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Free IRS-run tax filing pilot to be available in 13 states

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Re: Free IRS-run tax filing pilot to be available in 13 states

#151

Post by nashashmi »

tombert wrote: post #50

This is great news; no matter how restricted it may be initially, I think having a "guaranteed-free" tax filing system will be great for most people, especially lower-income people. The private companies have demonstrated pretty clearly that they will do everything they can to avoid people actually having free tax filing, and while ~$50-100 might not seem like a ton of money, keep in mind that at the current United S…

Just print out the sheet from your broker of all the trades you did with the end result of gains circled. Send that in. You should be ok from doing anything more complex.

Re: Free IRS-run tax filing pilot to be available in 13 states

#152

Post by not2b »

sokoloff wrote: post #84
not2b wrote: post #66

Earlier quoted context omitted.

Businesses will still need tax assistance. But there is no reason for a person whose income comes only from a salary, interest on savings and a brokerage account to need paid help to file taxes. The IRS already has all of the numbers. They could pre-fill the forms with those numbers and just have the taxpayer approve them.

The IRS processing of the data sent to them by various reporting requirements is much more like what we'd call "eventually consistent". If you ask for a transcript of your tax account ("what does the IRS know about my tax situation?") on April 15th and again 6 months later, the second report is very likely to be complete, while the first is not nearly as likely.

So, do it anyway and let the IRS eventually send a correction (refund or bill) in the rare cases where it makes a difference. Or allow the taxpayer to make corrections if they know about them. But probably the number of errors will go down; well-intended taxpayers often copy numbers wrong, and that probably happens more often than "eventually consistent" issues.

Re: Free IRS-run tax filing pilot to be available in 13 states

#153

Post by bluGill »

sidewndr46 wrote: post #43
joshribakoff wrote: post #33

They already have this in some form, its called “free fillable forms”, and it sucks. For example if there is any minor issue like something off by a cent it fails to submit and won’t tell you which field has an error or what the error is. Although its not officially maintained by the IRS, I don’t think… if i recall Intuit maintains it as part of an (arguably nefarious) agreement with the IRS. It’s presumably intentio…

I got some incomprehensible statements one time from a joint venture. I paid an accountant to do my taxes since I couldn't figure out. There answer to me was "I have no idea what this is trying to say, so I'll just submit it. If you get audited let me know and we'll work it out"

If you have a joint venture then your situation probably is complex enough that an accountant is something need anyway. At that point have them do the taxes as well. Most people don't have that complex a situation.

Re: Free IRS-run tax filing pilot to be available in 13 states

#154

Post by frumper »

LordDragonfang wrote: post #146
zeroonetwothree wrote: post #127

Earlier quoted context omitted.

You might have additional deductions they don’t know about. There are also things like your filing status, # dependents, etc that can change.

>They should just give you an itemized breakdown and ask if it's correct. I'm sorry, but this response comes up every time, and every time the answer is "yes, that's why I said you should be able to just tell them it's correct." It doesn't have to be any more difficult than checking a box. 90% of people are just going to use the standard deduction (no, seriously: in 2019 it was 87.3%[1]), and for most people their fi…

It's very reasonable to take the standard deduction with other deductions and credits. The standard deduction only replaces some of them.

edit: It's also possible you file before things are reported to the IRS about you.

Re: Free IRS-run tax filing pilot to be available in 13 states

#155

Post by hcrisp »

joshribakoff wrote: post #33

They already have this in some form, its called “free fillable forms”, and it sucks. For example if there is any minor issue like something off by a cent it fails to submit and won’t tell you which field has an error or what the error is. Although its not officially maintained by the IRS, I don’t think… if i recall Intuit maintains it as part of an (arguably nefarious) agreement with the IRS. It’s presumably intentio…

I've used it for many years and never had a problem. It is like filling in a PDF form but has a "Calculate" button which runs all the math for you (apart from some tables, etc. which you need to look up yourself). So I'm not sure how you would get off by a cent.

Federal taxes only. Except for entering in your W-2s by hand, it's pretty straightforward. You can save a PDF copy to your local drive. The nice thing is you save postage and do not have to pay someone to prepare / file it for you.

Re: Free IRS-run tax filing pilot to be available in 13 states

#156

Post by yohannparis »

zeroonetwothree wrote: post #123
tombert wrote: post #50

This is great news; no matter how restricted it may be initially, I think having a "guaranteed-free" tax filing system will be great for most people, especially lower-income people. The private companies have demonstrated pretty clearly that they will do everything they can to avoid people actually having free tax filing, and while ~$50-100 might not seem like a ton of money, keep in mind that at the current United S…

Don’t you already get free filing below some income threshold?

