121–130 of 148 posts
A similar trick exists for credit reports. The real site for Government-mandated free credit reports: https://www.annualcreditreport.com (See " https://www.consumerfinance.gov/ask-cfpb/how-do-i-get-a-copy... ) The highly publicized deceptive site designed to get you to sign up for a service you don't need: https://www.freecreditreport.com/
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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…
Anyone who uses TurboTax etc. doesn't actually "do their taxes". They're basically just doing a data entry job, mechanically typing values into boxes from forms as TurboTax prompts them. In many cases people don't even do that, instead opting to direct TurboTax to automatically fetch their data from a payroll provider, bank, brokerage, etc. and do it for them. So for many people it's just 1) enter in financial institution usernames and passwords; 2) click "file my return".
And given that the IRS wouldn't just "send you a bill", but instead send a pre-filled return, people would have every opportunity to read through it and decide if they agree with what the IRS filled in.
There is materially nothing different. The tax prep lobby has just done a fantastic job of convincing people that it "feels better" to fill out your own taxes rather than getting a pre-filled return from the IRS. Which is bonkers, especially since that supposed "feel good" crap wastes billions of dollars every year.
(The US is also pay-as-you-earn, btw. If your employer doesn't withhold enough taxes from your paycheck and you don't make up for it by paying quarterly estimated taxes, you have to pay extra penalties come tax day.)
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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.
Ok, but why does making the process more painful make people lobby for lower taxes? The connection isn’t obvious to me. To make this more explicit, presumably the chain of reasoning is as follows: 1. Make tax filing more painful. 2. As a general rule, people will set out to do that which reduces their pain. 3. Therefore, people will set out to do that which makes tax filing less painful. 4. People determine that lobb…
It's just an in-your-face reminder of how much you're paying in taxes, supposedly sending a stronger message to you than if the IRS were to send you a pre-filled return.
So the idea is, if you're more obviously reminded of how/why your tax money is leaving your wallet, you'll hate taxes more and lobby for lower taxes. You understand that doing so won't make filing taxes any less complicated (and in fact it might be more complicated if taxes are lowered through new deductions and credits that you need to prove eligibility for), but you'll expect to be paying less.
It's still stupid, but at least the chain of logic could potentially hold if you squint close enough and agree with the premises.
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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.
I will assume that although we think the 'gov' knows all about our financial affairs, in reality they don't. E.g. receive some inheritance, selling of property with profit, started trading forex and you got income from that. There are many unknowns, perhaps not for you, but for other people. Also you need to file in order to have this 'discussion'/exchange. Perhaps the state erroneously thinks you made 500k and is ta…
That's still less painful than doing the whole thing from scratch, and the majority of people don't have this situation, so they have very little work to do.
Let's remember that just because there are edge cases, that doesn't mean you should abandon hope for making the common case easy. The best user interfaces make the common case easy and the uncommon case possible.
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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…
The majority of taxpayers are not in that situation. They would benefit greatly from an IRS-provided pre-filled tax return.
For people that are in this situation, the IRS will send them a pre-filled tax return with incorrect data. Then they have the choice to either start with the pre-filled form and make corrections, or start from scratch with their own data. They are no worse off (and possibly much better off, if the corrections are minor) than they are under the current regime.
Regarding itemized deductions, with the 2018 tax year changes, the standard deduction is so much higher (and SALT deductions so much limited), that even fewer people than before will itemize. And the percentage of people who itemize already wasn't that high. But again: people who do itemize could merely correct the pre-filled form the IRS sends, or start from scratch if they really want to.
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 ther…
If the public would rather have simple tax filing then that is what any reasonable government (that wants to get elected and wants to actually collect tax revenue) should do, regardless of some private corporations quarterly numbers/stock price.
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I agree with the fact that lobbying is a big problem. I think just about everybody agrees with that. However, the rest of your points aren’t so great. The tax services are quite convenient and useful paid services. Submitting free taxes in the USA is obviously an option. And to your point on health care: health insurance companies are not the only bad actors in the health care system.
Not convenient or useful at all. You know what would be actually convenient and useful? The government pre-filling most of your taxes for you, like in other countries.
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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.
We can stop wasting billions of dollars a year on the tax prep industry and instead send a tiny fraction of that amount to the IRS so they can beef up their operations.
The one issue I see is that a lot of people expect to be able to file their taxes (and get their refund) by early February. People who have brokerage accounts (and other things) generally can't do this, as brokerage tax forms aren't due until mid-March. Since the IRS wouldn't know who does and does not wait on brokerage forms, they'd have to wait on everyone, and delay sending out pre-filled forms until late March. A lot of people would be pissed about not getting their refund in early February like they're used to. (Personally I think this is a dumb thing to get pissed about, but at the end of the day you have to convince voters it's ok, and the backlash against this would be huge.)
Requiring that brokerages and other entities with a later deadline move their deadline up to late January just might be a non-starter for some. Then again, if I look at my 1099-DIV and 1099-B forms, it's not clear why it takes so long to prepare them. All it takes is a DB query against my transaction history for the year that could be done on January 1st; no need to wait 2.5 months.
Certainly some forms couldn't be prepared until businesses close their prior-year books, but I think that'd affect a small minority of taxpayers.
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…
And the fact that it works... is even more amazing.
It's like 1984.
I mean, it's not even a bad fact. There's no reason to hide the fact that they push people to the paid product. That is what is expected of businesses. I mean, why lie about it? For me it's more insulting to get lied to like this. It's so weird.
But then I see what happens all around me and I remember it works for the majority, or it wouldn't happen.
This isn't directed at political parties, it is about how power is handled by those who wield it, and how those who receive its influence act. You'll see the same dynamics in any large powerful entity and it's admirers: political parties, companies, religious institutions, even NGOs... talk to their fervent supporters and the conversation becomes super polarized where obvious facts are denied, obscured, minimized, or in general disregarded in favor of a vision. Even things that come up on mainstream news outlets will be dubbed 'conspiracy'.
Even saying something completely true and factual which someone won't disagree with, if it casts a negative light on powerful institutions they admire, a major percentage of the population will attack you verbally and put out every answer as if it was a personal attack. I guess most people lack self identity outside of their affiliations? I don't know that part.
But I believe the reaction of the admirers pushes companies and other powerful entities to act in a way that disregards facts. They are speaking to the admirers. They are engaging in persuasion.
The issue is more than free filing. Everything seems to be broken. I helped my brother in law file for an extension through the IRS web site. The IRS directed us to private companies including TurboTax to file the extension. We clicked on the free TurboTax link which nowhere had an ability to file for an extension! I finally told my brother in law to print the extension form and mail it to the IRS. The IRS should not…
> I finally told my brother in law to print the extension form and mail it to the IRS. What was wrong with this to begin with?