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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

#181

Post by themagician »

gowld wrote: post #102
clintonb wrote: post #54

Earlier quoted context omitted.

They know when you don't pay enough, so they have to know what you owe. All of the forms we receive (e.g., W-2, 1099) are transmitted to the IRS. They can use them to determine if a tax payer underpaid. I know this firsthand because a broker transmitted proceeds without transmitting a cost basis, resulting in a scary letter from the IRS a few months after I filed. The problem, as I understand it, is that the IRS' tec…

They want to spook you into being honest, by not telling you what they know. If you knew the IRS missed something , you could safely not report it.

It honestly seems like the revenue lost to this would be trivial against the cost savings of not having to play the weird game that we play.

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

#182

Post by jdmichal »

lesuorac wrote: post #150
kevin_thibedeau wrote: post #135

Earlier quoted context omitted.

> There is no reason for a w2 wage earner taking the standard deduction to need to file taxes. Unreported gambling winnings or a low revenue side gig aren't tracked by the IRS.

Yes, a non-w2 wage earner has income that is not tracked by a w2 ... The general issue with gambling wins is not that the IRS doesn't know (casinos report winnings) its that they don't have to report losses.

Another asymmetry: Winnings are always included while losses are itemized. Which means if you take the standard deduction you cannot write off the loses, but still have to include the gains.

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

#183

Post by isbvhodnvemrwvn »

ilyt wrote: post #113
RandallBrown wrote: post #59

Earlier quoted context omitted.

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.

Here in Poland the tax form is pretty much "here is what we know, re-type that into the form and add whatever is missing for deducations". Which you can use free app to download, file and send the filed one. weirdly enough official site also have instruction on how to use PlayOnLinux to run it under Linux

If you don't want to change anything you can just submit it with one click.

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

#184

Post by shortcake27 »

_yb2s wrote: post #51
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…

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…

Yeah the American system absurd. “We have all the data but you still need to figure it out yourself and if you get it wrong you’ll get in trouble”. The Australian system has improved a lot over the past few years - PAYG (employment), bank interest, and dividends are all pre-filled on your tax return. So all you need to figure out is deductions and other income. I’d still like to see it taken a step further like in the UK where you don’t even need to file a tax return unless you have income the HMRC doesn’t know about.

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

#185

Post by Taywee »

whimsicalism wrote: post #121
binarymax wrote: post #110

Earlier quoted context omitted.

No you’re doing everything right! The point is that you shouldn’t even need to do anything. The IRS already has your information. Unless youre changing something that they won’t know about (for example not using the standard deduction), then ideally you would get an automated return and possible refund without taking any action.

The point is that I might report something that they aren't aware of. It makes sense to me, the IRS does not know everything and strategically witholding what you know will lead people to report things that you don't know about.

In countries that don't force every citizen to file, you still can report things they aren't aware of and still can do your taxes manually if you choose.

The majority of the population doesn't know anything about their taxes that the IRS doesn't. Why force everybody through a song and dance that only is of service to the exceptions (and a couple very large tax filing corporations who lobby hard against automatic taxes)?

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

#186

Post by whimsicalism »

iends wrote: post #162
whimsicalism wrote: post #118

Earlier quoted context omitted.

I just take the standard deduction. Investments: Yes, I have to file a 1099. Business: no. Crypto: I think your holdings have to be significant for it to matter whether you file this or not, maybe I broke a law here.

You broke the law if you sold crypto, regardless of amount.

Realistically what penalty do you think GP would face if they had failed to report those $15 in capital gains.

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

#187

Post by siftrics »

ericmay wrote: post #127
ethbr0 wrote: post #117

Earlier quoted context omitted.

The only thing worse than a private monopoly is a public one.

In the case of taxes in the United States this doesn’t really follow because if the government says you owe $x.xx then you have to go through the bureaucracy either way to either pay or dispute the charge. For most people (simple wage earner) TurboTax and other software is just an additional regulatory tax and no different than the government except that it takes money from citizens. A government has a monopoly on ta…

ethbr0 is referring to monopolies enforced by law for private companies; they're not trying to point out the government itself is a monopoly.

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

#188

Post by zaroth »

mikestew wrote: post #137
tivert wrote: post #100

Earlier quoted context omitted.

> 90% of federal tax filers in the US do not itemize, which includes the majority of home owners. Isn't that a relatively recent thing? IIRC, the standard deduction was massively increased a few years ago.

Isn't that a relatively recent thing? Yes, it is. What difference do you think that makes in the present day?

It makes a difference because policy changes don’t happen instantly.

Something we can do differently that seems obvious today could have been a disastrous policy just a few years ago.

The optics of the IRS sending out bills for thousands of dollars more than people rightfully owe are bad, to say the least.

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

#189

Post by jprete »

cdelsolar wrote: post #167
_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…

yeah it's insane. This past tax cycle, we filed and overpaid by like 3K, using Turbo Tax. Of course Turbo Tax didn't tell us this, and we wouldn't have known except we got a check for the overpayment from the govt about a week or two later!

I'm curious what mistake happened that you overpaid so much and the government caught it? I always assumed that the IRS relies on the tax return unless it explicitly audits you, but I think my assumption is now out of date.

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

#190

Post by Rebelgecko »

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.

Let's not let perfect be the enemy of the good here. Per the IRS's stats, 89% of people take the standard deduction.

For those who itemize, the government usually knows about most the things you're itemizing. I'm itemizing this year because of 3 things: taxes paid, mortgage interest, and charitable donations. The government already knows about 2 of those, so they could send me prefilled forms that are 95% complete (W-2, investment 1099, mortgage 1098, mortgage 1099 and other bank account 1099-ints, my form 5498 for my IRA, property taxes, etc). I'd much prefer only having to fill in my charitable donations. It would change a job that takes a couple hours into one that takes maybe 15 minutes.

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