Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

washingtonpost.com

Post reply on HN
Print view View original

361–370 of 589 posts

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

#361

Post by astrange »

tzs wrote: post #173
kristopolous wrote: post #25

Earlier quoted context omitted.

I go with them too. Everytime this comes up though I post this https://apps.irs.gov/app/freeFile/browse-all-offers/ There's many nice and cheap options out there. Please, if you value basic democracy, don't give money to Intuit or TurboTax - not a dollar, not a penny. But do click on their paid ads whenever you see them and just close out after the page load. That company needs to be dismantled brick by brick, byte b…

What's up with the age limitations on some of those? age

Maybe they don't want to deal with IRA withdrawals?

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

#362

Post by astrange »

whimsicalism wrote: post #115
runako wrote: post #60

Earlier quoted context omitted.

> above a certain income threshold, your tax return becomes exponentially more complex For some people. A person working a single job as a programmer earning $300k in straight W-2 income (no RSUs, etc.) does not have more complex taxes than a person earning $100k from a combination of their podcast + a few rental properties. There's no logic to means-testing this kind of service, where there would be for feature-test…

RSUs don't really complicate anything, they are straight W-2 income.

If you sell them it gets more complicated because your broker is for some reason forbidden from reporting the correct cost basis even though they know it.

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

#363

Post by kimixa »

tcmart14 wrote: post #337
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"

Isn't this what some of the nordic countries do? They send you have receipt/bill and you have a window to correct it.

It's what the UK does too - I never had to file anything for taxes if I only had reported salaried income. Even stuff like interest or investments is mostly automatically handled, you often need to be doing something a little unusual in that area to require anything.

And even if you did have some side income to report, the HMRC website had most things in a pretty easy wizard-like form, similar to turbotax or the like, with the things they already knew about pre-filled.

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

#364

Post by metaphor »

You know those bills that summarily end with "and for other purposes"? Well...

Worth noting that the GOP-led House is trying to silently kill this with haste (along with funding for IRS enforcement) by burying defunding language in H.R. 2811 (a.k.a. the House's proposal to raise the debt ceiling) § 251 under a backhanded title named "Family and Small Business Taxpayer Protection"[1]:

> The unobligated balances of amounts appropriated or otherwise made available for activities of the Internal Revenue Service by paragraphs (1)(A)(ii), (1)(A)(iii), (1)(B), (2), (3), (4), and (5) of section 10301 of Public Law 117–169 (commonly known as the “Inflation Reduction Act of 2022”) as of the date of the enactment of this Act are rescinded.

The $15 million budget mentioned in the article was appropriated[2] by § 10301 p. (1)(B) of the Inflation Reduction Act of 2022 and will expire at the end of this fiscal year:

> TASK FORCE TO DESIGN AN IRS-RUN FREE "DIRECT EFILE" TAX RETURN SYSTEM.—For necessary expenses of the Internal Revenue Service to deliver to Congress, within nine months following the date of the enactment of this Act, a report on (I) the cost (including options for differential coverage based on taxpayer adjusted gross income and return complexity) of developing and running a free direct efile tax return system, including costs to build and administer each release, with a focus on multi-lingual and mobile-friendly features and safeguards for taxpayer data; (II) taxpayer opinions, expectations, and level of trust, based on surveys, for such a free direct efile system; and (III) the opinions of an independent third-party on the overall feasibility, approach, schedule, cost, organizational design, and Internal Revenue Service capacity to deliver such a direct efile tax return system, $15,000,000, to remain available until September 30, 2023: Provided, That these amounts shall be in addition to amounts otherwise available for such purposes.

What the GOP really wants to quietly snuff is the IRS's enforcement budget...something about IRS examinations and collections having very real capacity to deliver positive revenue increases for the Treasury[3], and higher-income taxpayers facing the largest increase in audit rates[4].

Alas, games will be played[5].

[1] https://www.congress.gov/bill/118th-congress/house-bill/2811...

[2] https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.p...

[3] https://www.cbo.gov/publication/56467

[4] https://www.cbo.gov/publication/57444

[5] https://www.nber.org/papers/w28542

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

#366

Post by sgerenser »

patrick451 wrote: post #359
sgerenser wrote: post #289

Earlier quoted context omitted.

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?

It’s often the case that you sell a block of RSU stock, and the broker reports the entire sale as a capital gain (e.g. if you sell $50K, then it shows up as a $50K capital gain on your broker’s 1099). But in reality, the gain should only be the difference between the price it was when it showed up in your account and when you sold it (which can actually be a loss), because the basis is already included in your W-2 as earned income.

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

#367

Post by firstlink »

patrick451 wrote: post #359
sgerenser wrote: post #289

Earlier quoted context omitted.

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?

The IRS requires your broker to report a different cost basis to you than you are entitled to use. It is government-mandated disinformation, not a misunderstanding.

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

#368

Post by firstlink »

AnthonyMouse wrote: post #264
chc wrote: post #133

Earlier quoted context omitted.

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 fo…

A clear accounting of what you have already paid is on your 1040, copied in from your W-2. People are ignorant of it because they want to be.

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

#369

Post by kelnos »

lr1970 wrote: post #210
shortcake27 wrote: post #184

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”. The Australian system has improved a lot over the past few years - PAYG (employment), bank interest, and dividends are all pre-filled on your tax return. So all you need to figure out is deductions and other income. I’d still like to see it taken a step further like in th…

> 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.

These "simple" cases still cover the vast majority of American taxpayers.

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

#370

Post by kelnos »

pclmulqdq wrote: post #249
alistairSH wrote: post #216

Earlier quoted context omitted.

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.

There's no reason why this has to be the case, though. Brokerages are already required to report lots of things about their clients to the IRS. No reason why "stock grant from employer" couldn't be one of them. (Regardless, these stock grants usually end up as W-2 income, so I'm not sure why you think this isn't covered already. Stock option grants often need some special handling, though.)

In any case, most Americans do not care about this. I'm getting tired of the "10% of taxpayers couldn't fully use this system, so let's not bother" type arguments.

Post reply on HN