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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

#31

Post by glimshe »

maccard wrote: post #20
glimshe wrote: post #17

Earlier quoted context omitted.

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…

> 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. That's way too complicated. In the UK, for the vast vast majority of people, there are no for…

You can call it relatively complicated, but it was not complicated in the absolute sense. Perhaps tedious and busy work-ey. The process was basically typing 10-15 numbers that I read from 2 forms sent to me by mail rather than thinking/reasoning.

Don't get me wrong, it would be a lot better to not do it like you describe, but as far as bureaucracy is concerned, I'll take this over all the other bureaucracy you have to deal with in Europe. It's the one time in the year that I feel I have to actively deal with the government in the US, at least in the state I live.

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

#32

Post by wildrhythms »

tuwtuwtuwtuw wrote: post #25
glimshe wrote: post #17

Earlier quoted context omitted.

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.

The policymakers in U.S. government have been bribed for decades by the likes of Intuit and H&R Block to not simplify the tax filing system.

https://www.propublica.org/article/inside-turbotax-20-year-f...

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

#33

Post by karmajunkie »

pid-1 wrote: post #26
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…

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.

i procrastinated on getting my tax paperwork together this year until an unbelievably late date. so i was kind of surprised to get a call from my tax guy on oct 16 letting me know my return was ready —they had just requested my transcripts from the irs, which had all my income from 2022 listed.

so it would seem that a) for at least the nominal taxpayer, it’s entirely possible that the government has your information already; and b) unless i get back into consulting or otherwise complicate my income, my tax guy just set himself up to request those transcripts every year!

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

#34

Post by rayiner »

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.…

There is nobody in the developed world as opposed to the government raising revenue as Americans are. That part is bipartisan, which is why Biden hasn’t meaningfully raised taxes. But Republicans go a step further and want you to suffer once a year so you don’t get complacent about the tax rates.

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

#35

Post by shiroiuma »

sdenton4 wrote: post #7
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.…

"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…

>The anti-tax activists think that if taxpaying is too easy, voters will be less likely to resist the federal government’s growth. Both want to make it as painful as possible for you to do your taxes yourself.

This sounds a lot like the logic the US government uses with regards to normalizing relations with Cuba. They think that by keeping up an embargo, that the Cuban people will rise up and overthrow their communist government. It hasn't worked for over 60 years, but surely any day now it will...

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

#36

Post by karmajunkie »

somewhereoutth wrote: post #27

Does 'direct file' mean you won't have to post (by registered mail) your physical tax form to the IRS? That would be the biggest win surely (although huge loss for USPS)

that’s not a thing for most people —registered mail is not necessary, even when physical forms ARE submitted, and the “Direct” part means directly with the IRS (no middleman). But the Direct File program is electronic so the answer to your question is yes.

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

#37

Post by rayiner »

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.

Have you ever done your taxes? For individuals, it’s easier if you have a high income because many of the deductions and credits phase out and are capped by AGI. Dependent care FSA versus dependent care credits, student loan interest deductions, etc. Most of the questions the software asks you aren’t “Warren buffet” deductions.

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

#38

Post by BrandoElFollito »

tuwtuwtuwtuw wrote: post #24
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.

Starting from this year I think that in France if you do not react then it is assumed that you completed your taxes as described in the tax sites.

The rationale is that for the vast, vast, vast majority of people there is nothing to do so it does not make much sense to bother them at all.

A lot of things changed when we finally moved to have taxes automatically deduced form the salary (before that you had to pay separately three times a year, and later you could make it a monthly payment). This means in practical terms zero contact wth your taxes when you are in the general situation.

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

#39

Post by ss1996 »

somewhereoutth wrote: post #27

Does 'direct file' mean you won't have to post (by registered mail) your physical tax form to the IRS? That would be the biggest win surely (although huge loss for USPS)

Just curious, why are you still sending physical tax forms? Have you been filing 1040NR? Those were recently digitalized, while the standard 1040 has been digital since a while.

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

#40

Post by poiop »

sakjur wrote: post #11
itake wrote: post #8

Earlier quoted context omitted.

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)?

In Sweden, certain things are reported to the government and others are not. Your task is to validate the prefilled tax forms and add missing income (above thresholds in place to allow for hobbyist level incomes) and deduct missing deductibles. The typical process is to just approve it, but when you’re for example selling real estate you’ll have to append it with information about your capital gains minus deductible…

Taxes in Sweden are generally effortless. Deductions, investments and benefits are often generous and easy to file. Unfortunately if you are more modest the story is a bit different.

It is great if you are established. You might have a big house, high maintenance costs, use cleaning services, invest a lot in the stock market and other things that comes with all that. Because not only is it easy but you get a lot of public benefits as well like health care, affordable student loans and mortgages, cost-free education and kindergarten, sick leave and affordable private additions to many of those. You can even use the ease of that to do things like start a company on the side.

For us that are more modest and don't have a lot of assets but mostly want work, get health care and do something else once in a while, it is still a good system. I once checked and approved my taxes in the middle of the night, from a bar, in China. But overall there isn't as much benefit. If I don't want to pay a higher tax rate than those who use all those deductions and want some flexibility in how I use my income (which I honestly rather wouldn't) I need to start a company. But then I would have to file much more complicated taxes and therefor get much less enjoyment from taxes being easy for personal income. Still by not doing so I am giving up tens of thousands of dollars a year.

So while I am in no way suggesting that the US system is better or even comparable, the Swedish tax system today have many of the same overall problems. And that is unfortunately more and more true of other systems as well.

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