private companies be able to produce (optional) tools that make filing easier?
The problem's continued existence was one they were largely responsible for. It's a bit like saying someone who prevents the installation of trash bins then offers to pick up litter for money is providing a valuable service.
Declaring taxes in Brazil is free, but it's hard work (if you dabble with stocks, for instance). For 1/5 of the value of the minimum wage you can hire a accountant that does it for you. I think the service is worth it's price. All i have to do is send them a bunch of documents and they make sense out of it.
This is the way it should be here in the US, and this is the way it works in a lot of countries. The tragedy is, we all know it, and we all want it to change, but there are a few people who don't want it to change, and they're empowered to make it that way.
> The tragedy is, we all know it, and we all want it to change, but there are a few people who don't want it to change, and they're empowered to make it that way.
It's almost as if you don't actually live in a democracy.
If I read the parent correctly it is already how it is in the US. If you do it yourself it is free, and for most people it wouldn't even be that complicated.
Does that mean I can FOIA for the source code? I ask in all seriousness: I believe some things are withheld/redacted due to "national security" but if they hard-coded mainframe credentials in their source code that's not my fault
Much government source is public domain by default, and they are decent about publishing it. If this is owned by the IRS, then probably it will be public. If its a service contracted out, then perhaps not.
Almost none of the “free” or affordable options work the minute you put in an international address. Uncle Sam is one of the rare cases of taxing its citizens abroad, but everything about getting taxed abroad is more complicated.
Like when Biden said COVID vaccines for all Americans & then the health minister or whatever had to walk it back clarifying that that doesn’t apply to those taxpayers living abroad.
California already has one, and it actually has fewer limitations than this federal pilot (it handles itemization and capital gains and such, although that's only because california doesn't have a separate capital gains rate)
This is great, but a lot of people think it will be a Intuit or H&R Block "killer". It won't. People don't pay for the "expert" tax prep, they pay for the hand holding. I have worked for HRB corporate for years and have seen countless people with simple W2's that happily pay $100+ per year just to have an office to go to, to shake a hand and talk to a person about their past year. As long as there are lonely elderly people, these businesses will always be there.
The description of this makes me skeptical. People have been asking for a system where the IRS does your taxes for your, sends you the draft, and you add in any deductions, etc.
They already do your taxes in the background to confirm your return is correct, so this is not significantly more work for them (in fact, it is probably less work).
In some countries with such a system, unless you intentionally lie, you are absolved of legal liability if the government screws up your taxes.
The article makes it sound like they are building a crappy turbo tax clone instead.
>They already do your taxes in the background to confirm your return is correct
This is a common misconception. Most places that send you forms also send them to the IRS (but by no means all places). The IRS makes sure that the information you put in your forms is the same as the forms they got, but they know nothing about your dependents, whether you pay mortgages interest, etc.
Now, the counterpoint to that argument is that c.90% of people just take the standard deduction anyway now that there's not SALT, but the argument there is that we should move completely away from deduction-driven taxes (which is probably the solution).
As for TurboTax et al, those places are not sending your forms to every state tax agency (why do people always forget about state taxes in these threads?), so there's still very much a need for some solution there. Probably IRS data sharing, but good luck getting all the states to agree with the Feds on tax forms (just look at the SALT battle).
Why not start with simplifying the tax code, instead of letting it metasize in complexity, and then laying more complexity on top with software packages?
That's absolutely true, so I guess a better question is "Why do so many people online get excited about free filing systems, without also getting excited about reducing the complexity of the tax code as a complement to those systems".
How many people have you met who are excited about free filing systems, but not excited by simplification of the tax code? Personally I've never met such a person.
It's rare that it gets mentioned on Hacker News, and the previous few times that I've brought it up, people actually attack it, like simplifying the tax code is a bad thing.
Do you still have to enter all your data or does it prefill the data it already knows like W-2 and 1099? That’s where the real benefit comes in my opinion.
The fact we have to file income tax is stupid. The IRS knows what you owe (try not filing your taxes or filing them wrong and you'll get a bill from them for what you owe or any adjustments due to your errors), so if you're not claiming anything or have special forms, why is it needed? For people who do a standard deduction there should be nothing to file.
You fill your shopping cart with a bunch of groceries then you have to write down what you think it all costs. The shop keeper then checks if you got it right. Then they call the police for each 12.3th customer who got it wrong. The odds to get it wrong are so big the help of a different company is needed who will add up the shopping cart for you.
I have my home/property loan through a coop (a FCS institution) and so I get dividends every year on my shares. It amounts to about 1.5x my monthly payment. Because of this I have F-income to declare and so most free offerings are off the table for me.
I used the FileFreeUSA and TurboTax Federal Free in the past and it worked well. I just use TT's paid offering now for the F-income declarations.
85% of Americans should only have to return the postcard "this is what we think your situation is". The other 15% have something the government doesn't know and needs to file. The other 10% should have an accountant do their taxes and not software (which leaves a few% lost, not quite complex enough for an accountant, but not enough of them to support software for their situation).
Well, you could have done a variety of things that aren't reported. For instance, donating money/time/goods, winning from gambling/etc, inheriting money/property, winning things/money, face deprecation in assets like real estate, etc. Payroll and taxes have about a million edge cases and it's one of the reasons payroll is such a bloated industry.
