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IRS tests free e-filing system that could compete with tax prep giants

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Re: IRS tests free e-filing system that could compete with tax prep giants

#71

Post by mynameisvlad »

RandallBrown wrote: post #59
_yb2s wrote: post #51

Earlier quoted context omitted.

The weird thing is the IRS already knows my taxes better than I do… a few times I’ve made mistakes inputting forms or forgot to put something in, and I will always get a letter from them about it. They’ve already done my taxes so they should just send me a bill and not waste my time, possibly with the option to submit extra details they are missing like deductions… but that should be an option for people that need it…

How would you know if you're going to take the standard deduction without doing your taxes? I'm fairly certain the federal government doesn't know about all my deductions.

In most countries that have implemented such a system, the government prepares your taxes for you, and then you ok them or ask for adjustments. The vast majority that use standard deductions would just approve it, while those that know their deductions would exceed that can itemize it.

Why wouldn't such a system work here?

It's not like the act of doing your taxes is what makes your realize you're over the standard deduction. Most people will know if they've done standard or itemized in the past and act off that.

Re: IRS tests free e-filing system that could compete with tax prep giants

#72

Post by RajT88 »

jandrese wrote: post #16

For what it is worth, even with my medium-complex tax return I have had great results with freetaxusa.com for the past few years. The first couple of times we used it we ran the taxes through TurboTax and FreeTax at the same time and due to better UI the FreeTax version was faster and less confusing. That said, at the end of the process after entering all of the same information in the same places the TurboTax one di…

freetaxusa.com user here as well. It's great, and cheap to file. I've paid tax specialists in the past far more with worse results.

Re: IRS tests free e-filing system that could compete with tax prep giants

#73

Post by gamblor956 »

jandrese wrote: post #20
jeffwask wrote: post #14

Earlier quoted context omitted.

It seems especially ridiculous since the US raised the standard deduction in 2017 fewer and fewer of us can itemize enough to meet it.

Not only did they raise the standard deduction, but there's that $10k limit that you slam into when trying to itemize. My total tax burden went up about 2% after that change, but it does make filing theoretically easier, except that my wife is always holding out hope so we go through all the work to itemize only to discover yet again that we're over the cap and wouldn't benefit.

there's that $10k limit that you slam into when trying to itemize

This is...incompletely stated...the only $10,000 limit when itemizing is on SALT taxes (state and local income and property taxes). There is no $10,000 limit on deductions in general.

And indeed, the IRS itself states "For 2023, as in 2022, 2021, 2020, 2019 and 2018, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act." (https://www.irs.gov/newsroom/irs-provides-tax-inflation-adju....)

The increase in the standard deduction means that it became more beneficial for many taxpayers that used to itemize. But many things that could be itemized in the past can no longer be itemized, which is probably what affected you (however, due to the way the TCJA was written, that prohibition only applies until 2025 unless extended by Congress, which will depend on who wins the 2024 election).

Re: IRS tests free e-filing system that could compete with tax prep giants

#74

Post by cstoner »

RandallBrown wrote: post #59
_yb2s wrote: post #51

Earlier quoted context omitted.

The weird thing is the IRS already knows my taxes better than I do… a few times I’ve made mistakes inputting forms or forgot to put something in, and I will always get a letter from them about it. They’ve already done my taxes so they should just send me a bill and not waste my time, possibly with the option to submit extra details they are missing like deductions… but that should be an option for people that need it…

How would you know if you're going to take the standard deduction without doing your taxes? I'm fairly certain the federal government doesn't know about all my deductions.

The vast majority of people take the standard deduction, so offering a "here's what we think you owe, but if you disagree feel free to do the full return" form would be a huge efficiency gain.

Your comment seems like a prime case of perfect being the enemy of good.

Re: IRS tests free e-filing system that could compete with tax prep giants

#75

Post by justapassenger »

RandallBrown wrote: post #59
_yb2s wrote: post #51

Earlier quoted context omitted.

The weird thing is the IRS already knows my taxes better than I do… a few times I’ve made mistakes inputting forms or forgot to put something in, and I will always get a letter from them about it. They’ve already done my taxes so they should just send me a bill and not waste my time, possibly with the option to submit extra details they are missing like deductions… but that should be an option for people that need it…

How would you know if you're going to take the standard deduction without doing your taxes? I'm fairly certain the federal government doesn't know about all my deductions.

With current tax code, not taking standard deduction is more of an exception than a rule.

It has to be supported, and you should be able to change it. But there's really no reason today for why IRS doesn't send you "this is what we think you owe, based on this data that we have. Click to accept or add more data". That process would hugely simplify taxes for majority of Americans and wouldn't impact people who have more complex cases.

Re: IRS tests free e-filing system that could compete with tax prep giants

#76

Post by Finnucane »

macinjosh wrote: post #56

The fact that we have to report anything about our personal finances to the Federal Government is a violation of the 5th Amendment. The fact that they've forced employers to be their snitches is even more gruesome. Isn't it a sure sign of fascism when corporations and government work hand in glove?

