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always assumed that the IRS relies on the tax return unless it explicitly audits you, but I think my assumption is now out of date.
I just an unexpected refund as well. No explanation. For all I know I overpaid by much more even.
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.
I wasn't arguing for or against any system. Just wondering how it could work when the government doesn't know about a significant amount of my deductions and I ended up itemizing last year.
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…
I'm not saying it's a GOOD reason, but the main reason the government doesn't just send you a tax bill and say, "here, now pay up" is because there are lots of things which are taxed but the government doesn't "see" because they are not (or cannot reliably be) reported. This goes for certain credits and deductions as well. So the only real leverage they have is to tell everyone to get it right or face the possibility of an audit.
What I don't understand about these programs is the added income clause. In California the state provides a free tool to file state income taxes (CalFile), but you can't use it if you make over $230,000 a year. Does it really make sense? It's similar with the federal free file program I believe. You would think they would want to encourage high income citizens to use their tool so they can control the deductions/cred…
If you're curious why, it's because of the California itemized deduction phase-out, line 29 in the instructions below [1]. CalFile only cares about handling "simple" items. Other notable exclusions [2] are capital gains, health savings accounts, Schedule C, Schedule E, and Roth IRA conversions and distributions. [1] https://www.ftb.ca.gov/forms/2022/2022-540-ca-instructions.h... [2] https://www.ftb.ca.gov/file/ways-t…
FWIW I've used calfile with capital gains and it worked fine, I was able to file properly and it gave me the same numeric results as TurboTax. HSA gains/dividends can also go in with your regular income, since California doesn't recognize them with any sort of special tax treatment.
One of the calfile devs shows up on HN every once in a while. I got the feeling that the real impediments were more bureaucratic than on the technical or accounting side of things.
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…
> 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.
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 th…
> Yeah the American system absurd.
The hilarious thing is that if we remove the context from this statement it applies so broadly that you could mean just about of our systems.
Having absurd systems is pretty much our defining characteristic.
You all are so cute thinking the government is going to perform this function when in reality they are simply going to choose a third party to outsource to. Probably without even giving Intuit a chance to bid on it. Not that I like Intuit, they suck IMO. But I do think a vendor selection process such as this should be an open one. Instead we will have more back room-brokered graft.
That might be true later! But so far: "The system was developed by the IRS and U.S. Digital Service, the White House’s technology consulting agency." You can learn more about the U.S. Digital Service here: https://www.usds.gov/mission
Well that totally disproves the idea because the USDS would never outsource anything.