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Killing TurboTax

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Re: Killing TurboTax

#451

Post by kbenson »

maybelsyrup wrote: post #445
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…

> "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. So let's just nationalize TurboTax.

That would a) never happen in the current US political climate and b) provide enough ammunition to those against such a mode as to be extremely counter-productive towards other social programs that could deal with more government support.

In other words, think back on all the talk of Democrat being "socialists" over the recent years and imagine the field day conservatives would have if any national figure mentioned this as an idea out loud, and how that might be used to shift the balance of power such that other meaningful programs that could deal with additional governmental support and regulation (healthcare) get set back.

Re: Killing TurboTax

#452

Post by sokoloff »

tylerhou wrote: post #440
warkdarrior wrote: post #435

Earlier quoted context omitted.

If I donate to a charity, it may reduce the tax I have to pay, especially my income is at the boundary between two tax brackets. Would IRS suggest such a donation in order to reduce the tax amount? Tax advisors do that all the time.

That's not how taxes work. Unless you would have donated to a charity anyway in a subsequent year, you never gain money on net from donating since your tax rate is marginal. Even if you have super low income and you are on the border for benefits (EITC, Medicare), donating to a charity will not make you eligible for those benefits because that eligibility is determined by AGI, which is income before deductions. The o…

There are scenarios in tax planning where expert advice can change the tax you owe by getting you to do something slightly different.

If you bunch deductions, you might alternate between the standard deduction and itemizing deductions, meaning if you want to support charities with $10K per year, you're better off to donate in Jan and Dec of the same year (itemizing), then skip 13 months (taking the standard deduction), then donate twice in the year after that (itemizing), etc. With the increased standard deduction, this may be needed to allow your donations to become deductible at all.

There are other planning strategies that a combined advisor and preparer can help with. (Using your HSA optimally as a retirement account. Optimizing your Roth conversions over the years. Modeling whether Backdoor Roth contributions make sense (or "what would you have to believe is true to have them make sense?") For business owners, setting the balance between your salary and distributions of profits.) Those are advice activities that overlap with a detailed understanding of your financial and tax situation and often mean that you have to change something about the structure or timing of your activity to accomplish your goal.

The IRS is in an OK position to look back and judge "based on what actually happened, here's what you owe", but in a terrible position to offer optimization advice.

Re: Killing TurboTax

#453

Post by vinkelhake »

robert_foss wrote: post #330
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…

This is how it is done in Sweden. And after having lived in 2 other countries it is clearly the way to go. The tax authority sends you a summary and you just approve it.

As a Swedish expat in California I cringe everytime tax season comes. Both because of how annoying it is, and because I know how simple it can be.

Re: Killing TurboTax

#454

Post by dang »

This is such an ongoing theme on HN that we could maybe use a bibiliography. If I missed any big ones let me know.

In reverse chronological order:

Show HN: ustaxes.org – open-source tax filing webapp - https://news.ycombinator.com/item?id=26138446 - Feb 2021 (219 comments)

TurboTax Tricked You into Paying to File Your Taxes (2019) - https://news.ycombinator.com/item?id=26102695 - Feb 2021 (306 comments)

TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free (2019) - https://news.ycombinator.com/item?id=26060414 - Feb 2021 (199 comments)

FTC Is Investigating Intuit over TurboTax Practices - https://news.ycombinator.com/item?id=24409093 - Sept 2020 (194 comments)

IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax - https://news.ycombinator.com/item?id=21923220 - Dec 2019 (448 comments)

IRS Tried to Hide Emails That Show Tax Industry Influence over Free File Program - https://news.ycombinator.com/item?id=21393758 - Oct 2019 (188 comments)

TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free - https://news.ycombinator.com/item?id=21281411 - Oct 2019 (447 comments)

TurboTax to charge more lower-income customers - https://news.ycombinator.com/item?id=20461169 - July 2019 (81 comments)

Congress Scraps Provision to Restrict IRS from Competing with TurboTax - https://news.ycombinator.com/item?id=20119916 - June 2019 (18 comments)

TurboTax Uses a “Military Discount” to Trick Troops into Paying to File Taxes - https://news.ycombinator.com/item?id=19994118 - May 2019 (42 comments)

Listen to TurboTax Lie to Get Out of Refunding Overcharged Customers - https://news.ycombinator.com/item?id=19870242 - May 2019 (44 comments)

TurboTax and H&R Block Saw Free Tax Filing as a Threat - https://news.ycombinator.com/item?id=19810981 - May 2019 (143 comments)

TurboTax Hides Its Free File Page from Search Engines - https://news.ycombinator.com/item?id=19758126 - April 2019 (262 comments)

TurboTax Uses Dark Patterns to Trick You into Paying to File Your Taxes - https://news.ycombinator.com/item?id=19718284 - April 2019 (274 comments)

Congress Is About to Ban the US Government from Offering Free Online Tax Filing - https://news.ycombinator.com/item?id=19613725 - April 2019 (696 comments)

How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - https://news.ycombinator.com/item?id=19392673 - March 2019 (253 comments)

H&R Block and Intuit Lobby Against Free and Simple Tax Filing (2017) - https://news.ycombinator.com/item?id=18956883 - Jan 2019 (190 comments)

