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Killing TurboTax

kunle.app

201–210 of 692 posts

Re: Killing TurboTax

#201
post #45

Earlier quoted context omitted.

For one, I don't blame a company for lobbying for their interests. Lobbying is protected by the first amendment. Congress has sole authority to author and vote on legislation at the pleasure of the electorate. The fact that TT (and H&R Block) have impressed upon reps that they will participate in Free File, it mitigates their need to make a government-sponsored program. Which isn't just barricaded by simply force of…

The issue isn't the lobbying per se, but rather that it's not hard to look at the situation and conclude that Congress is favoring the interests of TurboTax over the interests of their constituents. It's difficult for me to believe that my representatives actually believe it's in my best interest to pay TurboTax $100 every year, compared to having the IRS automatically file my taxes. On the other hard, it's easy to b…

Maybe I'm being too generous but the electorate has all the power over elected officials. If a candidate makes a big deal over free file and voters don't care, then the lobbyists are effectively absolved. You'd have to show me that Congress actually had this on their agenda and removed it at the behest of lobbyists to say it's really corruption.

Unless they're actively spreading disinformation or corrupting the vote.

Re: Killing TurboTax

#202
post #72

Earlier quoted context omitted.

Unless you really screw up[1], or are intentionally trying to screw the IRS[2], you don't have to worry about an audit. The IRS's goal isn't to bring down their wrath upon you, their goal is to accurately collect the taxes they are due. If you pay too little, they'll ask you to pay the difference. If you pay too much, they'll refund it. Really: I once used the single-payer tax table instead of the filing-jointly tax…

IANAL, or an accountant, etc, but if I’ve learned anything from ravenously consuming Trump family news the past few years, it’s that ignorance of the law actually is a defense in cases around taxes, and the IRS has to satisfy a standard of proving bad intent in order to really screw you. Again, IANAL, do your taxes, please. But it does seem like the system is legitimately designed with an ethos of just making sure ta…

Having dealt with tax authorities in several countries, it's a recurring theme that they have no interest in coming down on you hard if you seem to be trying to do the right thing and make actual efforts at compliance, as they have their hands full putting actual effort into dealing with people actually trying to evade tax.

What I always do if in doubt is to attach a letter setting out my assumptions. I've outright had to tell the tax authorities I didn't know the real numbers one year, because I realised shortly before filing that I'd lost documentation in a move, and so a whole bunch of details were estimates. Even that was accepted without additional documentation.

Of course I'm sure there are countries that are worse.

Re: Killing TurboTax

#203
post #51
post #40

Earlier quoted context omitted.

I don't know where this idea came from (I've seen it on reddit a LOT), but it's the same here in Switzerland: you do it yourself because the tax department has no idea how much you made precisely, what you can deduce from it (expenses you had to do in order to acquire your income), etc. It just makes more sense to have everyone manage their own taxes.

The IRS already has most of your income information and much of your deduction information. They already use this to validate if your return makes sense. In effect, the IRS already does most of a taxpayer's paperwork. Since they do this, it might be nice to provide it to taxpayers for review and correction, rather than making us all start from zero each time.

The IRS doesn’t have your deductions, but at the same time most people don’t have enough to itemize anyway, especially since Trump increased the standard deduction for individuals and families.

I think simplifying the tax code first requires trading in our deduction system for a flat tax or lower taxes across the board. Then you could get to a simple postcard bill every year. Too many special interests to let that happen though.

Re: Killing TurboTax

#204
post #200

Earlier quoted context omitted.

I don’t know. But if you’ve opened up the IRS free fillable forms website, and put up the accompanying instructions on your second monitor, and know how to read English, I don’t see how it’s difficult, if you’re income is from a W-2. Everything is kind of labeled and laid out for you.

I believe that's only for filing a federal tax return, and for filing your state tax return you still have to either use a tax preparation website or do it on paper.

Many states offer online filing systems, might even be the majority now. You just have to visit the state’s tax department website.

Re: Killing TurboTax

#205

Something I never understood about us taxes - from reading discussions online, it seems like everyone needs to file taxes at the end of every year? Here it's only self employed, or people with rental or investment income. In a normal employer-employee relationship, the employer has to take care of it for you, they deduct taxes before sending the money to your account. This seems to be the way it works in most places,…

The USA has payroll deduction, but the tax code is complicated enough that that's only a rough estimate of what you actually owe. What you actually owe cannot be determined and deducted ahead of time, because a person's true tax obligation depends on information and events that may not be available until up to ~105 days after the end of the tax year.

So, every year, you have to do a bunch of paperwork (it took me over 4 hours this year) to calculate your actual tax obligation, and then either you send the government a check or they send you a check to settle the difference.

Re: Killing TurboTax

#206

Something I never understood about us taxes - from reading discussions online, it seems like everyone needs to file taxes at the end of every year? Here it's only self employed, or people with rental or investment income. In a normal employer-employee relationship, the employer has to take care of it for you, they deduct taxes before sending the money to your account. This seems to be the way it works in most places,…

The US's system of tax deductions makes it impossible for your employer to know how much to remove from your paycheck except in the simplest of scenarios. They may not know how many children you have or how much money your spouse makes if you file jointly or how much you pay in rent or whether you're a first-time home buyer or what your deductible medical expenses were for the year or whether you had education expenses and so on...

Re: Killing TurboTax

#207
post #27

Try freetaxusa.com if you're looking for a free alternative that has an equally friendly user interface!

