IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax • Hacker News Board

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

#391

Post by MaulingMonkey » Wed, Jan 01, 2020, 3:19 AM UTC

ac29 wrote: post #357

JohnFen wrote: post #259

Earlier quoted context omitted.

(Edited to correct an error) About 20% of people (particularly low income people) have simple tax returns and file using 1040EZ. If the IRS computed that form, then what they send out would be ideal for the majority of taxpayers. So it would benefit those by eliminating the expense of tax preparation without actually costing them more in taxes. Then there are those like myself who fall into an in-between area. I have…

1040EZ died after tax year 2017: https://www.irs.gov/forms-pubs/about-form-1040-ez

To nuance this - they've been refactoring/shuffling the forms around.

  2017 Form 1040EZ goes up to box no. 14
  2017 Form 1040 goes up to box no. 79

  2018 Form 1040 has no boxes for $ amounts!
  2018 Form 1040 Schedules 1-3 is where they all went, if you needed them.

  2019 Form 1040 added boxes back up to 11b
  2019 Form 1040 Schedules 1-3 also exist

Basically, Form 1040 is now "EZ" by default. For those with more complicated tax filings, you've had your work scattered to the four winds - I mean, three schedules.

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

#392

Post by burfog » Wed, Jan 01, 2020, 3:27 AM UTC

arcticbull wrote: post #334

nightski wrote: post #292

Earlier quoted context omitted.

I thought that argument was because they doubled the standard deduction, making it much less attractive to itemize and hence, simpler. What is idiotic about that? For most middle to lower class families it reduced their tax burden and made things simpler. There were a few exceptions, primarily upper middle class families in high cost of living areas, but those were exceptional situations.

The net effect of the changes was absolutely tiny for low and middle income folks, and disproportionately rewarded the already well off for whom the marginal utility of money is the lowest. It was a totally regressive change. Just doubling the standard deduction is fine. Capping SLPT was a kick in the nards to liberals on the coasts. It's not just "upper middle class" folks who got hosed, its actually people on the b…

Capping the deduction for state and local taxes is proper. The cap should be $0.

If those taxes can be deducted, the nation is subsidizing the more wasteful states. We create a situation where the winning move is to jack up state and local taxes. This diverts more money to the state. The cost of wasteful spending gets spread across the nation, while the benefits stay with those who are wasteful. This encourages a race to see who can be most wasteful, with the federal government being forced to have higher tax rates to make up for funds lost to tax deductions.

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

#393

Post by naniwaduni » Wed, Jan 01, 2020, 3:49 AM UTC

reaperducer wrote: post #248

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…

a) The great majority of the population who perceives a salary not needing to file taxes. In the United States, and many other nations, the vast majority of taxes aren't collected from payroll. If that was the case, things would be easy. But there are hundreds of other ways that taxes are collected, and they vary from person to person. More importantly, taxes aren't exclusively about revenue generation. They're used…

> They're used to encourage people to do or not do things:

They might be better if this were the goal if people could actual interpret what they're being encouraged to do!

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

#394

Post by arcticbull » Wed, Jan 01, 2020, 3:49 AM UTC

burfog wrote: post #392

arcticbull wrote: post #334

Earlier quoted context omitted.

The net effect of the changes was absolutely tiny for low and middle income folks, and disproportionately rewarded the already well off for whom the marginal utility of money is the lowest. It was a totally regressive change. Just doubling the standard deduction is fine. Capping SLPT was a kick in the nards to liberals on the coasts. It's not just "upper middle class" folks who got hosed, its actually people on the b…

Capping the deduction for state and local taxes is proper. The cap should be $0. If those taxes can be deducted, the nation is subsidizing the more wasteful states. We create a situation where the winning move is to jack up state and local taxes. This diverts more money to the state. The cost of wasteful spending gets spread across the nation, while the benefits stay with those who are wasteful. This encourages a rac…

That’s double taxation. It’s not fair to literally tax me on the taxes I have to pay to another government entity. I don’t even get taxed on the taxes I pay to foreign governments with no cap (?!). The government is “one” from my perspective wrt taxes. No reason for me to pay federal tax on my state tax, period.

Your argument just makes it more efficient for the federal government to be wasteful than state governments which do way way less. It’s useless. The federal government has no business keeping states “lean” that’s up to the voters of said states. There’s nothing in the constitution that makes it the federal governments responsibility unless I missed an amendment.

Further these high tax states also pay for literally all the other states. California is massive net givers of transfer payments and the flyover states being given a break from this are net takers of transfer payments. It’s just biting the hand that feeds. Of course it’s not politically expeditious to say that. [1]

This was done for votes, nothing else.

[1] https://www.politifact.com/california/article/2017/feb/14/do...

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

#395

Post by AndrewKemendo » Wed, Jan 01, 2020, 3:55 AM UTC

privateSFacct wrote: post #8

Fantastic news! Now let's have the IRS start building out their free e-file program and IDEALLY put some pressure or at least summarize what parts of the tax code are the most complex so they can be simplified. A lot of the tax code complexity comes from congress messing with the logic of taxing folks on their income. And yes, simplifying the tax code would get rid of loopholes like deduction that can exceed the cost…

The IRS is always hiring software engineers [1]. You could go there and help them do it.

