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TurboTax and H&R Block Saw Free Tax Filing as a Threat

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Re: TurboTax and H&R Block Saw Free Tax Filing as a Threat

#91

Post by Twirrim »

StephenCanis wrote: post #84
magnetic wrote: post #75

Earlier quoted context omitted.

In addition to the penalty you'd incur, the IRS is unlikely to dig into your deductions and credits with your fervor, so they will likely compute a number that is "quite suboptimal". There are also multiple ways of doing things, and picking one path may be strategic to you (if you expect more or less income in the following years). Giving up on this flexibility and its ramifications will affect your outcome negativel…

I think the general idea would be for the IRS to provide you with the completed tax return. This should be sufficient for a vast majority of people who only earn employment income. You would then review the return and could update/file a return if you have additional deductions or business income that would not otherwise be reported to the IRS. I believe the UK and some other European countries already have this syst…

The UK tends to do its tax incentives a different way.

The government favours them as subsidies at point of purchase, rather than something you do at the end of the year. That actually works out a lot nicer as a tax payer, as you don't need to have the full amount of money up-front, and also means you're way less likely to miss out on some of them.

Re: TurboTax and H&R Block Saw Free Tax Filing as a Threat

#92

Post by JohnFen »

GordonS wrote: post #88
macspoofing wrote: post #77

The number of anti-TurboTax articles lately ... I get it, filing taxes could be easier but it isn't - on the scale of things to worry about, is it really that important? What about on the scale of things that government is inefficient at - does this rank in the top 1000? Again, I'm not saying we can't improve it, and I agree with calls for the IRS (and CRA) to send pre-filled forms. What I'm calling into question is…

I'm a Brit, so ab outsider - but isn't the big issue here that a private company has been able to successfully lobby to get laws changed to make it illegal for tax filing to be free? I'm not aufait with the US tax system, so please correct me if I've got that wrong.

> isn't the big issue here that a private company has been able to successfully lobby to get laws changed to make it illegal for tax filing to be free?

Yes, it's this exactly.

Also, in my opinion, this is a great example of how a lot of the corruption of government by corporations is done, and is easy for pretty much anybody to understand.

Re: TurboTax and H&R Block Saw Free Tax Filing as a Threat

#93

Post by HenryBemis »

danso wrote: post #14

FWIW, Turbotax/H&R's hiding of their Free File site pages was discussed here about a week ago: https://news.ycombinator.com/item?id=19758126 They have since made their pages discoverable by search engines and have denied that it was intentional obfuscation. But the news in TFA is that apparently someone at (or formerly at) H&R leaked internal documents with explicit guidance: > “Do not send clients to this Web Site u…

> The H&R Block spokeswoman said the company’s Free File offering grew 8.3% this year..

I wonder what was the growth of the paid products. Gut feeling tells me that it was far more than 8.3%.

I have said before (and it didn't do good to my karma but this is more important). I feel that USA Democracy (not the political party) has been corrupted and injured by Lobbying. "Corporate America" rules and the people are there just to get their blood sucked. Healthcare is ran by insurance companies with insane pricing. Talking to the state should be free. Submitting your taxes should be free. I am using (in the UK) a software, but it is my choice to use it. I could be using Excel files and have my accountant submitting printed papers. My choice. It is called freedom. Those companies are playing the people for fools. They will keep pushing so that the vast majority of the people will need to pay to pay taxes. It doesn't make sense :)

Re: TurboTax and H&R Block Saw Free Tax Filing as a Threat

#94

Post by antidesitter »

Twirrim wrote: post #89
brianpayne2 wrote: post #59

Earlier quoted context omitted.

This is how many of the countries around the world treat it. You can thank the folks that lobby the government on behalf of tax prep companies for this convoluted mess we have. The more confused we are, the more money they make.

It's more complicated than that. There are very influential anti-tax and small government think tanks that vehemently argue against it, from the perspective that it reduces oversight. Their position is that people just won't pay much attention to how much taxes they're paying if they don't have to fill in tax paperwork themselves each year. Their position is that if you make it invisible to end users, governments wil…

This argument never made sense to me.

How is the amount on a check or bill, if made clearly visible, somehow “not visible”?

Re: TurboTax and H&R Block Saw Free Tax Filing as a Threat

#95

Post by vonmoltke »

asdff wrote: post #53
danso wrote: post #14

FWIW, Turbotax/H&R's hiding of their Free File site pages was discussed here about a week ago: https://news.ycombinator.com/item?id=19758126 They have since made their pages discoverable by search engines and have denied that it was intentional obfuscation. But the news in TFA is that apparently someone at (or formerly at) H&R leaked internal documents with explicit guidance: > “Do not send clients to this Web Site u…

Is there even a reason we have to file? My understanding is that if you don't file, the IRS knows about your W2 or 1099s anyway and will punish you, so what's even the point of filing yourself? Just have the IRS send a check or bill in the mail in April and end this nonsense industry.

It could be done, but it requires the IRS to be given far more resources, and for it to change the filing deadlines and reporting requirements for lots of dependent forms.

