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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

#211

Post by joemi »

jprete wrote: post #189
cdelsolar wrote: post #167

Earlier quoted context omitted.

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always assumed that the IRS relies on the tax return unless it explicitly audits you, but I think my assumption is now out of date.

Over the years there have been a few times where I got an additional (small) return due to overpayment. As far as I know, I've never been audited (and I think I'd know if I were).

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

#212

Post by newhotelowner »

alfalfasprout wrote: post #83

The software is nice and all... but the real problem is that the tax code is just way too complex. If you have properties, RSU income, other investment income, W2 income, and have to deal with multiple states you can have three different CPAs come up with three different numbers. At the end of the day, if you're a billionaire earned income is a teeny tiny part of your earnings and most of it is kept unrealized for ta…

> properties, RSU income, other investment income, W2 income, and have to deal with multiple states

That's a problem but not the main problem. That's less than 20% of the tax paying population. The majority of the population is mostly 1-2 jobs & may be a house.

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

#213

Post by elicash »

CodeWriter23 wrote: post #200
elicash wrote: post #97

Earlier quoted context omitted.

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.

I suggested in my comment that they might!

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

#214

Post by sumtechguy »

cpuguy83 wrote: post #160
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.

I owned a house from 2012-2018. Still wound up with the standard deduction every year.

Paid mine off in 2008. I have been standard deduction ever since. My taxes take about 30 mins to do with one of the major bits of software. I could go real cheap and just copy the numbers around from year to year and do the math and mail it in. But at this point it is getting more and more silly that the IRS does not just mail us a post card with a link saying 'is this right?'. Pretty much all the ways I make money have a 10 form that they are filing with the IRS. I am fairly sure I am not alone.

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

#215

Post by codegeek »

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…

"that has already been reported to the government"

This statement is mostly true and your point remains but there is a small percentage of Americans who have complex stuff like a Business, multiple non-W sources, investments, Itemized deductions etc. For those, IRS cannot just figure out everything themselves.

A good solution is for IRS to automate those 90% of cases and for the rest, let them file with CPAs and tools as they do now.

Source: I run a business (well 2 now with a much smaller one) and my taxes are never simple. I wouldn't be one of those Americans with straight calculated stuff. I like my deductions and options but also pay a lot to CPA to handle this shit.

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

#216

Post by alistairSH »

bityard wrote: post #193
_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…

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…

Those deductions and credits (mostly) apply to people itemizing their deductions. About 30% of households itemize - the remaining 70% take the standard deduction. [EDIT - since the tax changes in 2018, the numbers are closer to 10% itemize/90% standard deduction]

And most of the common items are known to the IRS... mortgage and mortgage interest, property taxes, state taxes, education credits, retirement savings.

Common items that could be known to the IRS (but aren't necessarily today)... charitable giving, medical expenses, self-employed healthcare premiums.

The IRS could, relatively easily, email/SMS/snail-mail you a pre-filled tax return with the info they do have. If nothing needs updated, you just (e-)sign and provide payment info.

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

#217

Post by jdeibele »

jrochkind1 wrote: post #146
bluGill wrote: post #122

Earlier quoted context omitted.

Since Trump's tax changes very few people itemize - it is very difficult to get about the standard deduction. The average person doesn't even have enough income (the standard deduction is about a third the average income, the odds that someone at that wage level is spending enough on deductible things is small, there are too many non-deductable things they also need to buy). Of course it depends on where you live - i…

I forgot the standard deduction went up a lot. I think you can still easily reach if you, say, tithe 5 or 10% of your (post-tax even!) income (to a church or other 501-c-3) and have a mortgage and pay property taxes in a major metropolitan area. (Also if you're single the standard deduction is half married filing jointly.) (I didn't realize the personal exemption is gone now too!!) But a quick google says... accordin…

I don't know if they have but charities (nonprofits and churches) lobbied against increasing the standard deduction or to make an exception for charities. Which didn't happen. https://www.philanthropy.com/article/nonprofits-hunt-for-a-t...

I guess there was a $300 provision for charitable deductions enacted in 2020 that they are trying to make permanent and larger. Web site wasn't working for me but Google's cache did: https://webcache.googleusercontent.com/search?q=cache:WdabFa...

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

#218

Post by bestcoder69 »

whimsicalism wrote: post #107
throwaway85858 wrote: post #32

Some notes about the official system in Germany called "Elster" 1. Sign in via chip card or certificate based authentication for which the activation codes come in the post. 2. All forms are neatly laid out and guide you through the process of filing them, the quality of the frontend is really top notch, they even have a dark mode. 3. All insurances (health, life etc.) and wage statements have already been submitted…

The US basically has a privatized version of this. Pretty much all I need to do is upload a 1099 for my bank account interest & cap gains, everything else is autouploaded. The main difference you have to realize is not that our system is actually super shitty, we just have 4x the number of people to complain about things.

In the US, if you fail to file then you won’t receive your EITC. In practice, in the US poor neighborhoods are littered with scammy tax preparers for this reason. I’d call our systems substantially different.

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

#219

Post by balaji1 »

AnIdiotOnTheNet wrote: post #199
shortcake27 wrote: post #184

Earlier quoted context omitted.

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.

List a few. For the ppl who downvoted your comment.

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

#220

Post by jcranmer »

koolba wrote: post #158
petsfed wrote: post #78

Earlier quoted context omitted.

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…

> But I already feel that when I look at my paystub, or pay property taxes. Unless you’re cutting a check in person you’re arguably not feeling it as much as you should. It’s like how replacing cash toll booths with electronic debit hides the true price you’re paying on the highway.

I doubt very many people know how much taxes they actually paid in 2022, even after the pain of filling out taxes. Instead, the number they know and remember is the size of the refund check (or the tax check they have to send out) in April. And the size of that check has relatively little to do with your actual tax rate, instead being driven by the withholding tables instead.
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