If you are taking the Fifth on your taxes ("No person ... shall be compelled in any criminal case to be a witness against himself") you might want to reconsider your life choices.

Re: IRS tests free e-filing system that could compete with tax prep giants

#77

Post by elicash »

macinjosh wrote: post #56

The fact that we have to report anything about our personal finances to the Federal Government is a violation of the 5th Amendment. The fact that they've forced employers to be their snitches is even more gruesome. Isn't it a sure sign of fascism when corporations and government work hand in glove?

The 16th Amendment allows for an income tax:

> The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

Re: IRS tests free e-filing system that could compete with tax prep giants

#78

Post by petsfed »

pstuart wrote: post #36
ShadowBanThis01 wrote: post #5

It is WAY past time for this. It's absurd that we have to regurgitate tax information that has already been reported to the government. But it's even more absurd that the government gives us no way to do so electronically. And then there's the disgusting shell game that IS the entire U.S. tax system, which is the root of the whole problem. But... didn't Congress pass some corrupt legislation years ago that made it il…

Check out Grover Norquist and his goals -- this tax hell is intentional.

This sounds kind of like a conspiracy-theory, so it's worth providing a source.

Norquist himself, and his organization Americans for Tax Reform, believe that making tax payers go through the process of preparing their tax return forces us to audit our comfortability with paying taxes[0],[1]. If, on the other hand, we just signed off on numbers that the IRS provided us every April, we'd be less aware of, and therefore less likely to protest, increases in taxes.

This isn't a subtle, arguably-the-cruelty-is-the-point sort of situation, this is a I'm-not-using-anesthetic-because-I'm-concerned-you-aren't-sufficiently-afraid-of-the-thresher-that-just-cut-your-foot-off-when-I-ran-you-over-with-it. I'm not a big fan of paying taxes, and I don't like it when my taxes go up. But I already feel that when I look at my paystub, or pay property taxes. The whole effort to make tax returns harder so people hate taxes hinges on the idea that most people are completely unaware of taxes until April 15th rolls around. It's cynical in the extreme, and that's really off-putting to me.

0. https://en.wikipedia.org/wiki/Americans_for_Tax_Reform#Oppos...

1. https://govinfo.library.unt.edu/taxreformpanel/meetings/meet...

Re: IRS tests free e-filing system that could compete with tax prep giants

#79

Post by uticus »

gamblor956 wrote: post #55
ShadowBanThis01 wrote: post #5

It is WAY past time for this. It's absurd that we have to regurgitate tax information that has already been reported to the government. But it's even more absurd that the government gives us no way to do so electronically. And then there's the disgusting shell game that IS the entire U.S. tax system, which is the root of the whole problem. But... didn't Congress pass some corrupt legislation years ago that made it il…

And then there's the disgusting shell game that IS the entire U.S. tax system, which is the root of the whole problem. Everyone thinks that they can come up with a much better tax system, and they always start with something super simple that meets their tax needs. But a simple system that meets one person's tax needs is usually not so simple, fair, or efficient for other people . And when you take all their needs in…

> For example, try designing a tax system that is both fair and efficient with respect to agricultural income and tech income... It won't be simple.

I love these armchair opportunities for college-level challenges without the admission fees, I'll bite. Step 1: disallow corporation as a legal taxable entity, private ownership only. Step 2: Subtract expenses from income. Step 3: Divide by 10. Step 4: If more than zero, send a check.

"Fair and efficient" in terms of opportunity is easy. In terms of outcome is a fool's game IMO

Re: IRS tests free e-filing system that could compete with tax prep giants

#80

Post by gamblor956 »

jandrese wrote: post #48
bubbleRefuge wrote: post #35

Earlier quoted context omitted.

10K limit on mortgage interest from primary residence , right ?

It's a $10k limit on deductions so dependents, charitable contributions, mortgage interest, and probably some more stuff has to stay under that cap or it doesn't count. Since that change went in we've never been able to even match the standard deduction. It increased our tax bill by about 2% and my wife has still never forgiven Trump. I think we are directly in the middle of "squeeze the middle class" part of that ta…

That's simply wrong.

The I.R.S. specifically notes that there is no limit on overall deductions, and hasn't been for years. https://www.irs.gov/newsroom/irs-provides-tax-inflation-adju....

However, there are now limits on individual deductions that didn't previously exist, like the SALT cap of $10,000. It also appears you were affected by the cap on the (loan) value of homes which for which you could take the mortgage interest deduction, which was lowered to $750k from $1m by the TCJA (meaning, if your home is worth more than $750k for loan purposes you can only deduct the mortgage interest attributable to the first $750k of the loan), or by the elimination of a number of 2% items (items that pre-TCJA could be deducted only if they exceeded 2% of your AGI).

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