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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

#71

Post by smsm42 »

rm999 wrote: 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…

Turbotax has data import for some of the major payroll systems. However, making this work with IRS data directly, is a secure way, it not a trivial task and this task has to be performed by the IRS, not Intuit. Note that this is not what Intuit lobbied against - it's preparing the whole return (which is non-trivial, especially given law changes and thousands of options that exist) against just exporting data. I don't think Intuit would be opposed to the latter, but they are to the former.

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

#72

Post by arnarbi »

ScottWhigham wrote: post #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) CP…

I've lived in Sweden and Iceland, both of which have pre-filled tax returns to be submitted either on paper or electronically. Sweden is particularly easy, all I have to do is to verify the numbers and then send an SMS with a personal code printed on my return. If I need to change anything, I log into the tax office website, make the changes and submit.

I have deductions to offset paid interest. If I hire a person to do some renovation in my home, the tax office pays half of the fee directly to them and I get a deduction as well. I sold my flat this year and will need to pay tax from the winnings, deducting costs. Almost all of this will be pre-filled.

In Iceland I had a slightly more complex tax situation. I filed jointly with my ex wife. Mortages, minimum wage deduction (i.e. you don't pay tax of the amount that is the legal minimum wage), property tax (house, cars), stocks and bonds, bank deposits and earned interest, deductions for rent compensation, was all prefilled.

Compared to this, filing my dead-simple US taxes with one deduction, filling in a two page calculation worksheet, feels like the middle ages.

No matter the complexity of the tax code, there are systems in place for all of them to evaluate and error-check tax declarations. The information is most likely all there already. All you need to have is a way to authenticate tax payers, and a front end.

And if I have a reason to think the tax authorities will not include items that lower my dues, I can always hire an accountant to file for me. I simply give them my "third-party filer access code" and sign the final return.

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

#73

Post by toomuchtodo »

toomuchtodo wrote: post #48
readme wrote: post #37

Earlier quoted context omitted.

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

Login to IRS website, be shown all your data. Is this correct? Yes. No. buttons. Workflow is present to deal with incorrect data. The data is already submitted electronically by employers, brokerage/retirement asset management companies, states, etc. Why should I have to pay a private company (I'm looking at you Intuit) when the IRS should have the ability to provide the same service FOR FREE.

Response to niggler: Yeah, I'm cool streaming them my business transactions via Yodlee/Mint/my bank if it streamlines the process. They can already get the data if they want it (audit, etc).

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

#74

Post by pdubs »

noonespecial wrote: post #42
rm999 wrote: 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…

You forgot the part about when == is != they get to charge you a giant penalty. That's no accident.

Only if it's malicious or intentional. A mistake will be picked up and you'll get a form a year or two later asking you to accept or challenge proposed corrections. If less tax was paid than required you have to pay that + interest...which really isn't that unreasonable.

I'm not saying the whole system isn't needlessly complex, but don't make it out like the IRS is actively out to get you.

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

#75

Post by ScottWhigham »

JimWestergren wrote: post #58
ScottWhigham wrote: post #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) CP…

My guess is that at least 85% of the population of Sweden does not have any deductions and can just accept the prefilled values from the tax office (employees). For a normal employee there are not so many deductions you can do. I guess travel to and from work is the most common deduction. But if you have a business (not a corp) things is of course very different.

That's what my guess was. In that environment then, a government system clearly works well. I wish I had stats about how many US tax returns have deductions - I'd assume it's close to 100%.

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

#76

Post by maxerickson »

niggler wrote: post #43
maxerickson wrote: post #36

Earlier quoted context omitted.

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

There are an incredible number of moving parts with circumstances that may seem trivial, such as a master limited partnership or a foreign company paying dividends. Unless the entire world can standardize on taxes, these complications can't go away because not all information is properly reported or reported in a timely manner

Sure. But a system that only addressed the needs of 100 million people with simple taxes might still be a good idea (I realize that the thing exists. Free File is urged on by the government and has wide reach. I don't like that it is roughly designed to prevent the IRS from developing any sort of direct servicing).

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

#77

Post by datasage »

hkarthik wrote: post #54

US Tax reform is one of those things I don't expect to happen in my life time. Our government is too addicted to the income stream it provides and is just too scared to mess with it in any meaningful way. All it takes is a fear monger with an agenda like Intuit to whisper "Our experts estimate that you will lose $X billion in uncollected taxes with this new scheme" to send congressmen from both parties running. Ideal…

Tax reform generally means simplified tax code and which does not necessarily result in less revenue.

But there is a huge industry built around servicing the complex tax code, many of whom wont be needed if the tax code is simplified. Just like any other industry disrupted by changing business environment, they will fight to the death to keep their industry alive and necessary.

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

#78

Post by reverend_gonzo »

cbs wrote: post #44
navait wrote: post #31

Earlier quoted context omitted.

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 rate…

The government doesn't do anything at market rates. They employ below market rates, and contract external companies above market rates. This is (unfortunately) by design.

For what its worth, government jobs are also a bit more secure and generally provide pensions and other benefits.

Whether those benefits are worth a decreased salary depends on the individual.

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

#79

Post by imjared »

MatthewPhillips wrote: post #45
theorique wrote: post #41

Earlier quoted context omitted.

some government programs have excellent customer service as compared to some corporate equivalents I am sure we could find counterexamples here.

Ever been to the DMV?

DMV in the District had a pretty long line but was fine otherwise. The biggest problem I saw was people who had not read the provided information/required materials in advance of coming then started arguing or pleading their case.

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

#80

Post by bjhoops1 »

David Cay Johnston covered this in one of his chapters in The Fine Print. If you're looking to be incensed by more cases of corruption between corporations and government, it's definitely worth a read. You'll also get to find out why we in the US pay 38x more per bit of data transferred than the Japanese do!
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