Would You Let the I.R.S. Prepare Your Taxes? (2015) - https://news.ycombinator.com/item?id=17751383 - Aug 2018 (424 comments)

Why I'm boycotting TurboTax this year - https://news.ycombinator.com/item?id=16844458 - April 2018 (23 comments)

H&R Block and Intuit Lobbying Against Simpler Tax Filing (2017) - https://news.ycombinator.com/item?id=16841449 - April 2018 (232 comments)

H&R Block and Intuit Are Lobbying Against Making Tax Filling Free and Easy - https://news.ycombinator.com/item?id=13922482 - March 2017 (234 comments)

How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - https://news.ycombinator.com/item?id=13853150 - March 2017 (439 comments)

TurboTax Takes Aim at Smaller Rival in Fight for Filers - https://news.ycombinator.com/item?id=11150694 - Feb 2016 (87 comments)

Would You Let the I.R.S. Prepare Your Taxes? - https://news.ycombinator.com/item?id=9381437 - April 2015 (150 comments)

Would You Let the I.R.S. Prepare Your Taxes? - https://news.ycombinator.com/item?id=9380232 - April 2015 (124 comments)

Filing taxes: It shouldn't be so hard - https://news.ycombinator.com/item?id=5488084 - April 2013 (56 comments)

How the Maker of TurboTax Fought Free, Simple Tax Filing - https://news.ycombinator.com/item?id=5443203 - March 2013 (330 comments)

Re: Killing TurboTax

#455

Post by yunesj »

kennywinker wrote: post #449
yunesj wrote: post #444

Earlier quoted context omitted.

> and then you look over the return, make any modifications you believe are correct, and send it to them Or more likely, they send you their estimate, based on a tiny fraction of the tax code, you recalculate it from scratch, send it to them, and then they audit you. Civil disagreements with the IRS start under the assumption that the IRS is correct (e.g., “your cost basis is zero,” or “that wasn’t a valid deduction”…

Again you're describing something very different from what is being suggested - and this is not a weird experimental theory - MANY countries have deeply complex tax codes and have also implemented an auto-file system where LARGE portions of the population can file in minutes due to a pre-filled return. I've yet to hear any stories where anything like your nightmare scenario has actually happened. Perhaps you would no…

> Many countries have deeply complex tax codes.

Can you give an example of any country whose tax code is more than 70k pages long?

Or a country where it requires, by default, taxes paid on money earned while living oversees, depending on a large number of international treaties, case law, and expensive private letter rulings? Or a country that requires you to file a different tax return in almost every state you step your foot in while working remotely? Or a country that requires you to essentially recalculate taxes on a quarterly basis to determine if you should be fined for underpaying estimated taxes?

> nightmare scenario

That’s not a nightmare scenario. That’s just a standard audit. They assume, e.g., zero coat basis, or residency, or it wasn’t used for business, or ... and you have to prove otherwise.

Re: Killing TurboTax

#456

Post by SubiculumCode »

astura wrote: post #309
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.

In one sense I totally agree, but in the other sense, it seems like it could be terribly invasive privacy wise.

Re: Killing TurboTax

#457

Post by GCA10 »

Kalium wrote: post #51
Biganon wrote: 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.

Depends how intricate your taxes are. Perhaps 30 million people file Schedule C, which covers freelance income, gig income, etc.

The IRS will (mostly) know your gross income, but it won't know the exact details about claimable deductions such as business travel, business meals, supplies, etc.

The only way it could know that would be to peer inside your credit-card statements, bank statements, etc. and make judgments about what was work related and what wasn't.

I'd rather do the tallying myself -- which is a chore -- rather than have IRS software make guesses that are a) awfully nosy and b) bound to disadvantage me.

Re: Killing TurboTax

#458

Post by ska »

sokoloff wrote: post #371
brigade wrote: post #362

Earlier quoted context omitted.

You do realize that $1k is about 10% of the median household income tax liability? I can't imagine the majority of people happily accept a 10% (more for half of households) tax hike, when companies already CC the IRS on all the forms they're regurgitating.

I'm actually fairly shocked that $10K is the median income tax liability given that a substantial percentage of households pay no net federal income tax.

It's probably median for households that pay any tax.

Re: Killing TurboTax

#459

Post by ska »

azog_alone wrote: post #316
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 reason the tax code is so complicated is BECAUSE OF TurboTax. They lobby heavily to keep things complex and have brought down potential competitors through legal means. As such, "killing TurboTax" is the correct first step.

> The reason the tax code is so complicated is BECAUSE OF TurboTax.

People have been arguing about unnecessary complexity in the tax code since before computers, let alone before TurboTax, so it can't be that simple.

Re: Killing TurboTax

#460

Post by ska »

drdeca wrote: post #347
ghaff wrote: post #325

Earlier quoted context omitted.

I know it's nice to have a corporate bogeyman to rail against but it's not that simple. For example, there have been all sorts of tax deductions over the years to incentivize things like home energy efficiency improvements, EVs, solar power, charitable contributions, etc. And the mortgage deduction was/is intended to promote home ownership. I could go on. Someone can disagree with some of the choices around tax rates…

There are some people who are weirdly anti-charity, saying that all of it should be done through taxes? I don't understand their point of view.

I suspect most of them are actually saying that relying on charity for some things is a bad idea, which isn't inherently anti-charity.
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