It also requires all the states' revenue departments to coordinate with the IRS, because if everyone needs to file a correction based on state taxes anyway the system doesn't make much sense.

Re: TurboTax and H&R Block Saw Free Tax Filing as a Threat

#96

Post by SilasX »

magnetic wrote: post #75
asdff wrote: post #53

Earlier quoted context omitted.

Is there even a reason we have to file? My understanding is that if you don't file, the IRS knows about your W2 or 1099s anyway and will punish you, so what's even the point of filing yourself? Just have the IRS send a check or bill in the mail in April and end this nonsense industry.

In addition to the penalty you'd incur, the IRS is unlikely to dig into your deductions and credits with your fervor, so they will likely compute a number that is "quite suboptimal". There are also multiple ways of doing things, and picking one path may be strategic to you (if you expect more or less income in the following years). Giving up on this flexibility and its ramifications will affect your outcome negativel…

My (very limited, anecdotal) experience is the opposite. When filing in ~'08, there was some stimulus credit I didn't claim, like $400, which I was eligible for.

After filing, I got a letter that said (in more formal language) "oh, you missed this, we're direct depositing it."

In any case, even for stuff the IRS might legitimately not know about, it would still be a tremendous simplification to reduce it down to, "Hey, here's a list of things that have deductions or credits. If you think something's missing, enter the info."

Re: TurboTax and H&R Block Saw Free Tax Filing as a Threat

#97

Post by vonmoltke »

antidesitter wrote: post #94
Twirrim wrote: post #89

Earlier quoted context omitted.

It's more complicated than that. There are very influential anti-tax and small government think tanks that vehemently argue against it, from the perspective that it reduces oversight. Their position is that people just won't pay much attention to how much taxes they're paying if they don't have to fill in tax paperwork themselves each year. Their position is that if you make it invisible to end users, governments wil…

This argument never made sense to me. How is the amount on a check or bill, if made clearly visible, somehow “not visible”?

Their actual goal is to make people resent taxes by forcing them to calculate themselves just how much money they are giving the government. It's less painful if you get something akin to a credit card statement from the IRS.

Re: TurboTax and H&R Block Saw Free Tax Filing as a Threat

#98

Post by spc476 »

GordonS wrote: post #85
danso wrote: post #14

FWIW, Turbotax/H&R's hiding of their Free File site pages was discussed here about a week ago: https://news.ycombinator.com/item?id=19758126 They have since made their pages discoverable by search engines and have denied that it was intentional obfuscation. But the news in TFA is that apparently someone at (or formerly at) H&R leaked internal documents with explicit guidance: > “Do not send clients to this Web Site u…

As a Brit, I know little about the US tax system - does every citizen need to file a tax return? In the UK, income tax is handled between employers and the government, so the vast majority of people don't need to file one.

Yes [1]. And prior to WWII, there was no withholding and everyone had to file quarterly. During WWII, withholding was introduced so the employer is now responsible for filing quarterly tax estimates, although if you are self-employed, you need to do that anyway (as you are your own employer).

[1] Unless you made below a certain threshold (which is quite low), but you are still encouraged to file anyway.

Re: TurboTax and H&R Block Saw Free Tax Filing as a Threat

#99

Post by hunter23 »

Shivetya wrote: post #78

I am not really in the camp of blaming either of these companies or any tax filing companies for issues like this. The real blame is Congress for making such a complex tax system will all their attempts to keep their offices secure. The tax system used to have meaning but generations of politicians found they could reward and punish with it and they did so with abandon. The system should never had become so complex a…

> The system should never had become so complex as to need a program.

Actually there were bills in congress that would have made it so a program wasn't needed because the government would file on your behalf (https://slate.com/business/2019/04/turbotax-bipartisan-tax-f...). In most cases the government knows enough about you to calculate your taxes for you. Turbotax lobbied the government to kill these bills because it would have destroyed their business model.

So the reason you have to use a complicated form or program to file, is entirely Turbotax's fault because they have lobbied the government from making it simpler for users.

Of course a bigger root cause is that lobbying is undermining our democracy.

Re: TurboTax and H&R Block Saw Free Tax Filing as a Threat

#100

Post by vonmoltke »

javagram wrote: post #69
asdff wrote: post #53

Earlier quoted context omitted.

Is there even a reason we have to file? My understanding is that if you don't file, the IRS knows about your W2 or 1099s anyway and will punish you, so what's even the point of filing yourself? Just have the IRS send a check or bill in the mail in April and end this nonsense industry.

The IRS does not actually have all the information placed on the tax return. For instance, all interest is charged as income for tax purposes, but 1099-INT is only issued for $10 and above. Similar restrictions exist for 1099-MISC but at a higher threshold, if you are a freelancer who receives a lot of small 1099 income from multiple sources, the IRS has no way of knowing that. Conversely, if you’re eligible to itemi…

> Charities don’t send records of their donors to the IRS.

In fact, charities are prohibited from valuing donations of property for the donor. The donor must do that, and justify the valuation if audited.

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