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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

#351

Post by mercutio2 »

koolba wrote: post #154
uticus wrote: post #79

Earlier quoted context omitted.

> For example, try designing a tax system that is both fair and efficient with respect to agricultural income and tech income... It won't be simple. I love these armchair opportunities for college-level challenges without the admission fees, I'll bite. Step 1: disallow corporation as a legal taxable entity, private ownership only. Step 2: Subtract expenses from income. Step 3: Divide by 10. Step 4: If more than zero,…

So you’ve eliminated the entire concept of depreciation? That’d make it effectively impossible to plan or operate any business with front loaded costs.

I'm not a fan of this toy example but... are you under the impression businesses want to have multi-annual depreciation of their assets?

As far as I can tell, all businesses would like to be able to deduct all cash outflows whenever they occur, regardless of whether it's capex or opex. Businesses depreciate across long time cycles because that's what they're forced to do.

As long as they can carry forward losses, don't all businesses want accelerated depreciation?

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

#352

Post by Spivak »

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…

True but the rubber met the road and people are upset about the bullshit work of tax filing and not the taxes themselves. So anyone who is arguing this way really should have given up and moved on to another strategy to make taxes painful.

If you want people to hate taxes end and ban automatic payroll deductions and make them pay it all at once. More than half the country will be unable to pay and the whole system will collapse under crushing tax debt.

Or it won't because of how little the average person actually pays that we could literally just have the top %15 of wage earners pay income tax as "the cost of winning capitalism" and we wouldn't even notice.

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

#353

Post by [deleted] »

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"

[deleted]

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

#354

Post by billti »

sgerenser wrote: post #291
az226 wrote: post #166

Earlier quoted context omitted.

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.

And I think that's part of the problem. I've done my taxes (in the U.S.) manually for the past couple of years (i.e. filling out a 1040 directly, no TurboTax etc.), and the amount of times I've read through some absurd item that is clearly only in the tax code to get the vote of some special interest is depressing. Like most 'benefits', there would be uproar if you tried to take them away now by the people impacted, but maybe they could be moved out into separate programs.

Seems like getting to a point where ~75% of the population didn't need to file would be doable if there was enough motivation for it. If your only income is on a W-2, and your only mortgage / banking / trading is with U.S. companies like Chase or Morgan Stanley, no reason that couldn't all be done for you.

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

#355

Post by nico »

rapht wrote: post #224
lr1970 wrote: post #210

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”. 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 and what IRS really knows is a guessing game. IRS is posturing and bluffing that they know everything an…

> 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.

This is how it works in Chile

It’s been like this for more than 10 years

In the last 5 the government made everything electronic

Every invoice or receipt any business or individual issues, is digitally signed by the government

If you are a single wage earner, you don’t even need to file your return, your prepaid taxes exactly match your overall tax burden

You can always choose to file if you want to or need to in case your situation is more nuanced

But most people don’t really need to do anything

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

#356

Post by astrange »

petsfed wrote: post #311
koolba wrote: post #158

Earlier quoted context omitted.

> 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 k…

> Because I am already made aware of that when I get my very first paycheck from a new job.

Taxes don't reduce your purchasing power insofar as everyone else also has to pay them, so your relative amount of post-tax money is the same, and the tax system is progressive, meaning your relative position is actually a little better.

Remember, money isn't real.

https://en.wikipedia.org/wiki/Money_illusion

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

#357

Post by astrange »

_8j50 wrote: post #238
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…

> regurgitate tax information that has already been reported to the government How does the government know my non-compensated travel and moving cost, wfh expenses, cash charity donations,etc...? If people like you get the option to file directly with the IRS, fine by me so long as you don't make the rest of us pay more by losing the ability to play the game and save money.

> wfh expenses

Was that ever deductible? You don't get the home office deductions unless you're self employed.

> cash charity donations

That basically isn't deductible for anyone anymore since nobody itemizes.

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

#358

Post by aksss »

jcfariadias wrote: post #329
aksss wrote: post #204

Earlier quoted context omitted.

> every transaction should, by law, be [reported to the gov.] Conceptually, and in principle, this freaks a lot of Americans out. But the burden of not doing it is exceeding the alternative, I think. While it may be progressive to automate tax filing, having the government know everything about your financial transactions without proper cause is not considered very progressive (I guess it depends on what you are tryi…

It's the only (that I know of) way to avoid tax evasion and paralel economy. There are incentives (tax deductions) that are granted to citizens who ask for invoices with their fiscal details It is indeed progressive because it unburdens citizens from a massive yearly headache when submiting taxes. It's progressive because it avoids physical printing of receipts, thus reducing waste and paper consumption. It is progre…

wow, we went to "we need to do it or people will die" pretty quickly there. XD

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

#359

Post by patrick451 »

sgerenser wrote: post #289
PopAlongKid wrote: post #246

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"

I’d be happy with a system like this, as long as they made it very clear WHEN you should do it the old way. For example: “Our estimate of your income may be too high in certain situations, for example if you are a business owner, independent contractor, or receive income from RSU or ESPP sales where the tax basis reported to the IRS is missing or inaccurate. In those cases, you are encouraged to fill out your tax ret…

I worry about be one of those. what is it about RSU compensation that is commonly misunderstood?

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

#360

Post by astrange »

cft wrote: post #63
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…

This is a dangerous path. First this, next the government just sends you the tax bill, without you needing to file (and you can dispute it), and then CBDC where every microtransaction is surveyed and sanctioned (or not).

You don't need "CBDC" for that, you're describing the current European tax system with a VAT. All business invoices are sent through the tax office, but you get paid to do it.
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