I just tried it. It has a good interface, but a massive downside in that it doesn't have any automated importing/parsing of W-2's, 1099's, and other forms, unlike TurboTax. You have to type in every single number, leaving room for fat finger errors that TurboTax largely eliminates. This removes much of the advantage of doing your taxes online in the first place. TurboTax will smoothly import these, sometimes directly from your bank's website (you don't have to download and upload the PDF). If FreeTaxUSA built a robust tax form PDF parser it would be a real TurboTax competitor. Right now, it's just a cleaner interface to filling out the IRS PDF's on your own. It's good if you don't mind a more manual approach to your taxes.

Re: Killing TurboTax

#208
post #104
post #80

Earlier quoted context omitted.

The IRS can simplify the process, sure. And if you are living alone, have no children, and don't care about taking advantage of any special credits or deductions, then a "file for me" button would be fine. (Though the process for those taxpayers is already in a good place--I filed my taxes for free in about 30 minutes this year.) But if you, say, have children, the IRS will not be able to "file for you" in any meanin…

I came here to write something along these lines. For the simplest cases, filing is free and really easy now. Everyone who needs TurboTax now would need something roughly as complicated until our entire tax regime is overhauled. Adding to the types of really common situations where you do have to provide context the IRS doesn't already have: - side-hustle contracting (IRS doesn't know what expenditures are for the bu…

Adding a perspective from Germany, where the tax code is definitely not simple, a major difference I see is that filing is optional for the simple cases because you can only ever get money back. There are some default deductibles already applied to your payroll tax so the tax office doesn't have to deal with super small cases. The big advantage is that Joe Average won't risk getting into a lot of trouble for not filing.

Just to illustrate, let's go through your examples and how it'd work in Germany:

> side-hustle contracting (IRS doesn't know what expenditures are for the business)

You'll have to mandatory file income taxes since the income from contracting is not salary and there are no payroll taxes deducted from it. Not sure how common it is in the US but in Germany the vast majority of people don't have side hustles like this (for a variety of reasons; certainly a bad thing)

> stock sales (your broker may not know your basis)

There's a default tax rate on capital gains (25%) with a 800€ allowance. You assign how you want to split the allowance between your various banks and other capital gains generating accounts (you're responsibility to not exceed them) and the banks will report your cap gains with your tax ID to the tax office. If you did pay taxes it's often worth filing to make sure the allowance evens out. Also, if you want to carry forward a loss you have to file (but you got 5 years to do so)

> home improvements eligible for tax deductions

You'll probably want to file but you don't _have to_. You just won't get the deduction.

> sold a home (IRS won't know your basis or selling price)

If it was the home you lived in, you don't have to file (it's tax free). If it was a house you rented you'll have to file but you'll have to do that anyway for the rental income.

> did you move for a job? IRS won't know whether you are eligible for tax deductions.

Same as with the other deductions, it's in your best interest to file but you don't have to. No (legal) consequences if you don't.

> crypto gains/losses

This gets tricky but if you owned the coins for more than a year (to the day) they're tax free and you don't have to report them. But you better have documentation on this if you ever get audited.

> inheritances (basis again)

This one is actually interesting as it's a completely separate tax and thus separate process from income tax. There's an allowance based on your relationship to the deceased (500k€ for spouses, 400k€ for children, etc.), if the inheritance exceeds that you'll get a letter from the tax office asking you to file a declaration for inheritance tax. At that point there's not much software that'll help you and you'll better hire a tax advisor :)

Re: Killing TurboTax

#209

TurboTax is disgusting. I used them for a few years in the past due to their great marketing and easy to use website. But they pulled a bait & switch on me last year, at the last minute (after I had done everything) I was required to pay north of $120 to actually file. The problem isn't that they want money to use their software, it's that they're not upfront about it. Free is thrown in your face about 100 times duri…

You're not required to pay anything if your taxes are 'dead simple' you can fill out 1040EZ for free. And still can still compare turbo tax for free to see if you got the same numbers, and send it in for free. Nobody forces you to pay. I did that when I was single. Nowadays, its complicated. Mortgage deductions, rental income and depreciation, independent contractor, children, jointly filing. I could attempt to do th…

1040-EZ and 1040-A were eliminated in 2018, so pretty much everyone uses 1040 now (which was probably simplified, I haven't compared). There's also 1040-SR for seniors.

> And still can still compare turbo tax for free to see if you got the same numbers, and send it in for free.

That's what I do for state, since my state has a relatively simple tax structure and offers free online e-file. For federal my situation is similar, I'm happy to pay someone < $100 to deal with all the schedules and calculations and make sure things are consistent. An accountant would be much more, and inertia keeps me with TurboTax, for better or worse.

Re: Killing TurboTax

#210
post #2

I gotta say I have a love-hate thing with Turbotax. I hate the company and its influence peddling, lobbying, and near monopoly status, but Turbotax itself is a very well designed product with a great intuitive experience that has done a great job filing taxes. So it's a rare case of a sleazy state-sanctioned (via refusal to simplify the tax code) monopoly with a decent product. Usually such monopolies have complete s…

Hard disagree, I've had numerous problems with their app and they constantly try to upsell you even after extracting their egregious yearly fees. There has been no innovation or even noticeable change to their product in years.

Maybe I am comparing it to typical accounting software, which usually has shockingly bad UI/UX.
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