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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

#141

Post by TimPC »

hedora wrote: post #112
pclmulqdq wrote: post #91

Earlier quoted context omitted.

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, whic…

I think UBI and flat tax are fundamentally incompatible. Reasonable levels of UBI require high taxes, and doing so with entirely flat taxes will be quite punitive on the middle class. I think the vast majority of the population think there is a lot of merit to graduated tax rates as well, charging 50% tax on all of someone's income above $10,000,000 isn't as punitive to any sort of living standard as charging 50% tax on someone's first $30k of income.

If we want a UBI of $24,000/year ($2,000/month) for an adult population of 250 million we are talking 6 trillion dollars in additional government spending. Assume for a minute we can cut 2 trillion in spending so we are talking about a spending increase of 4 trillion. This would mean roughly doubling current government revenues. If you wanted to do so with a flat tax, you'd see rates near the top rate now on all income.

Are people ready for a world where you get $24,000/year from the government and pay something like a 40% tax on all your income? Compared to the current tax code you probably break even at roughly $75,000/year and for incomes above that you'd pay more in tax.

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

#142

Post by lotsoweiners »

blincoln wrote: post #114
ghaff wrote: post #74

Earlier 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…

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.

That isn’t true anymore as of 2018 when the Trump administration made changes to the tax law. As a homeowner with a mortgage I used to itemize every year but now the standard deduction benefits me more.

https://smartasset.com/taxes/heres-how-the-trump-tax-plan-co...

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

#143

Post by jghn »

amerkhalid wrote: post #86
ghaff wrote: post #74

Earlier 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 they should get rid of all deductions at the individual levels. They just cause confusion and hide true cost of things. For example, I went to buy Jeep. 4xe version was $8000 more. But its battery lasts only 2-3 miles and it would have taken forever to breakeven. But dealership kept insisting that I will get $6000 in tax rebate/deductions so the actual cost is only $2000 more. They had marked up the car by ho…

> They had marked up the car by how much government was going to give rebate on and there was no savings for a taxpayer

This is the thing that always gets me. After having seen too many examples of this I soured on these incentivized deductions. The benefit always seems to go to the middle man.

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

#144

Post by onetimeusename »

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.…

I think it is deliberately made difficult as a backdoor way to raise more money through penalties and interest fees. Additionally, since the odds are so high that the average person making above $200K has made an error, it can be used as blackmail.

On a global scale, complex taxes are actually not uncommon and the US fares well. I'd like to see a comparison of government corruption with tax complexity. For example, it seems that most South American countries are considered to have very complex taxes.

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

#145

Post by naasking »

onetimeusename wrote: post #144
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.…

I think it is deliberately made difficult as a backdoor way to raise more money through penalties and interest fees. Additionally, since the odds are so high that the average person making above $200K has made an error, it can be used as blackmail. On a global scale, complex taxes are actually not uncommon and the US fares well. I'd like to see a comparison of government corruption with tax complexity. For example, i…

> I think it is deliberately made difficult as a backdoor way to raise more money through penalties and interest fees.

No, you have it backwards. Politicians don't want to make it difficult, they want a simple, stable revenue stream. But in the attempt to do so, commercial interests carve out convoluted exceptions for themselves to preserve revenue and make it more difficult for incumbents to challenge them. The lobby that ensues skews political incentives, and that's why it gets convoluted.

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

#146

Post by permo-w »

wussboy wrote: post #119
rocmcd wrote: post #59

Earlier quoted context omitted.

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?

that's a question actually: during prohibition were Americans allowed wine for mass?

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

#147

Post by FireBeyond »

wussboy wrote: post #119
rocmcd wrote: post #59

Earlier quoted context omitted.

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?

Religion is all about who you DON'T recognize..... Jews don't recognize Jesus as the son of God, Protestants don't recognize the Pope, and Baptists don't recognize each other in the liquor store.

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

#148

Post by JohnFen »

_DeadFred_ wrote: post #139
comte7092 wrote: post #116

Earlier quoted context omitted.

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.

Or when they just ignore that we already have socialized healthcare, just in the worst way possible, at the Emergency Room level only. So no preventative care just extremely expensive emergency care.

Not just no preventative care, but no real care. Emergency rooms treat you to the point where you're stable. They aren't going to treat you to the point where you're healthy again.

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

#149

Post by isykt »

_DeadFred_ wrote: post #139
comte7092 wrote: post #116

Earlier quoted context omitted.

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.

Or when they just ignore that we already have socialized healthcare, just in the worst way possible, at the Emergency Room level only. So no preventative care just extremely expensive emergency care.

Most people don’t think in systems, they think in stories.

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

#150

Post by mulmen »

vonwoodson wrote: post #55
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?

It’s very much a “who cares?” Issue. It’d be cool… but: taxes are still super easy to file for 90% of people. You’ve literally always been able to file your taxes by paper and not have to pay anyone anything to do so. It does not have to be a digital system and the government should not chase technical solutions unless it genuinely benefits its operation and legal requirement. If people want easy taxes then they can…

Paper forms are also a technology. Why should we use paper forms but not electronic forms?

Presumably the IRS has embraced electronic computer technology internally and no longer does business only on paper.

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