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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

#291

Post by sgerenser »

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 far from the only thing that the IRS doesn’t know about. Almost everything on Schedule C, and RSU and ESPP cost basis would also probably require manual intervention. Probably a bunch of other credits as well, like the tax credit for buying an EV, solar/energy efficiency, adoption, various student-related deductions/credits, etc.

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

#292

Post by aynyc »

pb7 wrote: post #285
aynyc wrote: post #261

Earlier quoted context omitted.

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).

>then you are intentionally under withholding What’s wrong with that? You can pay estimated quarterly taxes with a credit card too. Many churners do.

Nothing wrong with churning, but it's not within the context of this post. Your goal is to churn, tax happened to be one of the venues. But for most people, churning is the wrong approach because their taxes are the biggest issue.

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

#293

Post by ac29 »

PopAlongKid wrote: post #246
jghn wrote: post #239

Earlier quoted context omitted.

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"

And that's probably the main reason it isnt done. The IRS assumes nearly no one would report extra taxable income if they came out and said all of the things they already knew (and by implication, dont know).

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

#294

Post by nonethewiser »

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…

Freetax USA is great. How could this be better? Free I guess. So if the software is as good (probably isnt) then its a marginal improvement.

The problem is the rules are complicated. Except this is only a problem because people dont want to pay more in taxes. Virtually all the complexity comes from opportunities not to pay taxes. Its difficult because you need to figure out how much you DO owe and be sure you qualify. In order to simplify taxes you’re going to raise taxes in an uneven and non deliberate way.

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

#295

Post by ac29 »

whimsicalism wrote: post #118
all2 wrote: post #114

Earlier quoted context omitted.

Do you have investments or businesses of any type? Do you itemize your deductions? My biggest time sink this year was sorting out how to file crypto gains/losses. After two hours of struggle, I found that I had to pay income tax on about 15 dollars of capital gains.

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.

The 2022 1040 has a line that says "At any time during 2022, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?"

If the answer is yes, but you put no so that you didnt need to file any additional details, thats definitely illegal.

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

#296

Post by alistairSH »

attractivechaos wrote: post #271
_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…

In my experience, if I underpay my tax, they will come at me and demand penalty and interest. If I overpay my tax, they will do nothing. This is by design, I think.

Generally, you're exempt from IRS penalty if you do either of: - pay >90% of owed amounts via estimated taxes or withholdings

- pay >=100% of your previous year's earnings

If you're underpaying by more than that, there's a high chance you're doing so on purpose. Or made a fairly egregious error (in which case, the penalty was probably assessed later upon audit).

And if you overpay, you get a refund, not nothing.

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

#298

Post by JohnFen »

_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…

> They’ve already done my taxes so they should just send me a bill and not waste my time

It's absolutely insane that it doesn't work that way. Precompute the taxes owed, and send that to the taxpayer. The taxpayer can then accept the IRS's computations or reject them and file their taxes like they always have.

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

#299

Post by chimeracoder »

BugsJustFindMe wrote: post #277
andrewla wrote: post #237

The steelman case for opposing "auto-filing" or having the IRS provide tax preparation is that the intention of requiring everyone to file is that all citizens should be directly aware of the amount of taxes being assessed and the complexity of the tax code itself, with the objective of making people oppose legislative increases in the complexity of the tax code, and to make tax increases more intrusive so that legis…

> The steelman case for opposing "auto-filing" or having the IRS provide tax preparation is that the intention of requiring everyone to file is that all citizens should be directly aware of the amount of taxes being assessed and the complexity of the tax code itself That's a very weak case when they could just send me a letter telling me how much they took and why, which would accomplish the same thing but better and…

> That's a very weak case when they could just send me a letter telling me how much they took and why, which would accomplish the same thing but better and without saddling me with a bunch of unnecessary labor and/or expense.

Furthermore, the amount of money that people pay is not very strongly correlated with the time or effort (or frustration) involved in filing the taxes.

In fact, there's often (though not always) a correlation in the other direction: most of the "optional" complexity in the tax code comes from the various tax deductions that people are able to file for, making it more effort and frustration not to overpay - this is essentially the opposite of what GP is saying would be the "steelman" argument.

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

#300

Post by ac29 »

TheCondor wrote: post #245
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 y…

> Second, why do I need to give my employer my SSN and several forms of ID?

This is almost certainly an immigration thing, not a tax thing. From I-9 is required to be completed by all employers. See: https://www.uscis.gov/sites/default/files/document/forms/i-9...

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