There is free filling using the official government tool. And there is free filling created by for profit businesses.

Re: Free IRS-run tax filing pilot to be available in 13 states

#157

Post by gavinhoward »

dalyons wrote: post #131
Analemma_ wrote: post #9

I've been using FreeTaxUSA for a while now to do my taxes, and I like it very much. (If you use TurboTax or H&R Block or something, I strongly recommend giving FreeTaxUSA a look). I was sort of wondering if the IRS would just buy them wholesale and use that as the free file software, since it's already "finished" and making another one would be duplicated effort. But is there precedent for that, the government just b…

I gave FTuasa a go after seeing it mentioned here a lot. Unfortunately it seems the investment part is very manual compared to TurboTax. I have a couple of robotrader , brokerage accounts etc. on TurboTax it’s a few clicks and that’s imported, FTusa is tediously transcribing numbers off dozens of forms that I have no idea if I’m doing it right. I reluctantly gave money to TT again.

Relative a of FreeTaxUSA employee here.

I'll let her know. She cares about UX.

Re: Free IRS-run tax filing pilot to be available in 13 states

#158

Post by bluGill »

whatever1 wrote: post #101

Why does the average American have to file taxes? You know my W2 you know my family members. Just send out the withhold amount to my employer.

85% of Americans should only have to return the postcard "this is what we think your situation is". The other 15% have something the government doesn't know and needs to file. The other 10% should have an accountant do their taxes and not software (which leaves a few% lost, not quite complex enough for an accountant, but not enough of them to support software for their situation).

Re: Free IRS-run tax filing pilot to be available in 13 states

#159

Post by jancsika »

ghaff wrote: post #137
bigbillheck wrote: post #111

Earlier quoted context omitted.

I think there are probably a lot fewer people with meaningful savings than you might think.

It looks like about half have brokerage accounts although some of those are probably just 401Ks and there's obviously a strong correlation with income levels.

I'd bet once you start digging down into the details, having a brokerage account becomes less and less relevant as a metric for who can pay simple taxes.

For example, how many of those respondents in the Gallup poll answered yes only because they have a Simple IRA? For those respondents, their contributions don't preclude them from taking the "simple tax" branch when filing taxes. (That's the "simple" part-- well, one of the simple parts, at least for the employee.)

Moreover, there were some changes to simple IRA administration in Secure 2.0 act that make automatic enrollment mandatory (for the employer to do 3% matching or whatever). So the category of respondent I mentioned above-- who technically has a brokerage account but can file simple taxes-- is likely to grow quite a bit in the next few years and decades.

Edit: I'd also be interested in how many people with simple IRAs contribute anything more than the 3% matching-- I'd bet its more than a majority. Perhaps that could change now that Secure 2.0 lets them contribute to a Roth IRA.

Re: Free IRS-run tax filing pilot to be available in 13 states

#160

Post by AnthonyMouse »

kdmccormick wrote: post #144
AnthonyMouse wrote: post #134

Earlier quoted context omitted.

Most of the inefficiency comes from the implementation rather than the policy, and the use of an income tax rather than a consumption tax. If you had a national VAT instead of a national income tax and the government wanted to subsidize e.g. solar panels, they would simply exempt solar panels from VAT and individuals wouldn't have to file anything, they would just pay less for solar panels because the seller wouldn't…

Everything you're saying sounds great, but afaict VAT doesn't have the power to rework a society the way income tax does: * Marriage is incentivized via the advantageous married-filing-jointly option. * Donations are deductible. * Employers are incentivized to replace part of wages with benefits packages including health insurance, which incentivizes people to not be unemployed. (I'm not saying any of this is a good…

> Marriage is incentivized via the advantageous married-filing-jointly option.

For 99% of people the 2023 brackets for married filing jointly are just double the ones for being single, and actually penalize two-income married couples in higher income brackets. Moreover, this wouldn't even do anything in a system with a flat marginal tax rate.

But if you actually wanted some marriage bonus you could increase the amount of the UBI for married couples.

> Donations are deductible.

So you don't charge VAT for donations or let the charity buy things without paying it.

> Employers are incentivized to replace part of wages with benefits packages including health insurance, which incentivizes people to not be unemployed.

This is definitely not a good thing and should be burned to the ground. But you could get the same effect if you wanted it by not charging VAT when e.g. employers pay for healthcare.

The better solution would, of course, be to not charge VAT when anyone pays for healthcare.

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