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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

#311
post #158
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 already feel it when I see the number every 2 weeks on my paycheck. Or when I'm advised of my property tax bill every 3 months. Or register a car. Or buy something at a physical store. Taxes are everywhere, and you have to work really hard to stay ignorant of how much they're taking out of your pocket.

Literally all Norquist is doing is making it so for about 2 weeks a year, what little free time I have after the kids are down for the night is spent in tense almost-argument with my wife as we seek out all the places our employers have secreted the tax documents they already provided to the IRS. Its such a colossal, pointless waste of time for people who have a simple tax situation.

I have never, not once, looked at the numbers produced by performing my tax return (which, again, the IRS already performs so they can double check my numbers) and thought "Thank you Grover Norquist for keeping me aware of how much my government is costing me!". Because I am already made aware of that when I get my very first paycheck from a new job.

Speaking of toll booths vs electronic debit, when I lived in the Bay Area, I had to commute from east bay to west bay every day. For the first 4-5 months, I was paying cash, because in my scant spare time, I hadn't had time to get transponder and direct debit set up. I was paying $35/week. I didn't become less aware of that cost when I switched to the transponder, because the actual cost was time. Time is something I have very little of, so adding friction just wastes my most limited resource.

Using my most limited resource to make sure I'm aware of how the government might be using slightly too much of my like 10th most limited resource is a waste of my fucking time. Thus, I'm angry not at the government for potentially wasting my money, but at Grover Norquist for wasting my time because he thinks I'm too fucking stupid to realize what's happening.

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

#312
post #293

Earlier quoted context omitted.

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).

Well I think that depends on what is being provided, most suggestions I've seen only talk about cover the simple case of some W-2s and other income sources already reported to the government and taking the standard deduction. If that's the case then the government doesn't _have_ to provide everything it knows, it would be on you to know if you have income that wasn't already reported to the government and file yourself, and it would be the same as now in that you don't know if they'll find out about your other income.

But also, there's still the risk of getting audited either way. Just because they apparently don't know about some income _now_ doesn't mean they'll never figure it out later.

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

#313
post #98
post #70

Earlier quoted context omitted.

In fact, other sane industrialized nations have really got it figured out: https://www.pbs.org/newshour/show/dreading-taxes-countries-s...

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

Amusingly I live in France and filling my taxes take me a total of two minutes checking the numbers and clicking ok. Really depend of your situation I guess.

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

#314

Earlier quoted context omitted.

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 Turbo…

There are some cases TurboTax can handle that FreeTaxUSA can't, if I'm not mistaken -- AMT due to early ISO exercise being one of them.

That's going to be pretty exceptional at the scale of most Americans. Even here on HN, I'd wager that's the exception: you need to be working at a ISO-awarding startup, have your ISOs vest, and have your company be doing well enough that exercising them seems like a sane fiscal decision. (… or, well, I suppose you can #yolo.) I've worked for startups for a decade, and I've yet to run into that. (Particularly since employers hold the view of "getting a raise == changing jobs"; this pretty much fixes options' value at $0.)

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

#315

Earlier quoted context omitted.

> 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're not exactly wrong, but I think that's true of most countries. We're just not aware of foreign dirty laundry, and as a tourist you'll not notice.

Most industrialized countries in northern or western Europe have most government systems that are an order of magnitude less absurd than the American equivalents.

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

#316
post #300

Earlier quoted context omitted.

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...

Yeah, I think I know the reasons, or at least some of them.

That particular idea might be a little bit more subversive but why does an employer need to care? Immigrant or natural born citizen, they should have some sort of tax paying relationship with the US federal government.

The southern boarder is being used mostly just for politics right now, but if we wanted to curb illegal immigration I think a big part of it would be some sort of "you're here now" stamp, some sort of criminal penalties for hiring undocumented non-residents, maybe mandatory tax withholding for everybody and then some sort of "you're allowed to work here" token from the feds.

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

#317

With so many software developers filing taxes, why isn't there a decent open-source tax filing application?

I was considering the same question this year. I've been doing mine with freefilefillableforms (basically just an online version of paper) for several years and have gradually been getting better at it.

Here's my breakdown of what took the most time/stress (I didn't use a stopwatch, so it's heavily impacted by how it felt):

2% creating a spreadsheet that did the simple arithmetic to add up sums for investment boxes and that did the final tax calculation

90% spent trying to understand/fix one stupid mistake with an HSA account that was very confusing in the tax code. I am nearly certain that TurboTax wouldn't have helped.

5% reviewing all our other accounts, saving copies of the statements, and inserting relevant values into a spreadsheet

3% copying and reviewing my copying of other numbers, including the long stupid EIN numbers from W-2s that I miscopied and caused the IRS to automatically reject my return

... and here are my conclusions:

* The thing I personally would most love but don't believe is easily possible is a way to avoid all the mistakes copying and to simplify some of the data collection and staring at 1099s from different accounts that arrange the boxes slightly differently, but I can see why this hasn't really been automated in an open source way. While some sort of image processing or by trying to scope out APIs with the financial institutions might help, it's hard to envision an open source project that would do this.

* I actually value tax time as a time to review accounts and finances. So even if the data collection stress was reduced, I would still want to have a good feel for the numbers.

* The most serious problems I seem to run into never feel like software problems. I have had problems like the HSA issue in the past with turbotax and the "helpful" UI can only do so much to answer tough questions.

* Last year I filled out the Qualified Dividends worksheet by hand, the spreadsheet is a million times better though. It's basically the same thing as those online calculators, but I wanted to be able to see what calculations it was doing and review it and also not put my tax info online.

* Overall, what I'm most inspired to do would be to share the spreadsheet or a similarly scoped program and document/continue to refine my process for entering and collecting data. Working towards an end-to-end solution feels to me like a loser, at least to start off. Modular seems like the way to go. Solve one problem at a time. There is already an https://opentaxsolver.sourceforge.net/. Haven't tried it out yet, but I feel like it isn't what I'm looking for.

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

#318
post #51

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…

Yes. It would be great to receive the standard, already filed return, and have time until the Tax Day to file a custom return if you need to.

- Lowers the burden on those who have very simple income (W-2).

- Offers enough boilerplate to start a custom return with.

- Never miss filing your return, no matter what happens to you between early February and April 15th. At worst you'll not receive as much back as you otherwise would.

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

#319

The IRS has no incentive to make sure you get all the deductions you're allowed. They don't have incentives to make sure the software works well under load and at scale. Whatever they put out will likely be half-baked, and the software will degrade rapidly because the tax laws change each year. I suspect, that given the currently complexity of the tax system itself (rather than the filing, which seems to be pretty st…

Not American, but as I understand it the IRS has to pay interest in the case of an overpayment? That's a disincentive for them to screw you over.

No, the IRS doesn't pay anyone interest. You will owe them interest if you underpay, however.

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

#320
post #293

Earlier quoted context omitted.

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).

Right. I was assuming most people would choose the lower of whatever the IRS said or their calculations showed. And that's fine, presumably that would be taken into account on the government side in order to get enough money.
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