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IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

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Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#311

Post by CorvusCrypto »

dahfizz wrote: post #121
xtracto wrote: post #38

This USA tax thing has always baffled me... it is the exact definition of why we pay taxes: for the government to provide services that are common to the country´s citizens. There´s nothing more common than tax collection: rich, middle class or poor. Why wouldn't citizens demand a public tax filing process? Even in Mexico we have an automagical tax filing process that makes: a) The great majority of the population wh…

I think it comes down to who people trust. Americans on the whole don't trust their government quite a lot. If the government just said "you owe X in tax this year", nearly everyone's knee jerk reaction would be that the government is overestimating and cheating them. On the other hand, you can pay a flat fee to let a third party fight the government on your behalf. That's something that many Americans like the sound…

> Americans on the whole don't trust their government quite a lot. If the government just said "you owe X in tax this year", nearly everyone's knee jerk reaction would be that the government is overestimating and cheating them.

That's why most governments that do self-declaration services make it so you can review what tax rules they based amounts off of. It's not like tax law is super easy elsewhere and without complications. I should never have to pay a fee just to declare taxes to reconcile things for the IRS. That is a basic governmental responsibility to give me that service for free.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#313

Post by s1artibartfast »

alistairSH wrote: post #67

In the US, we've had decades of (largely GOP) messaging that the government can't do anything properly. A substantial portion of the population believes it. As noted in a sibling comment, the IRS could pre-fill forms that would be correct for the vast majority of tax payers (who take the standard deduction/don't itemize, have a single job, and no other edge cases). These people should not be paying TurboTax either wa…

>A substantial portion of the population believes it.

I think it is somewhat disingenuous to suggest that these people were simply duped. The average person has tons of exposure to government incompetence in other arenas.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#314

Post by jimbokun »

xtracto wrote: post #38

This USA tax thing has always baffled me... it is the exact definition of why we pay taxes: for the government to provide services that are common to the country´s citizens. There´s nothing more common than tax collection: rich, middle class or poor. Why wouldn't citizens demand a public tax filing process? Even in Mexico we have an automagical tax filing process that makes: a) The great majority of the population wh…

"Why wouldn't citizens demand a public tax filing process?"

Our government doesn't respond to citizens, only corporations.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#317

Post by dahfizz »

alistairSH wrote: post #145
dahfizz wrote: post #132

Earlier quoted context omitted.

I have had a different experience. Last year I filled out my 1040EZ and was unhappy with the final amount owed. I decided to click through turbo tax who found me a lot of deductions related to student loans and things. I think I only paid like $35 and they saved me over a thousand I would have missed otherwise. And truthfully, it's not a lot of money. I would gladly pay $30-40 just to not have to deal with the hassle…

The majority (~70%) of tax-payers don't have $12k/$24k (single/married) worth of things to deduct. Yet, ~90% of tax-payers use either a CPA (~50%) or tax software (30%) to file. Between overly complex rules, heavy advertising, and lobbying, the tax prep companies have us all convinced we'll go jail if we don't pay $40-$400+ for prep services.

I still think you are seriously discounting the added convenience and peace of mind.

If I was an older person who wasn't super comfortable dealing with computer programs, I would absolutely pay a CPA a few hundred bucks to do my taxes. It saves me time and I don't have to worry about screwing it up.

It's the same reason people get food delivered. I'm paying someone to cook food and bring it to my house. It's something I could do myself, but its a hassle that I can pay to avoid. Plus, I can be confident that a professional chef is much less likely to prepare me burnt / raw / untasty food than I would be myself.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#318

Post by jdavis703 »

komali2 wrote: post #82
alistairSH wrote: post #67

In the US, we've had decades of (largely GOP) messaging that the government can't do anything properly. A substantial portion of the population believes it. As noted in a sibling comment, the IRS could pre-fill forms that would be correct for the vast majority of tax payers (who take the standard deduction/don't itemize, have a single job, and no other edge cases). These people should not be paying TurboTax either wa…

It's pretty disgusting. Summed up in one of my favorite tweets, which went something like > Gov: you owe us money. It's called taxes > Ctzn: oh ok, how much do I owe you? > Gov: you have to figure it out > Ctzn: oh well, then I owe you 0 > Gov: no, no, we know how much you owe, you have to figure it out, and by the way if you get it wrong you go to jail

I forgot to file one of several 1099 forms one year. I got a friendly call from an auditor. He explained what the discrepancy was, how I could appeal if I wanted, and what the payment options were. When I told him I'd take an IRS loan (i.e. a payment plan with interest), he advised me it would be cheaper for me to get a loan from family, friends or the bank.

This was about as far from being threatened with prison I've ever been... And believe me I've come pretty close to being arrested (during exercise of my 1st & 4th amendment rights on multiple occasions).

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#319

Post by dahfizz »

ansible wrote: post #137
dahfizz wrote: post #132

Earlier quoted context omitted.

I have had a different experience. Last year I filled out my 1040EZ and was unhappy with the final amount owed. I decided to click through turbo tax who found me a lot of deductions related to student loans and things. I think I only paid like $35 and they saved me over a thousand I would have missed otherwise. And truthfully, it's not a lot of money. I would gladly pay $30-40 just to not have to deal with the hassle…

> I decided to click through turbo tax who found me a lot of deductions related to student loans and things. We require any companies who collect interest payments on things like student loans to automatically report that to the IRS. We could then have the IRS fill that in for your tax return automatically. But special interests don't want that to happen.

Of course the system could be better. But it's not better.

For better or for worse, tax software does add utility for most people.

Hopefully this reform from the IRS actually improves the situation.

Re: IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax

#320

Post by roenxi »

JamesBarney wrote: post #262
jxramos wrote: post #168

Earlier quoted context omitted.

The thing people misunderstand with the government not being able to figure it out is because there's a huge variety of complexity that is truly individual based. Did you make a contribution to a tax deductible IRA? Did you make a retroactive payment to that account in the following tax calendar year? There's a ton of variables going on here, where the government doesn't have this all-seeing system where everything g…

Tax brackets are the simplest thing in the world but I've heard this argument several times. Is it made it good faith? Are there really people who think tax brackets make taxes complicated and not 401ks, mortgage interest tax deductions, capital gains, etc? A flat tax is completely orthoganal to the complexity of the tax system(which is almost entirely what counts as income, and what type of income does it count as).…

If you have 5 tax brackets, all the other parts of the tax system basically get multiplied by 5 in the number of combinations that could cause weird optimal equilibriums.

Eg, maybe the most optimal retirement plan changes depending on whether you are in the 2nd-to-lowest or highest tax bracket. That means advice for one person might be suboptimal for someone else solely because they are in a different tax bracket.

Factoring in indirect taxes like payroll, in Australia about half my marginal income is directed to government purposes (Australian tax system). Rationally I should be spending 2-3 days/year of thinking time reading up on changes in tax law and scheming on trying to optimise my tax burden if I believe I can find a way of reducing that by 1% somewhere. Having 5 different tax brackets is just asking for me to try and find some complicated scheme where I filter income to unemployed relatives (eg, the ol' put income earning assests in the wife's name). I don't want to be incentivised to be thinking about that sort of thing, I'd rather just know there are no options.

The more combinations there are, the more weird schemes people come up with. Having everyone pay a flat 30% and with some sort of minimum income scheme would reduce the number of alternatives there I have to think about and make it easier to be confident that my taxes are properly optimised.

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