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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

#141

Post by gyardley »

danso wrote: post #124
gyardley wrote: post #86

Yes, TurboTax is being rather transparently venal, but that doesn't mean they're wrong. I doubt the American government is competent enough to get tax calculations right, and I suspect they're hungry enough for revenue to make all their default assumptions in their favor. At least that's been my experience with every state and federal tax authority I've dealt with for the past half-decade or so. Once we have a tax co…

> Once we have a tax code that's simple enough and a government that's competent enough to get think right How do you foresee this happening if we -- the government and the public -- maintain a status quo in which feasible optimizations are never pursued because hey, we have a private alternative that doesn't charge too much to do it? For the government to become more competent, the people have to demand reform. For…

I'm arguing that without these prerequisites, this 'optimization' isn't an optimization at all - it'll be a step backwards, because it'll just end up ripping people off.

People certainly should demand reform, but not this particular reform at this particular time. People should absolutely demand a simpler tax code - I don't know about you, but I'm still holding out hope we'll see some tax reform in 2013.

'Competent government' is a harder problem. Americans aren't Norwegians or Germans, and simply aren't good at large bureaucracy. Unless America starts subcontracting out its administration to the Swedes, better government is going to take either a change in American character or something smaller and less-centralized.

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

#142

Post by [deleted] »

arnarbi wrote: post #72
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…

[deleted]

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

#143

Post by fotbr »

Hannan wrote: post #110
pdubs wrote: post #74

Earlier quoted context omitted.

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.

>> If less tax was paid than required you have to pay that + interest...which really isn't that unreasonable. If I pay too much, do I get interest back on the overage?

I got paid interest because the IRS took longer than they were supposed to when they processed my return claiming the first time homeowner credit. I wasn't expecting it, and I certainly wasn't expecting the interest rate I was paid to be higher than any non-credit-card interest rate, but it was.

I treated myself to a bottle of Lagavulin 16 and a couple good cigars.

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

#144

Post by mjn »

haakon wrote: post #140
arnarbi wrote: post #72

Earlier quoted context omitted.

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…

In Norway, if you qualify for simplified tax return (which I think most people do), you don't have to do anything anymore. You get a default pre-filled tax return that you can access electronically (or on paper if you prefer), and you only have to return it if you need to make changes.

Same in Denmark; you also get the refund automatically paid, if they owe you anything, with interest (0.5%, but still). I screwed up my withholding my first year here (failed to apply for a tax ID at all, so taxes were withheld by default at the highest rate). The next March I got a letter saying, your taxes were over-withheld by large_amount. If this is incorrect, please log in and fix it, otherwise we're going to deposit a huge pile of money in your account in N weeks. Did nothing for a few weeks and the money showed up.

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

#145

Post by DanielBMarkham »

ellyagg wrote: post #138
DanielBMarkham wrote: post #118

Couple of notes. 1) The IRS itself gets most of the tax advice wrong that it gives out to taxpayers 2) Paying taxes is one of the few transactional relationships you have with your government. If you ask me, a government representative should come to your office and you should pay him in cash, not hide and automate taxes so that they disappear. 3) There is a difference between a simple tax system and a tax system tha…

"2) Paying taxes is one of the few transactional relationships you have with your government. If you ask me, a government representative should come to your office and you should pay him in cash, not hide and automate taxes so that they disappear." Yep. My brother resists giving his credit cards to businesses to keep on file because it makes it much easier for them to get your money habitually, unconsciously, acciden…

You should love paying your taxes because you love your government. That means that you and the government should have some sort of transactional relationship. I give the government 100 bucks every payday, and I see the things it provides for me. Then, every election, I get to vote for folks to make adjustments based on my desires. We have a relationship. I understand and am reminded on a regular basis that there is a trade-off

I can't emphasize how much that making this relationship go away is a tremendously bad idea. Yes, tax paying can be easy -- if the tax code is easy. But you should do something on a regular basis to think about the agreement you're part of, even if it's just sending an SMS every week to transfer your funds.

