Killing TurboTax • Hacker News Board

Re: Killing TurboTax

#301

Post by RC_ITR » Wed, Mar 03, 2021, 7:28 PM UTC

bluGill wrote: post #181

RC_ITR wrote: post #138

Earlier quoted context omitted.

Sure, but that would require a significant shift away from our current deduction-based approach. Good luck prying that out of the cold dead hands of boomers (and eventually Gen X)

A large part of it has been. The standard deduction is high enough now that most people can't take advantage of the deduction based approach. Of course most tax people will tell you to save all receipts, they will happily charge you to look through them and calculate that they are not big enough to matter. If people knew how simple their taxes really were most people wouldn't be willing to pay as much for it.

That ignores the effect of wealth inequality in the US. You may not know a lot of people who itemize, but our elite / political class does at almost a 100% rate.

So long as they want / use it, it will 'trickle down' to others.

https://www.taxpolicycenter.org/briefing-book/what-are-itemi....

Re: Killing TurboTax

#302

Post by lolsal » Wed, Mar 03, 2021, 7:28 PM UTC

gugagore wrote: post #288

lolsal wrote: post #282

TurboTax's offering is not just about literally filing my taxes. It's about managing risk that I'm not botching my filing in the form of missing something entirely, mis-filing, or leaving deductions on the table. Even if submitting forms online is entirely free, I'm willing to pay SOMETHING to make sure SOMEONE ELSE is responsible for making sure it goes well. I pay accountants for this for this exact reason. I'm sur…

This is an honest question: what responsibility does a TurboTax have? How would you find out that they messed up, and how would you react?

I don't know if I can answer that first question - it seems like if they position themselves as providing expert advice and competent filing, and then I pay for it, I should be guaranteed something. But the world does not really operate on SHOULDs.

If I used TurboTax, I would expect to find out they messed up by getting some notification from the IRS, or accidentally discovering later that I missed a deduction. If the IRS was reaching out, I'd engage a real accountant ASAP. If TurboTax missed a deduction, I'd vote with my wallet and use an accountant the following year :)

disclaimer: I use an accountant because my tax situation is complicated.

Re: Killing TurboTax

#303

Post by throwawayboise » Wed, Mar 03, 2021, 7:31 PM UTC

lotsofpulp wrote: post #180

chrisseaton wrote: post #157

Earlier quoted context omitted.

> It’s pretty simple to do your own taxes So why do people complain about it so much? To the point where they're writing their own custom software (?!) to do it?

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.

When I was in middle school (1980s) we did a tax return on paper, I think it was part of a Social Studies class? We were given a fictitious W2, number of dependents, etc. and had to fill out a 1040 and a State return (on paper of course, no computers then). This permanently demystified the process. I think a lot of people who pay HRBlock or similar to do their taxes have never tried to do their taxes manually and are just afraid to try.

I have always done my taxes myself, on paper, even years when I had capital gains, education credits, 1099s, and small business (single member LLC) income. It's a bit time consuming but not difficult per se.

Re: Killing TurboTax

#304

Post by lolsal » Wed, Mar 03, 2021, 7:32 PM UTC

trymas wrote: post #296

lolsal wrote: post #282

TurboTax's offering is not just about literally filing my taxes. It's about managing risk that I'm not botching my filing in the form of missing something entirely, mis-filing, or leaving deductions on the table. Even if submitting forms online is entirely free, I'm willing to pay SOMETHING to make sure SOMEONE ELSE is responsible for making sure it goes well. I pay accountants for this for this exact reason. I'm sur…

It's a racket. Government already knows how much you owe them. So how about US government, like most modern countries, send you a form which says: "we think you owe us xxx$ (because of this and that), if not - provide extra information"?

> It's a racket.

Yea, possibly (I agree with you). It is as much a racket as lots of other things. Doesn't excuse it being a racket, but TurboTax is not an anomaly.

> Government already knows how much you owe them.

This is false. If you aren't taking advantage of deductions, sophisticated tax-deferred vehicles for retirement or tax-advantaged accounts for other investments, you're giving the IRS more than you have to. If that doesn't bother you, that's fine too!

> So how about US government, like most modern countries, send you a form which says: "we think you owe us xxx$ (because of this and that), if not - provide extra information"?

Cool, sounds great. However, you're over-simplifying things and ignoring the complicated parts. For a lot of people, a simple approach like the above would be totally adequate and I personally completely support a system like that.

