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13 States join the IRS direct-file test after tax prep firms dropped the ball

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Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#21

Post by oefrha »

andyjohnson0 wrote: post #18
ImPleadThe5th wrote: post #15

Earlier quoted context omitted.

When you get a new job, you fill out some forms that tells the government how much money to withhold from your paycheck based on your expected earnings, deductions, etc. Later, at the end of the year, you file your return of what you actually made, what your actual deductions were, etc. And then the government will either pay you if you paid too much or they will ask you to pay if you did not pay enough.

Thanks. Presumably such a person wouldn't need tax-return software? The system here in the UK is similar, except that "regular workers" don't file a tax return. Work-related deductions/additions (e.g. private health plans) are reported by the employer and are automatically accounted for. Non-work stuff like capital gains on personal property sales are mostly dealt with as part of the transaction.

> Presumably such a person wouldn't need tax-return software?

Wrong. I did my first tax return by manually filling out the PDF form. Even though I only had a single income and was filing the EZ form, it took at least an hour or two. Then there were state taxes.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#22

Post by BrandoElFollito »

We have in France pre-filled taxes, you go to the tax site, click next a few times and you are done. Takes 30 seconds for 90% of the population. Usually people do not even check what they click if they have a standard job.

Is the system in the US much more complicated to require software purchases?

I get it that it is not prefilled, but is there a lot to actually input in the system?

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#23

Post by samus »

mnky9800n wrote: post #6
psunavy03 wrote: post #4

Earlier quoted context omitted.

Part of the problem is that both parties have ended up making our tax code so convoluted as sops to their own special interest groups. Group A needs a tax break for this! Group B for that! And so if you have a bog-standard boring return, fine, but if your financial situation ends up in certain buckets such as renting out property, getting RSUs, etc., then sometimes it's cheaper to hire an accountant than leave money…

The tax code is complicated simply because wealthy people do not want to pay their fair share.

Depends on your definition of wealthy I guess. There are many tax exemptions that also affect less affluent people. There are simplified filing schemes, but one would leave a lot of money on the table using those.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#24

Post by tuwtuwtuwtuw »

BrandoElFollito wrote: post #22

We have in France pre-filled taxes, you go to the tax site, click next a few times and you are done. Takes 30 seconds for 90% of the population. Usually people do not even check what they click if they have a standard job. Is the system in the US much more complicated to require software purchases? I get it that it is not prefilled, but is there a lot to actually input in the system?

Same here in Sweden. You can also just send a text message to confirm all is good as is.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#25

Post by tuwtuwtuwtuw »

glimshe wrote: post #17
andyjohnson0 wrote: post #13

Non-USian here. How does federal income tax work for people with a normal, regular job? If someone just works full time in a shop or on a factory line, do they get yearly tax demand that they have to check and/or calculate themself?

It can be pretty easy. When I started my professional life in the US, taxes were relatively simple because I basically had two sources of income (job and interest investments). You enter 2 forms, ignore a lot of prompts in the tax software (do you do X? Do you do Y?) and go for it. You can even file your taxes for free - in theory - if you have a simple life like that. A lot of taxpayers do. The problem that makes th…

And the government is unaware of those or? Where I live the banks reports stuff such as mortage interest payment, capital gains etc, it's time for taxes it's all filled out already and I click OK or text the tax authority to confirm.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#26

Post by pid-1 »

psunavy03 wrote: post #4
kvdveer wrote: post #2

As a citizen of a country where tax is handled entirely by the government, schemes where for-profit corporations are part of the tax collection infrastructure seems absurd. As absurd as for-profit courts or for-profit election polling stations. The article mentions that the tax software maker opposes the government doing this, but doesn't mention public opinion. What does the average American think about this?

Part of the problem is that both parties have ended up making our tax code so convoluted as sops to their own special interest groups. Group A needs a tax break for this! Group B for that! And so if you have a bog-standard boring return, fine, but if your financial situation ends up in certain buckets such as renting out property, getting RSUs, etc., then sometimes it's cheaper to hire an accountant than leave money…

Most countries have complicated tax codes.

That's not a good reason for tax filling to be hard, unless the tax agency itself doesn't know how much a person should be paying.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#28

Post by Retric »

broken-kebab wrote: post #16
sdenton4 wrote: post #7

Earlier quoted context omitted.

"And tax politics make strange bedfellows. Fighting alongside H&R Block and Intuit are anti-tax activist groups like Grover Norquist’s Americans for Tax Reform. H&R Block and Intuit love taxes—that’s how they make their money. Grover Norquist wants to cut taxes wherever possible. But on this issue, their interests are aligned. H&R Block and Intuit want to make it difficult for you to file on your own. The anti-tax ac…

US taxes were pretty cumbersome before Intuit et al. Intuit wouldn't appear if not that. So your quote may partially explain resistance to change, but not causes.

Taxes weren’t particularly difficult if like most people you were overpaying before this software showed up.

The complexity was originally a way to effectively have different rules for people with accountants than regular citizens thus allowing politicians to shift the tax burden without making the carveouts obvious.

Now days we just blatantly tax people living off investments less, etc. Thus defeating the original purpose of that complexity.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#29

Post by madsbuch »

itake wrote: post #8
mnky9800n wrote: post #5

In the 8 years since I lived in the United States my income taxes in other countries have been almost unbelievably easy. Typically I look at the calculated amount provided by a government website, compare it to what I think it should be if there is done discrepancy, upload some receipts or whatever for deductions, then click submit. It is beyond me why the experience should be any how different in the United States.…

JW, how do these countries handle non-employement or self-reported income (e.g. capital gains of real estate, equity, or even selling products online)?

of you do that seriously you'd incorporate the llc equivalent, which has its own reporting.

in Denmark, if you are a hobbyist (less than 50.000 DKK) then you report the aggregate income (b indkomst) and it is being added to your regular income.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#30

Post by blibble »

itake wrote: post #8
mnky9800n wrote: post #5

In the 8 years since I lived in the United States my income taxes in other countries have been almost unbelievably easy. Typically I look at the calculated amount provided by a government website, compare it to what I think it should be if there is done discrepancy, upload some receipts or whatever for deductions, then click submit. It is beyond me why the experience should be any how different in the United States.…

JW, how do these countries handle non-employement or self-reported income (e.g. capital gains of real estate, equity, or even selling products online)?

> non-employement

trust that your accountant won't fiddle your books for you (plus occasional audits)

> capital gains of real estate

in the UK all transactions go through the land registry and they can reconcile

> equity, or even selling products online

for these categories: generous allowances to almost all regular people from taxation

at the point it's more than this then it's fair to call it a business, at which point the penalties are severe for fiddling

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