The late Senator Daniel Patrick Moynihan is the person responsible for making sure the Social Security agency sends out statements to show how much you've paid into the system. He felt, and I agree, that government systems for which there's no interaction eventually become perceived as either magic or worthless -- and either choice was really bad for a democracy over the long term.

You shouldn't run a government the same way you'd run one of those companies that wants to automatically deduct money from your account every month -- hoping you'll never miss the charges once the benefit goes away and then they can continue billing. It just won't work.

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

#146

Post by rjacoby5 »

MBCook wrote: post #51
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…

Ignore all the deductions and other stuff. It's a mess and should be fixed, but for this simple issue, it's not relevant. I get W2s, 1099s, 1099-Rs, 1099-INTs, THX-1178s, ABC-123s, etc. I have to manually copy the stuff from boxes 1-30 on each of those onto my returns. I'd file my taxes in January expect it takes weeks for all the various organizations I deal with to make those and send them through the mail. I shoul…

I think you mean THX-1138s.

Total operation cost: six thousand credits under budget. Congratulations. Be efficient, be happy.

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

#147

Post by brk »

ajross wrote: post #122
noonespecial wrote: post #42

Earlier quoted context omitted.

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

No one pays penalties for simple mistakes. That's what FOX news tells you, but it's not true. We've made five-figure goofs on taxes in the past and a simple letter explaining the mistake (assuming it's an explainable mistake and you didn't get caught in actual attempted fraud) is enough to get the penalty waved.

Seconded. Mine was a 6 figure mistake. I fact, it COST the IRS money to contact me. Once they sent info I realized the error, and that I did not in fact owe 6 figures. Paid it anyway so my wife wouldn't stress about penalities, restated ( took a year) and then received a refund with hefty interest paid by the IRS. Along the way their support line was helpful in getting some questions answered.

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

#148

Post by chime »

ajross wrote: post #122
noonespecial wrote: post #42

Earlier quoted context omitted.

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

No one pays penalties for simple mistakes. That's what FOX news tells you, but it's not true. We've made five-figure goofs on taxes in the past and a simple letter explaining the mistake (assuming it's an explainable mistake and you didn't get caught in actual attempted fraud) is enough to get the penalty waved.

The penalty is in interest on the taxes. We had an incorrect entry in our 2010 return and had to pay about 12% in addition to the deficient amount. That would've been zero if they just verified it in 2011 and told us that there was an error. That is a penalty as far as I am concerned because I didn't get to choose the rate, I didn't get to fight it, and I didn't get to decide when it was due. It was an error on our part and a lack of efficient process on their part caused us to pay extra fees on top of the back-taxes. Whether you call it justified interest or penalty doesn't matter because it still costs me the same.

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

#149

Post by silvertonia »

ajross wrote: post #122
noonespecial wrote: post #42

Earlier quoted context omitted.

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

No one pays penalties for simple mistakes. That's what FOX news tells you, but it's not true. We've made five-figure goofs on taxes in the past and a simple letter explaining the mistake (assuming it's an explainable mistake and you didn't get caught in actual attempted fraud) is enough to get the penalty waved.

Yup, 100%. I did the same, it was a big botch that I then took 6 months to finally get around to addressing. The IRS sent a few simple letters, and in the end there were no penalties-- I think I paid some ridiculously low interest on the money I owed and payed past the grace period they gave me from when I found out about it.

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

#150

Post by lhc- »

frogpelt wrote: post #90

Frankly, anyone who does trust any government hasn't had very much experience with them. At best, governments are inefficient and incompetent. At worst, they are run by politicians absorbed with self-interest. There are already scads of people trusting too much to other entities rather than figuring it out on their own. These people leave their tax withholdings at default levels, then walk down to the local Wal-Mart…

"The solution is not more government nanny-state ideas"

"requiring every person who receives 10% or more...to attend classes"

This seems like a bit of a non-sequitur. Don't provide an easy (and free) way for people to submit their taxes without going to a CPA, but do force people to go to some classes? How is that less of a "nanny state"?

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