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How the Maker of TurboTax Fought Free, Simple Tax Filing

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Re: How the Maker of TurboTax Fought Free, Simple Tax Filing

#31
post #11

This stuff aggravates me. My taxes aren't abnormally complex (single, one state, very few deductions, one w-2), but I get several 1099s for my investments and end up spending an hour filling them in manually, importing CSV files from my brokerages, and double checking the numbers. What annoys me is all the forms clearly state the IRS has also been sent this information; I'm literally filling out forms in a slow, erro…

The government is not bad at code because of lobbying, they're bad at code because of fluctuating budgets, low salaries, and ridiculous processes.

The IRS was recruiting for interns at my university recently, who could eventually become full time workers. However, I found that at best I could enter as a GS-9, and those were positions with 5 years of expirience. The best salary I could get from that was $53,000 in NYC. Even the lowest offers my friends were getting were $60k in a low-cost area.

If the government was able to fund it's IT operations at market rates, or pay outside the GS we'd all be much better off. I don't know about the federal level but my state relies on outside contractors to make web applcations, who mostly do a half-assed job and disappear when maintenance becomes a problem.

Re: How the Maker of TurboTax Fought Free, Simple Tax Filing

#32

The choice is between letting the government do your taxes for "free", versus having a company whose reputation rides on getting your taxes done as efficiently as possible with the least tax burden to you. Anybody who would choose to have the government complete them, hasn't been paying attention to the lengths revenue-strapped states will go to maximize their tax collections. It's a bit like letting the user car sal…

It would be optional. You would not have to use it if you don't trust it. (Personally, I don't trust TurboTax.)

Re: How the Maker of TurboTax Fought Free, Simple Tax Filing

#33
In Brazil this kind of tax statement has been done online for many years using software supplied by the federal government. Unfortunately the government doesn't supply the data as well. It knows much better than me how much money I was paid, how much I paid for medical services, what my bank statement says, and so on, because we have a very comprehensive and intrusive set of laws about accountability towards the government. But still the government has us entering a lot of information from a lot of sources every year (information, I repeat, it already has) and we face harsh liabilities if we fail to retrieve and enter the correct information.

Re: How the Maker of TurboTax Fought Free, Simple Tax Filing

#35

Earlier quoted context omitted.

This is total BS Go reread the article, unless you're really in pro of companies charging for what should be free. Pro-tip: if the government thinks you owe X, it's not Turbotax that's going to change that.

No need for the hyperbole. OP's question is logical. On one hand you have a company who is taking your money and has a reasonable expectation that, as a result of using their software, you will save more money because they will help you find deductions and tax credits that you would've been hard pressed to find yourself. These companies compete in a free market for your money, both with other software companies and w…

"nd has a reasonable expectation that, as a result of using their software, you will save more money because they will help you find deductions that you would've been hard pressed to find yourself."

That has a lot less to do with software and more with you knowing the allowed deductions.

Funny how I have no problem finding these deductions using the free sw provided by the government (in more than one country)

I understand this is strange, but it works because deductions are often balanced. For example, you filing a deduction for medical expenses signal a correspondent owing of taxes by the doctor/hospital, so you're helping with enforcing collections.

" Is their system going to be designed to help you get as many deductions as possible? Are they going to prompt you to deduct moving expenses"

More or less yes. There may be the case where the software is going to be completely useless (like Argentina), but then you just skip the sw and go for a tax consultant.

"If Intuit/et al help you save $5000 in taxes this year by helping you deduct"

If you really can save 5k you 1 - probably know it 2 - may get the help of a tax consultant

But most people don't have deductions and should just file the 'default' for free.

Re: How the Maker of TurboTax Fought Free, Simple Tax Filing

#36
post #28

Earlier quoted context omitted.

I think you're missing the point. The IRS has already received your 1099/W2/etc and thus it knows (a) your income, and (b) how much in taxes you've already paid. By then having the IRS start your tax return for you, you would no longer have to fill in that info. The IRS makes free forms available already. Besides, are there actually people so stupid that they would give their SSN/info to a site like that?