Re: Killing TurboTax

#305

Post by runako » Wed, Mar 03, 2021, 7:34 PM UTC

realityking wrote: post #208

runako wrote: post #104

Earlier quoted context omitted.

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 fili…

Really educational comparison!

It seems the major difference derives from our (American) punitive approach to those who use our meager social safety net.

For example a large swath of Americans earn an income that entitles them to assistance in the form of the Earned Income Tax Credit (EITC). This is (roughly, it depends) available to people who earn For a large set in the middle class, you have to file because you leave money on the table by not claiming deductions.

So even if we weren't all more or less required by law to file, we would mostly have a financial incentives to file anyway.

Oh and anecdotally, side-hustles and second jobs are very common in the US. Poor social safety net, no employment contracts, very low minimum wage, high healthcare costs all doom most Americans to perpetually precarious financial circumstances. So everybody is trying to get a little more so they don't get wiped out.

Re: Killing TurboTax

#306

Post by [deleted] » Wed, Mar 03, 2021, 7:34 PM UTC

bob1029 wrote: post #298

"Killing TurboTax" is essentially a meme until we meaningfully simplify the tax code. There is no software development team on earth who could catch up with the full capabilities of TurboTax without some sort of fundamental shift in the business. I really hate to say this as someone who makes a living out of it, but dealing with the current amount of complexity in the tax code with a piece of software that a non-expe…

[deleted]

Re: Killing TurboTax

#307

Post by JMTQp8lwXL » Wed, Mar 03, 2021, 7:36 PM UTC

lupire wrote: post #284

JMTQp8lwXL wrote: post #129

Earlier quoted context omitted.

Free File is made by Turbotax. It's likely to discourage the government from entering the space. dig freefilefillableforms.com ;; AUTHORITY SECTION: freefilefillableforms.com. 300 IN SOA a18-64.akam.net. nadmin.intuit.com. 2020102802 10800 3600 604800 86400

There's an actual law and legal agreement between IRS and tax companies to operate Free File.

And that relationship isn't disclosed to users. You have to dig to find it.

Re: Killing TurboTax

#308

Post by namdnay » Wed, Mar 03, 2021, 7:38 PM UTC

bob1029 wrote: post #298

"Killing TurboTax" is essentially a meme until we meaningfully simplify the tax code. There is no software development team on earth who could catch up with the full capabilities of TurboTax without some sort of fundamental shift in the business. I really hate to say this as someone who makes a living out of it, but dealing with the current amount of complexity in the tax code with a piece of software that a non-expe…

Hmmm, how does the IRS check? Purely manually? Surely there are some alternatives out there. Worst case scenario, the government buys a turbo tax competitor

Re: Killing TurboTax

#309

Post by astura » Wed, Mar 03, 2021, 7:40 PM UTC

bob1029 wrote: post #298

"Killing TurboTax" is essentially a meme until we meaningfully simplify the tax code. There is no software development team on earth who could catch up with the full capabilities of TurboTax without some sort of fundamental shift in the business. I really hate to say this as someone who makes a living out of it, but dealing with the current amount of complexity in the tax code with a piece of software that a non-expe…

The IRS themselves need to provide this "auto tax" service.

Re: Killing TurboTax

#310

Post by mumblemumble » Wed, Mar 03, 2021, 7:40 PM UTC

colejohnson66 wrote: post #174

wheybags wrote: post #167

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,…

Correct. Companies like Intuit lobby the government to keep complex tax codes so they can provide services that make it easy.

It's not quite that simple. There's a lot of popular political support for things that make a simpler tax season impossible, too.

For example, the existence of tax-advantaged savings vehicles such as IRAs and HSAs mean that the taxable portion of your income isn't settled until the deadline for making contributions for that tax year. Which is April 15. But I imagine there would be a lot of popular political backlash if Congress were to abolish IRAs in the name of sticking it to Intuit.

There's also that whole mess of expenditures that you can deduct from your taxable income, which doesn't kick in until the total of your deductible expenses exceeds the standard deduction. And a lot of people were worried when the standard deduction got increased a few years ago. It made a lot of people's taxes nominally easier to calculate, but people were worried that it might remove an incentive for charitable donations, or reduce the largess that the government gives to homeowners relative to renters, or alter the impact of tax incentives for people who put solar panels on their roofs, or whatever.

Long story short, we love to blame Intuit, and it is true that Intuit generally wants a nasty complicated tax code, but it's also true that, in the aggregate, so does America.