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Killing TurboTax

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Re: Killing TurboTax

#351

Post by kingaillas »

chrisseaton wrote: post #102

Are accountants prohibitively expensive in the US? I don't use any tax software myself in the UK - I just pay an accountant $250 once a year and he does it for me (using some software I presume.) It's not really on my radar as things worth trying to automate or use software myself for, let alone building my own software! I'd have to be able to do it in just a few hours to be cost effective.

That's about what those franchise tax prep companies charge (Liberty Tax, Jackson Hewitt, etc).

I found out my parents used one of these places last year, and they charged them about $350 for a SIMPLE tax return. It looked like the goal was to charge about $50 less than the eventual refund, and also push the "get your refund right now!!" scam (i.e. take a high interest loan for the refund amount).

This year, I did their taxes and mine too (separately), using FreeTaxUSA.

Re: Killing TurboTax

#353

Post by jnwatson »

lallysingh wrote: post #341
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…

I think if there was a basic extensible system, that could grow into a full product. Start with 1040EZ in year 1, then grow with your customers' needs as they age and need more. TT has a large moat but behind it must be a ton of technical debt. Would an open source solution work here?

You’re imagining an army of tax accountants to continually keep a system up to date to put themselves out of business?

Re: Killing TurboTax

#354

Post by harperlee »

sokoloff wrote: post #343
astura wrote: post #317

Earlier quoted context omitted.

No, it can work with the complicated path too, they present you with what they already know about you and give you the opportunity to add more information that they don't yet know. They then calculate what you owe and tell you. At some point they are going to calculate what you owe based on what you provide them and what is reported to them, no matter what. Laws that authorize "auto tax" can also come with extra repo…

There is a much greater depth of detail that I provide to my tax preparer than I'd be willing to share with the IRS. I tell my tax preparer everything and have perfect confidence that my taxes will be prepared correctly and in accordance with the tax code and that nothing which is not required to be disclosed will be disclosed. Much of what I provide to my preparer is irrelevant to my tax obligations and anything tha…

May I ask examples of things that you are not confident sharing with the IRS, that you do not have the obligation to share with the IRS, and that can affect the taxes you owe? In my (foreign) mind, whatever might affect your obligation final number you are legally required to do so (either preemptively or when asked), so I don't fully understand.

Re: Killing TurboTax

#355

Post by Larrikin »

lallysingh wrote: post #341
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…

I think if there was a basic extensible system, that could grow into a full product. Start with 1040EZ in year 1, then grow with your customers' needs as they age and need more. TT has a large moat but behind it must be a ton of technical debt. Would an open source solution work here?

There's atleast one Show HN every year that does that and promises support for the more complicated cases "in a few months".

Re: Killing TurboTax

#356

Post by derekp7 »

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…

To give an example of complexity that can hit "normal" people, something I just learned yesterday. If you are between 18 and 24, and a student, then if you had received unemployment income that income is considered "unearned income". Therefore it is subject to the highest marginal tax rate (tax bracket) that your parents fall into (which is 22% - 24% for quite a few people).

To me, that is kind of nuts, and not something that follows from normal logic (i.e., it isn't something that you will "get right" by just filling out a standard 1040 form).

Re: Killing TurboTax

#357

Post by [deleted] »

astura wrote: post #317
bob1029 wrote: post #312

Earlier quoted context omitted.

As noted in other comments here, an "auto tax" service only really works on the happy path. There are parts of the tax code which are highly subjective in more complex situations and require explicit elections on part of the filing party. These elections can have consequences far beyond the immediate tax filing transaction.

No, it can work with the complicated path too, they present you with what they already know about you and give you the opportunity to add more information that they don't yet know. They then calculate what you owe and tell you. At some point they are going to calculate what you owe based on what you provide them and what is reported to them, no matter what. Laws that authorize "auto tax" can also come with extra repo…

[deleted]

Re: Killing TurboTax

#358

Post by Kalium »

specialist wrote: post #165
Kalium wrote: post #51

Earlier quoted context omitted.

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 higher cost of administration is the part that makes me bug-eyed. Auto-filing and simplification would be so much cheaper.

The IRS already has a web portal that lets you retrieve your data. This could be executed by adding more info to that. The higher cost of administration on that shouldn't make anyone bug-eyed, no matter how wonderful your idea of auto-filing and simplification is.

Re: Killing TurboTax

#359

Post by a_c_s »

mumblemumble wrote: post #310
colejohnson66 wrote: post #174

Earlier quoted context omitted.

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…

This is making mountains out of mole hills though: these types of problems can be solved without abolishing tax-deductible accounts.

For example, one could tweak the deadline for contributions to those accounts to be say March 1, make the financial institutions report to the IRS by March 15th, send everyone their estimate on April 1st and have a deadline of April 15th to confirm or adjust their tax filing.

Most of the big things that involve deductions are already tied to a financial institution that already report to the IRS.

Re: Killing TurboTax

#360

Post by mandelbrotwurst »

derekp7 wrote: post #356
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…

To give an example of complexity that can hit "normal" people, something I just learned yesterday. If you are between 18 and 24, and a student, then if you had received unemployment income that income is considered "unearned income". Therefore it is subject to the highest marginal tax rate (tax bracket) that your parents fall into (which is 22% - 24% for quite a few people). To me, that is kind of nuts, and not somet…

By “and a student” do you mean claimed as a dependent by someone else?
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