[1]https://www.jobs.irs.gov/careers?field_usajobs_category_ref_...

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

#396

Post by [deleted] » Wed, Jan 01, 2020, 4:02 AM UTC

JohnFen wrote: post #259

cortesoft wrote: post #150

Earlier quoted context omitted.

Ok, I disagree with the TurboTax reasoning, but I think your argument doesn't make sense... if most people have their pre-filled tax forms making them pay more than they should, then everyone is going to compute their taxes themselves anyway to avoid paying too much... at that point, why is it better than the current system?

(Edited to correct an error) About 20% of people (particularly low income people) have simple tax returns and file using 1040EZ. If the IRS computed that form, then what they send out would be ideal for the majority of taxpayers. So it would benefit those by eliminating the expense of tax preparation without actually costing them more in taxes. Then there are those like myself who fall into an in-between area. I have…

[deleted]

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

#397

Post by froindt » Wed, Jan 01, 2020, 4:02 AM UTC

everybodyknows wrote: post #91

mucholove wrote: post #47

One of the sad things behind the story: Bill Campbell was Chairman of the board at Inuit while this was going on. His story is inspiring. I’m a capitalist at heart. But I’m not a monopolist or a crony—and hope not to become one. The best among us aren’t perfect. We should take this as a cautionary tale.

The vexing question: Why does there seem to be no space in the market for an honest, quality vendor? As in Fastmail, Costco, or the pre-Amazon Whole Foods? Are there so few customers willing to pay a truthful, higher sticker price that such a business cannot be sustained?

Freetaxusa was a very easy experience last year. Federal is free, state is $10.

I haven't read their privacy policy. Perhaps a profile of me was sold to dozens of companies - but I think they fit your criteria pretty well.

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

#398

Post by [deleted] » Wed, Jan 01, 2020, 4:04 AM UTC

burfog wrote: post #379

jacurtis wrote: post #190

Earlier quoted context omitted.

Most countries have this "automagical tax filing process". And what kills me the most is that America actually secretly has this same system too . Yet every year we have to go through the charade of filing taxes ourselves, when the governemnt already knows what we owe without us needing to round up paperwork, W2 forms, 1099 forms, and so forth. Yet they make us do it anyway. Don't believe me? Simply don't file your t…

If it was automatic, income would be missed. The government would be revealing what it doesn't know about, and people would not supply the missing information. Under the current system, people aren't sure what the government is aware of. Because we get in trouble for leaving things off, we are more likely to report everything.

[deleted]

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

#399

Post by colejohnson66 » Wed, Jan 01, 2020, 4:11 AM UTC

rayiner wrote: post #354

CorvusCrypto wrote: post #307

Earlier quoted context omitted.

how would that affect ease of tax generation? You would still need to have the proper congressional authorities vote on the matter, no? And sure, when I am in sweden I get taxed more because of VAT and such, but having a national standard where I can just declare my taxes for the year by pushing a single button for free through the government tax app is a benefit to outweigh any worry that you will get shafted by new…

> how would that affect ease of tax generation? You would still need to have the proper congressional authorities vote on the matter, no? People aren’t paying attention to tax bills that are getting voted on. But when they do their taxes, they’re forced to actually work out how much they’re paying the government. A bill or invoice they get in the mail wouldn’t have the same effect. As to the US system being unjustifi…

> People aren’t paying attention to tax bills that are getting voted on. But when they do their taxes, they’re forced to actually work out how much they’re paying the government. A bill or invoice they get in the mail wouldn’t have the same effect.

Except they’re not working it out. They just have TurboTax do it then see they get a few thousand dollars for $35+ and a few minutes of work. Most people don’t understand that a tax return is money that was already theirs; They just see it as an extra paycheck.

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

#400

Post by rs23296008n1 » Wed, Jan 01, 2020, 4:19 AM UTC

jacurtis wrote: post #190

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…

Most countries have this "automagical tax filing process". And what kills me the most is that America actually secretly has this same system too . Yet every year we have to go through the charade of filing taxes ourselves, when the governemnt already knows what we owe without us needing to round up paperwork, W2 forms, 1099 forms, and so forth. Yet they make us do it anyway. Don't believe me? Simply don't file your t…

Completely agree. Tax preparation is actually work the government should pre-fill. Australia does this. You can do your taxes online free and/or get an accountant or an army of accountants if your affairs are that complex. Frankly, the government should do the initial assessment for you generated automatically from the many, many existing surveillance systems already in place. They are watching all financial transactions and you might as well assume they are.

To even imply otherwise, and I've seen other comments say they shouldn't / don't have this already in place... even when social media companies are slurping data every way they can... seems absurd.

All that said, you should go through each item and correct their mistakes. Those matching systems aren't perfect.