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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

#181

Post by dmoy »

ghaff wrote: post #158
dmoy wrote: post #154

Earlier quoted context omitted.

Shoot, I accidentally reported the same income twice even with turbotax once because I didn't understand what non-covered shares were. (And in my defense, the broker also didn't show cost basis on the 1099-B either, I was just supposed to know)

I forget when the cost basis reporting requirements got firmed up but there were some point where I had options from a former employer that had gone through a couple rounds of acquisitions and when I eventually sold the shares I ended up throwing my hands up a plugged in some average cost basis that was somewhere in the ballpark and called it a day. It's all pretty automatic these days but it used to often be a real…

Yea cost basis reporting from the broker to you is better now.

Cost basis reporting from the broker to the IRS is still blank for non-covered shares though, which leads to the other common case of "forgot a page of 1099, IRS thinks it's $0 cost basis, sends bill for $10k++, but actually you owe ~$0 if you send in the correct info".

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

#182

Post by comte7092 »

hooverd wrote: post #178
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.

I hope the IRS is building in-house competency for this project. So much public sector inefficiency is because we farm out projects to the consultant industrial complex.

Agree 100%. That is an issue that I don’t think gets enough attention.

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

#183

Post by instagib »

According to the IRS, these are the states joining the pilot:

States with state income tax: Arizona, California, Massachusetts, and New York States without state income tax: Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming

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

#184

Post by kbelder »

sokoloff wrote: post #108
dboreham wrote: post #98

Earlier quoted context omitted.

It's a "push" system rather than "pull" that you're thinking of -- the government (in theory) has no idea what someone earned, although they do know how much tax they've already paid during the year, they pretend that they don't. So the employee's task is to present a record to the government (known as "Filing Taxes") that says: I earned this much, and I already paid this much tax, so you owe me this much back (while…

> the government (in theory) has no idea what someone earned The government gets a copy of your W-2 and 1099s.

And that is most but not necessarily all you've earned, and the Gov has no way of knowing the total unless you fill out a form.

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

#185

Post by hooverd »

justinzollars wrote: post #125
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.

Government size as a proportion of GDP is at 42.36% [1]. How much bigger should it get? 1. https://www.imf.org/external/datamapper/exp@FPP/USA/FRA/JPN/...

Paradoxically, if the government did more it would spend less. All civil servants without in-house expertise know how to do is RFP and spend money.

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

#186

Post by Shaanie »

poiop wrote: post #57
lawn wrote: post #46

Earlier quoted context omitted.

You're comparing the tax system, but the main topic is simply the act of filing your taxes. Which is indeed extremely easy here in Sweden comparatively.

I am not really comparing tax system, or at least that isn't the intention. The Swedish tax system is easy as long as you stick to those accounted for benefits. Say if you make a $100k a year and you pay social security for public pension among other things but public pension only gives you credit up to $50k a year. Now if you have a big house you can deduct renovations so your income is for tax purposes is, say, $75…

Tax deduction for renovations is $5k per year ($7.5k next year). Or well, less now that 1 USD is 11 SEK instead of 10.

You make it sound like you can just start a company and hire yourself, and the biggest drawback would be more complicated taxes... No, the biggest drawback is that you're starting a business and taking a (much) larger risk than being employed. Hiring an accountant to help with the bookkeeping is a minor thing in comparison.

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

#187

Post by fwungy »

wredue wrote: post #165
fwungy wrote: post #164

Earlier quoted context omitted.

Simple, relatively high, taxes for the plebs and a complex, exploitable tax code for the rich. There's no need for wagies with low net worths to go through the full process.

The things the rich are capable of doing with their money is beyond the reach of us “normal” people. I don’t know how we can possibly not have complex taxes for the rich short of taking all their money.

They make the tax code complicated so they can leverage it.

This is why they can't get Trump on tax issues. Trump pays the best tax people to cover him. If they nailed Trump on anything they'd have to nail a lot of other people too, who are otherwise untouchable.

A flat tax would work just fine, except for all the people in the tax industry that is. You just level the flat tax until you get the equivalent revenue from the current scheme.

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

#188

Post by JohnFen »

pclmulqdq wrote: post #175
JohnFen wrote: post #153

Earlier quoted context omitted.

I know that I wouldn't, because I don't want to. I'd just pay the amount the IRS says I should pay and call it good. I'd probably be paying more tax than absolutely necessary, but I honestly wouldn't mind that at all -- especially because I'd be saving money over doing the taxes myself (in the sense of time == money) or paying someone else to do them for me.

I mean, if the IRS was wrong about your income and you got audited, you would probably still be on the hook for penalties and back taxes. You're still going to want to spend some time checking that tax form pretty thoroughly.

True, but the same is also true if a tax preparer makes a mistake. Also, the IRS almost always waives penalties (and often interest) unless they think it wasn't an honest mistake.

I'm not bothered by this risk. If a mistake is made and I owe additional taxes, then I'll just pay what I owe. No biggie.

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

#189

Post by pclmulqdq »

JohnFen wrote: post #188
pclmulqdq wrote: post #175

Earlier quoted context omitted.

I mean, if the IRS was wrong about your income and you got audited, you would probably still be on the hook for penalties and back taxes. You're still going to want to spend some time checking that tax form pretty thoroughly.

True, but the same is also true if a tax preparer makes a mistake. Also, the IRS almost always waives penalties (and often interest) unless they think it wasn't an honest mistake. I'm not bothered by this risk. If a mistake is made and I owe additional taxes, then I'll just pay what I owe. No biggie.

I mean, that is a hell of a life choice, but I guess if you assume that the government is always honest (see the Iraq war and many other things) and the IRS always interprets the documents they receive correctly (which they don't today - I have gotten letters from them which are blatantly wrong), that sounds good.

I understand that an hour is valuable, but that hour you spend checking your tax documents may be the highest-leverage hour of work you do that year.

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

#190

Post by rayiner »

yonaguska wrote: post #170
rayiner wrote: post #37

Earlier quoted context omitted.

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.

Actual wealthy is living off investment income, not a W2. These are the people the complications are built for.

But those complications don’t affect the average tax filer, which was OP’s theory.
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