I think many of us here don't get paid by W2 or by 1099. We are compensated in different ways which don't require those types of filings (e.g. K1), in which case we do need to fill out forms.

I don't understand your example, the originator of a k1 would file it with the IRS, just like for a W2 or 1099.

Re: How the Maker of TurboTax Fought Free, Simple Tax Filing

#37

Earlier quoted context omitted.

No, it's not about doing your taxes electronically. It's about the IRS pre-calculating everything for you, so you don't have to input anything . You just say "yes, that's right", unless there are errors or additional information needed.

Exactly. We have the ability to do this, and private companies lobby against it (and win!) to protect their profit. What the fark.

So, you're comfortable with just trusting the government to tell you what you owe? I'd prefer to check the math myself.

Re: How the Maker of TurboTax Fought Free, Simple Tax Filing

#38
I'm not sure what the tax code is like in other countries, but the US one is pretty complicated due the number of write-offs you can add to your tax deductions. A lot of those deductions are not reported to the government, so it's up to you to figure out if its worth doing or just doing the standard deduction amount.

Re: How the Maker of TurboTax Fought Free, Simple Tax Filing

#39

The choice is between letting the government do your taxes for "free", versus having a company whose reputation rides on getting your taxes done as efficiently as possible with the least tax burden to you. Anybody who would choose to have the government complete them, hasn't been paying attention to the lengths revenue-strapped states will go to maximize their tax collections. It's a bit like letting the user car sal…

[deleted]

Re: How the Maker of TurboTax Fought Free, Simple Tax Filing

#40
To those saying "We should be more like Sweden/Finland!", I'd ask whether those countries have a tax system that is also based on using tax credits and deductions to lower your tax due? I don't know the tax codes in those countries but my guess is that, because they use the tax entity-created system, they do not have such a complicated tax code as the US.

In the US, you have two sides of this: (1) the IRS, and (2) CPAs, CPA firms, and software firms like Intuit who profit from helping customers file taxes. The question always is, "Why would I pay someone to file my taxes?" The answer is, "If they can save you more than their fee, it's worth it." In other words, if they charge $100 but save you $101 in "tax due", you have a net "win" of $1 thus you should hire a professional. Why does this work?

For the CPAs, CPA firms, and software firms like Intuit, you have a professional who is taking your money and offers a reasonable expectation that, as a result of using their software, you will save more money than you pay in fees because they will help you find deductions and tax credits that you would've been hard pressed to find yourself. These companies compete in a free market for your money, both with other software companies and with CPAs/CPA firms. The "winner" (for a particular user/client) is the one who (a) has the best reputation of not getting you audited, and (b) who gets you the best price:deduction ratio.

On the other hand, you have a government entity whose sole charge is to collect revenue. Is their system going to be designed to help you get as many deductions as possible? Are they going to prompt you to deduct moving expenses (just to pick one example)? Maybe, maybe not. The question is legit though and thus causes us all to say, "Wait a minute... maybe, since there is a financial incentive for them not to show me deductions, that they will hide some of that (or make finding it as complex as the tax code)."

If Intuit/et al help you save $5000 in taxes this year by helping you deduct all that you can, Intuit/et al do not make one penny more - that money simply stays in your pocket. And you probably smile, buy a new car/vacation/etc. And you certainly tell your friends, "You should use Intuit!" If the IRS helps you save $5000 that you would have otherwise paid (b/c you did not fully deduct all that you could have), then the IRS loses $5000. That in and of itself highlights the problem. Do you trust the IRS to say, "It's okay if we lose $5000 - you're happy, right? That's what matters!"? Of course not. Having the separation works in the US for this clear conflict of interest.

Again - I don't know the tax code of the Euro countries but I'd be interested to hear if they have a similar setup and how they work around this. It's logical to think that the IRS could invest $500 million building such a system and then no one uses it because paying $30 to Intuit/etc results in a higher refund for the above reasons...

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