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

washingtonpost.com

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

#261

Post by aynyc »

pb7 wrote: post #252
aynyc wrote: post #120

Earlier quoted context omitted.

This is what we called premature optimization. If you owe big money on taxes, spend your energy and effort to figure out how to reduce that, not on credit card points.

They’re not mutually exclusive. A W-2 employee has very few ways to reduce taxes and no amount of energy or effort will change that.

If you are on w2 and owe big taxes, then you are intentionally under withholding. Unless you won IPO or buyout jackpot, then spend your time planning your retirement, not credit card churn (unless that’s your plan all along).

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

#262

Post by balls187 »

themagician wrote: post #45

Does the IRS actually know what everyone owes? I know it's true for W-2 employees, but what about everyone else? I've always had this feeling that you could ask the IRS what they believe any given SSN/EIN owes and they'd be able to tell you (not that they would, but that it's already calculated somewhere). I don't know if this actually true though. I know almost all W-2 information is sent electronically. They know a…

> Does the IRS actually know what everyone owes? I know it's true for W-2 employees, but what about everyone else?

Not quite. The IRS knows the income that is reported, and the taxes you have paid.

It doesn't know which credits and deductions you qualify for. It can guess based on your previous returns, but it isn't accurate and needs to be updated annually.

Once you provide your credits and deductions, the IRS can calculate what your tax liability should be vs what you actually paid.

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

#263

Post by pc86 »

az226 wrote: post #166
_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…

Exactly. “We’ve submitted your tax return for you using the standard deduction. If you’d like to itemize your deduction, please send us Form 1050 Itemized Deduction worksheet.”

Itemized deductions are 1040 Schedule A, and you don't typically file worksheets along with your return (although there's nothing stopping you from doing so).

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

#264

Post by AnthonyMouse »

chc wrote: post #133
_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…

There have been many proposals along these lines, but Republicans in Congress don't like it because they believe making it painful to file taxes will win support for their generalized opposition to taxes.

Then give them something they want, like have the IRS send everyone a summary just exactly how much in taxes they actually pay. Let people know the "refund" they get is not money from the government but rather money the government took from them several months ago and is only getting around to giving back now. Make a clear comparison between the amount they're getting back and the amount the government kept, which for most ordinary people is thousands of dollars a year.

Assuming the problem is actually ideological opposition from Republicans, and not campaign funding, because then it would be bipartisan:

https://www.opensecrets.org/orgs/intuit-inc/summary?id=D0000...

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

#265

Post by Aperocky »

makestuff wrote: post #175

I hate turbo tax. Every year there is some bug with importing stock transactions which requires me to dig around on their support forums.

LOL a box has to be manually filled out. I can't believe they didn't fix that for 3 straight years.

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

#266

Post by pledess »

_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…

It's technically possible for tax preparation software to collect information about UI interaction (e.g., revising income downward before finishing) and send that information to the IRS. I don't know whether that occurs, and maybe all tax preparation companies decided not to do it for fear of detection and customer backlash. Still, it seems plausible that this new interest in IRS-hosted free e-filing means that someone became uncomfortable with a previous arrangement where those companies were sending UI data "voluntarily" or "accidentally" to help enable data mining for IRS audits. (Backspacing and decreasing a W-2 income value is probably not of interest, but a pattern of backspacing in something like "Gambling income" or "Gross receipts or sales" might be.)

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

#267

Post by rcktmrtn »

testfoobar wrote: post #64
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. You can generalize this to the funding of the US government. The system obfuscates the stark reality: the US government spends resources faster than it collects them. It makes up the difference it two ways: deficit spending and off-the-books liabilities (SSA and Medicare being the biggest). Inflati…

> Inflation is a solution to these problems

... inflation in combination with hegemony.

My understanding is that if the US wasn't calling so many shots on the world stage, other countries would be less willing to tolerate us inflating away the US dollars they hold. But as "the global reserve" currency (for now), they have no choice but to grin and bear it, desperately try not to inflate their own money supplies to deal with the loss in value.

This is basically the truth behind MMT. Inflation actually can get you "free" money, but only because you're basically forcing it out of other economies by virtue of holding all the guns and oil.

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

#268

Post by karaterobot »

Granted: Intuit sucks, H&R block sucks, they are blocking tax reform, they are evil, the tax system in the U.S. makes no sense.

Having stipulated that, I do not understand why the government is creating a free product to compete with Turbotax, et al. instead of making tax returns unnecessary in the first place. I assume it is because it would have been much harder for Biden to sneak that change into the bill. But, sadly, nothing short of reform is an actual solution. And, I'm much less comfortable with the government spending tax dollars competing directly with a private company than I am with them legislating or regulating that company's reason for existing away. That feels like it's much closer to their remit.

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

#269

Post by deathanatos »

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…

I also switched to FreeTaxUSA this year. Same as in your case, TurboTax got the bigger refund (I was able to figure out why, in my case) … but the extra refund was completely eaten away by the higher cost. I.e., I ended up with more money with FreeTaxUSA, even though the initial return was of poorer quality. (We caught the error and it was corrected anyways … so … yeah.)

There was a state tax error, I think, in TurboTax's return. The FreeTaxUSA got that particular item more correct. (It was a bit of a debatable item, though.)

IMO TurboTax can't justify its price, vs. FreeTaxUSA.

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

#270

Post by stjohnswarts »

Why don't they simply buy some "middle-sized" company like FreeTaxUsa.com and build on that? Government has an awful history of "clean room" start of virtually all large scale software projects. They sell it to the lowest bidder and then they fail and billions get wasted, when they could just have bought something.
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