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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

#241

Post by akira2501 »

runako wrote: post #66

"The IRS currently refers people seeking no-cost filing options to a consortium of companies that provide free e-filing for taxpayers below a certain income level. Though 70 percent of taxpayers qualify for those products, fewer than 3 percent of taxpayers use them, according to a Government Accountability Office report." This low uptake absolutely has to be one of the impediments to a rollout of a free IRS-run tax s…

> why should we invest resources in expanding our free services when taxpayers don't use what we already make available?

It's not a service. It's an obligation. You want my money? Why do I have to find a "service" to get you to take it?

If you've never used one of those services, you should. Some of them have gotten better only very recently, some still look like fly-by-night scam operations that are trying to filch your personal information. The old adage "you get what you pay for" has never been more true.

> Is there data to support the notion that usage would meaningfully increase if we supported 100% of filing cases?

Yes. The billions of dollars spent lobbying the congress to prevent this very thing from happening.

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

#242

Post by philjohn »

mattlondon wrote: post #52
brocklobsta wrote: post #15

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…

In the UK you don't have to file at if your income is under £100,000 (assuming you are employed by a company that does PAYE (pay as you earn) - i.e. tax is deducted automatically from your payslip - and you don't have any other sources of income which is probably 99% of people) - after 100k you have to file electronically (although someone can do this on your behalf - I don't think postal filing is possible any more)…

The one thing missing is automatically calculating your tapered pension allowance after rolling over unused, based on your previous tax years - that's why I get an accountant to file mine.

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

#243

Post by jghn »

justapassenger wrote: post #75
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.

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 mo…

I itemize, but it doesn't save me a ton. I would probably still click that button just to save me the mental headache and time spent.

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

#244

Post by d--b »

namdnay wrote: post #203
d--b wrote: post #98

Earlier quoted context omitted.

Not all though. I developed admin-phobia since I moved back to France. Being a contractor here is such a FUCKING nightmare compared to UK and US. Sure the US could do without turbotax. BUT AT LEAST YOU GUYS HAVE TURBOTAX

What type of contractor? Micro-entreprise is really simple for side gigs, and if it's your main job, declaring as an SAS and getting an accountant makes it (relatively) painless in my experience

Yes it’s the “getting a 2000€/year accountant” part that I thought I didn’t need (cause I never needed one in the us).

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

#245

Post by TheCondor »

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…

I'll do you one better, maybe two better...

Why can my bank and credit card vendors tell me "up to the second" the status of my account. I use a credit card and get an alert on my Apple Watch. The IRS could have an app that shows it in real time (say up to the day) how much tax you've paid and if they think you'll owe more or get a refund based upon what they know at that point and time and what they know from last year.

Second, why do I need to give my employer my SSN and several forms of ID? Couldn't I share some sort of token that the IRS could give them with my name and maybe a picture and all the instructions embedded on how to withhold, how much to withhold, etc. Maybe it could be a unique identifier per job. I get a picture id but they shouldn't need my SSN. It can't quite be just an opaque QR code but it could be something pretty similar.

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

#246

Post by PopAlongKid »

jghn wrote: post #239
rapht wrote: post #224

Earlier quoted context omitted.

> IRS knows all the income data only in simple cases like salaried employees with W-2 forms. If you are business owner or contractor the things can be more complicated If you already can avoid the trouble for 50% (?) of the people who are in the standard case, it's already a massive win.

Exactly. Doing custom taxes could be opt-in. "Here's what we're going to charge you. If you think you owe less due to details we don't have, feel free to file the old way"

Correction: "If you think you owe less or more due to details we don't have, feel free to file the old way"

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

#247

Post by rsynnott »

elicash wrote: post #128
colmmacc wrote: post #4

Earlier quoted context omitted.

I lived in four countries before moving to the USA and none of them required me to file at all. As an ordinary employee, taxes were PAYE (Pay as you Earn) and there was no complicated system of tax exemptions that aren't either handled directly at source, or as separate rebates (like child allowance payments). I long for that day in the USA.

Does that work when the percent you're supposed to pay depends on income bracket? (Genuine question!)

Yes. Now, there are edge-cases; in particular, things get messy when you move job and you may end up temporarily overpaying. But it works.

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

#248

Post by makmanalp »

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…

> But... didn't Congress pass some corrupt legislation years ago that made it illegal for the government to set up a tax-filing Web site? What happened to this: https://www.propublica.org/article/congress-is-about-to-ban-...

Thanks for pointing this out - looking at the responses, folks blaming congress might have a point but I'm also surprised that this thread isn't directing more of the frustration to intuit and others involved in the deliberately confusingly named "free file alliance" - an industry coalition that's nominally providing a free filing option that's hidden / limited / difficult enough to use that very few people actually do despite it being free.

The answer to your question is that initially yes, it was banned as part of a mutual MOU, but it is not anymore. The rest is in here: https://www.propublica.org/article/irs-reforms-free-file-pro...

Here's more on the subject: - This one has internal slides from intuit https://www.propublica.org/article/inside-turbotax-20-year-f... - This is a report prepared by a left think tank (pointing this out as a disclaimer) that has a lot of details from earnings calls and such: https://big.assets.huffingtonpost.com/athena/files/2023/05/1... - This one details on the influence of the "revolving door" of lobbyists taking governemnt positions on the IRS' policymaking https://www.opensecrets.org/news/2023/05/turbotax-owner-intu...

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

#249

Post by pclmulqdq »

alistairSH wrote: post #216
bityard wrote: post #193

Earlier quoted context omitted.

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. Com…

That's not really true. Itemized deductions are a small part of this, and so are the individual tax credits. Business accounting and post-tax investment are actually the big items here, and are impossible for the IRS to do for you. I'm afraid that if you get a stock grant from your employer, that puts you beyond where the IRS can send you a pre-filled form that is correct.

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

#250

Post by Aperocky »

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!

How? Was it Form-1099K mis-ingestion from turbotax? Or is it some other hole?
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