Tax prep firms should market themselves as software to audit automated IRS tax calculations.
13 States join the IRS direct-file test after tax prep firms dropped the ball
111–120 of 196 posts
Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball
#112Earlier quoted context omitted.
And the reality today is that, if like a lot of people, you just have a W2 and maybe a 1099 or two, while the 1040 form is probably a bit intimidating, it's pretty straightforward if you're just taking the standard deduction as most people do since Trump era tax changes. Basically, if you're eligible for any of these direct-file arrangements, your taxes are pretty easy to file anyway. I'm all for simplifying tax fili…
I think a lot of people who complain about the complexity of the US tax code and the "need" for TurboTax would benefit from directly filling out the 1040 by hand one year - most of them would have a pretty easy time doing it. For most people, all you need is a 4-function calculator, your W-2s/1099s, and a pencil, and it will take at most an hour or so. Where the IRS's UX is really bad for the average taxpayer is all…
I used to do it with just the 1040 and a spreadsheet.
The problem with that is that there are literally 100 crazy-assed questions that I have to answer in order to fill out all the supplementary worksheets, etc.
For instance: I bought a used EV. Do I take the tax break? Is it a deduction or credit?
Figuring that out will take at least 10 minutes after you find the right IRS bulletin.
Also, we have a roboadvisor, which means we hit all the corner cases for investment income.
Even with turbotax, it takes about 8 hours for our moderately complicated taxes. Just getting the basic stuff that any homeowner with a family has to do takes 2-3.
On top of that, the first year I used turbotax, I found out I had been overpaying ~$200-500 the previous 4 years.
Filing amended returns wasn’t worth it, but paying the intuit mafia would have saved me time and money in the long run.
If I had my way, we would move to a UBI and a flat tax (on income and capital gains).
That reduces the tax code to a two variable equation of a line.
I’d take a scatterplot of the 30-90th percentile of the US’s effective tax rates, and fit the line to that data set with a linear regression.
In addition to creating basic income, this would ensure that the ultra wealthy actually pay taxes.
Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball
#113Earlier quoted context omitted.
UK: no CGT on your home, only investment properties. https://www.gov.uk/tax-sell-home (in some ways this is a pretty big middle class giveaway, but it also hugely simplifies things) UK equity: smart people use an ISA wrapper https://www.gov.uk/individual-savings-accounts/how-isas-work or a pension, both of which are tax free for people with normal incomes and wealth. Selling online: after £1000 you're a "trader" and…
Another great example of how the UK handles things differently in a way that shifts the filing burden off the taxpayer is charitable tax deductions. In the US taxpayers track their charitable giving and use it to reduce their taxable income at filing time. In the UK when you donate to a charity you attest to that charity that you are a UK taxpayer and that the donation is therefore gift aid eligible, and the charity…
In the US, that assumes they exceed the standard deduction--which absent a large mortgage deduction or quite high charitable giving most people won't for routine modest donations.
Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball
#114Earlier quoted context omitted.
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 p…
And the reality today is that, if like a lot of people, you just have a W2 and maybe a 1099 or two, while the 1040 form is probably a bit intimidating, it's pretty straightforward if you're just taking the standard deduction as most people do since Trump era tax changes. Basically, if you're eligible for any of these direct-file arrangements, your taxes are pretty easy to file anyway. I'm all for simplifying tax fili…
Maybe stating the obvious, but virtually everyone with one or more home loans should be itemizing their deductions to include that and their state sales or income tax. The standard deduction is very generous for non-homeowners (IMO), but it's easy to get a higher deduction just based on home loans and state tax, without even getting into all of the sketchy loopholes that some tax preparers will try to use.
Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball
#115Earlier quoted context omitted.