I agree it's probably a bit much for most people though and not filing should be akin to not reporting anything else and the IRS should automatically calculate your return and mail a check or a bill if you owe.
There are too many additions to the tax code beyond that. Really, if they cut away 95% of the cruft then it could be dramatically simplified. Everybody has their thing they hold onto for dear life in a tax code.
Most of the cruft has been cut out (as of 1986!) People are just so used to accountants and tax programs that they never look at the details to realize how simple their tax situation really is. This is encouraged by the tax industry.
Retail financial services are a source of misery for low income people. Providers don't want those customers, and it shows. Predatory products and service providers prey on the less well off. Postal banking would be a good next step.
Wouldn't there just be a lot of money made by someone offering free filing and then offering to give you your return immediately for a fee of like 10%? Is anyone doing this?
I hope the next step would be to tax me and let me decide to dispute if I see something not right. Most of us working with a W2 will have our tax filing simplified and cheap.
They already have this in some form, its called “free fillable forms”, and it sucks. For example if there is any minor issue like something off by a cent it fails to submit and won’t tell you which field has an error or what the error is. Although its not officially maintained by the IRS, I don’t think… if i recall Intuit maintains it as part of an (arguably nefarious) agreement with the IRS. It’s presumably intentionally made to suck and hard to find.
I've used it for many years and never had a problem. It is like filling in a PDF form but has a "Calculate" button which runs all the math for you (apart from some tables, etc. which you need to look up yourself). So I'm not sure how you would get off by a cent.
Federal taxes only. Except for entering in your W-2s by hand, it's pretty straightforward. You can save a PDF copy to your local drive. The nice thing is you save postage and do not have to pay someone to prepare / file it for you.
I got some incomprehensible statements one time from a joint venture. I paid an accountant to do my taxes since I couldn't figure out. There answer to me was "I have no idea what this is trying to say, so I'll just submit it. If you get audited let me know and we'll work it out"
If you have a joint venture then your situation probably is complex enough that an accountant is something need anyway. At that point have them do the taxes as well. Most people don't have that complex a situation.
im not sure what argument you're making. are you claiming the IRS' statement is just fabricating that this program has anything to do with the congressional bill it's actually proposed and funded within ?
That's not necessarily uncommon is it? It was my understanding that bills get passed with extra funding for relatively disconnected causes all the time. They may have to credit the bill under which this was passed, but that doesn't necessarily reflect positively on the rest of the bill or the government's fiscal policy in general.
>that doesn't necessarily reflect positively on the rest of the bill
so what? Biden's bill made a good thing happen, so much that HN readers gave it 859 upmods (which is a lot). I point this out mostly so that I can be amused at how infuriating it is to Hacker News readers who can't help but be hypocrites that they love certain policies but continue to rail against the kind of government that brings about such policies.
I don't think there is any stipulation that the US government can't use products sold by US based companies. In fact, they enjoy doing it. You should ask your elected representatives to prohibit tracking on government websites; if they pass a law, the IRS's web design team will follow it.
I always thought it was weird that something so complex, easy to mess up, and important to the government would require a third party external dependency. For a while towards the end it really kinda became a shining example of late stage capitalism. You, for all intents and purposes, NEEDED to do business with one of these handful of entities or you are in violation of the law. If you can't afford that you'll have to do this literally impossible stack of paperwork instead.
The "stack of paperwork" is definitely far from impossible.
You have form 1040, which gives you a run-down of every possible form you need to reference. You fill out the boxes with the info it wants, then you go down the list, filling in each number box that applies to you: Got W-2s? Probably, attach 'em and sum them up. See a phrase you don't recognize? Read the relevant instructions. Got interest? Time to fill out a Schedule B, which itself references some other forms, and attach some 1099s. Sell any investiments? Schedule D, which might have you fill out an 8949 (strictly speaking, you can skip this one if all your investments have declared basis on your 1099-Bs that you received from your brokerage). If you think you might have more deductions than the standard, there's Schedule A, but for most people you can safely skip that one and take the standard. Taxable income determined!
Then the taxes section contains a bunch of forms that apply to you if you're in certain situations, maybe you have a kid (Schedule 8812), the instructions are very helpful in telling you what you need to care about here. The first box is important, it includes your income tax which the instructions will tell you how to calculate.
Sum up your witholdings from the W-2s and 1099s to figure out how much you've already paid the government, then figure out if you owe the fed money or they owe you.
Sign, stick in an envelope, and send. Whole process takes a couple hours the first time, when you need to learn what you actually need to fill out, and in future years less than 2 hours.
If you can read at a 6th grade level and do basic addition and subtraction you can fill out your tax forms.
The private companies have demonstrated pretty clearly that they will do everything they can to avoid people actually having free tax filing, and while ~$50-100 might not seem like a ton of money, keep in mind that at the current United States minimum wage ($7.25 as of this writing), it would take upwards of working 6-14 hours just to pay for tax filing. $100 is a lot of money when you're not a yuppie software engineer.
I suspect I did enough crazy stuff with stocks this year that it probably won't apply to me at first, but hopefully by 2025 or 2026 I can stop giving money to Intuit or Jackson Hewitt.