> Grover Norquist’s Americans for Tax Reform For those who don't know, Grover Norquist is a highly influential, batshit crazy right-wing ideologue who believes the estate tax is morally equivalent to the holocaust. Almost every Republican lawmaker on the national level signs a pledge he has written, swearing they will not raise taxes. https://news.ycombinator.com/item?id=24037730
Grover is the figurehead, but he's got backing from plenty of other billionaires and other large tax-is-bad action group. also directly sprung from Bush Sr. saying "read my lips: no new taxes" and then immediately going the other way. that ruffled a few feathers and took the "tax bad" lobby into the Tea Party / Norquist insanity we've seen.
It's funny. I would not ever want to paint Norquist as an ultra-powerful shot-caller. I just assume those are the guys who donate the money and the guys decide who gets the donations. When you think about it in those terms, he's perhaps more of a cultural artifact.
But wow, what an artifact! There has not been, to my knowledge, an instance of a newly elected US Senator publicly saying "signing this absurd thing is beneath the dignity of my office and of course I'm going to try to keep taxes low, the voters of xxx elected me because they know I'm a dedicated conservative, but it is impossible to guarantee that it will not be necessary to levy a new tax of some kind, so I am not going to promise that." Or something along those lines.
He doesn't get to decide who gets the donations, but he does get to administer the Kool-Aid, and it's powerful stuff.
(edit: it occurred to me that given the rules involving political donations, and PACs, and so on, he might be administering all kinds of money and the public wouldn't necessarily know about it, so... yeah...)
Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball
#116I love the quote from the Intuit VP, which complained that it would end up “costing billions of dollars in taxpayer money.” The current system costs billions of dollars in taxpayer money, it’s just that today those dollars flow to Intuit. The IRS one should end up costing less overall, even at govt contracting rates.
That’s just the classic anti public sector service line in general.
Whatever your feelings are about single payer healthcare, it’s incredibly disingenuous when politicians debate against it by bringing up the cost of such a system, without comparing it to the current cost of the private system it would replace.
Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball
#117Earlier quoted context omitted.
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 p…
And the reality today is that, if like a lot of people, you just have a W2 and maybe a 1099 or two, while the 1040 form is probably a bit intimidating, it's pretty straightforward if you're just taking the standard deduction as most people do since Trump era tax changes. Basically, if you're eligible for any of these direct-file arrangements, your taxes are pretty easy to file anyway. I'm all for simplifying tax fili…
The question with the trump era changes isn’t what percentage itemize in a given year.
The question to ask is what percentage should always itemize. and how long it takes for them to figure out if they should or not each year.
It is true that some people just won’t bother, but that’s just a hidden tax hike on the middle class. It doesn’t make sense for that group to bother to take the time to learn turbotax or hire an accountant in order to potentially save $1000.
Also, the Trump changes intentionally cause under-witholding, so now people have to fill out the “did I get fined for underpayment?” form, and the “do I need to file quarterly taxes?” form.
The change that intentionally broke the withholding formula was explicitly designed to make tax preparation more painful.
Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball
#118Earlier quoted context omitted.
then you're gonna really hate to learn about vehicle registration
Vehicle registration is done by state agencies. I would not expect that all the data in 50 states' (plus additional territories') databases end up reflected into a federal database today.
Some of us pay state taxes too…
Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball
#119Earlier 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…
Otherwise known as the "bootlegger and baptist" problem.
"Never invite just one baptist to go fishing with you or he'll drink all your beer."
Related?
Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball
#120I love the quote from the Intuit VP, which complained that it would end up “costing billions of dollars in taxpayer money.” The current system costs billions of dollars in taxpayer money, it’s just that today those dollars flow to Intuit. The IRS one should end up costing less overall, even at govt contracting rates.
That’s just the classic anti public sector service line in general. Whatever your feelings are about single payer healthcare, it’s incredibly disingenuous when politicians debate against it by bringing up the cost of such a system, without comparing it to the current cost of the private system it would replace.
A key factor is that insurance companies are a big sector, and are in everybody’s pension funds. This is one of the reason that the oil companies get subsidies (“green hydrogen” which makes no scientific sense) in the anti-climate-change legislation.
Intuit and HR Block are too small to present that level of opposition.