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Direct File won't happen in 2026, IRS tells states

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Re: Direct File won't happen in 2026, IRS tells states

#171

Post by testing22321 »

wildzzz wrote: post #121
terminalshort wrote: post #62

Earlier quoted context omitted.

Which is basically how it works here too. If you just have W-2 income from an employer it takes less than 10 minutes to fill out the form. Sure, the system you mention is more convenient, but the difference is minimal.

The IRS already has most of my tax information and knows the tax code. Why must I deal with a third party (and potentially have to pay them) to electronically file my own taxes?

The same reason you pay exorbitant sums for healthcare, education, transport and much more.

The US is not a county optimized to provide quality services inexpensively. It is a business optimized to maximize profits.

Re: Direct File won't happen in 2026, IRS tells states

#172

Post by RajT88 »

Thorrez wrote: post #153
RajT88 wrote: post #80

Earlier quoted context omitted.

It is not that complex. RSU's or options are pretty straightforward. Deductions can get esoteric if you sold a bunch of stock. Even then, not that bad.

RSUs are not straightforward: https://news.ycombinator.com/item?id=43676698 And options are worse.

All right, I guess I see your point. If you company doesn't handle the complexity, it can be a nightmare.

Where I've worked, they withhold the necessary number of shares from RSU's and it just gets taxed as W-2 income. Then, it shows up with the taxed cost basis in Fidelity so you don't get double taxed when selling shares. It doesn't appear like they have to factor in travel into that equation - that's only for your salary.

As far as options, it was similar where I was receiving them. The only issue I ever had exercising options was when the company whose stock I was trading changed names, and then the IRS suddenly believed all those options were 0 cost basis and wanted a bunch of money. That took two rounds of letters and a call to HR to get sorted out. Granted - laws have changed since then - that fiasco was 18 years ago.

Re: Direct File won't happen in 2026, IRS tells states

#173

Post by sgerenser »

zbentley wrote: post #145
sgerenser wrote: post #143

Earlier quoted context omitted.

There are already ways to file your taxes for free or very cheap, e.g. https://www.freetaxusa.com . It would be hard for anyone to compete with a free or very cheap competitor, even as a nonprofit.

Yes, but Direct File moved us closer to a future where the government could pre-fill data for (and/or potentially just send a bill to) tax filers. Even if other free tax filing software exists, the loss of Direct File is painful because it was advancing the precedent of first party tax software.

That’s valid, but my comment was about why a (non-governmental) third party or charity wouldn’t want to take the open source Direct File software and run with it. If they aren’t actually the government running it, it completely loses its primary advantage.

Re: Direct File won't happen in 2026, IRS tells states

#174

Post by voxic11 »

thayne wrote: post #61
hyperrail wrote: post #4

https://github.com/IRS-Public/direct-file Obviously the 2025 version will be out of date for the 2026 filing season, though public code means it can always be revived by anyone else. (previous HN threads: https://news.ycombinator.com/item?id=44182356 https://news.ycombinator.com/item?id=44131901 )

Does the "Modernized eFile API" still exist?

afaik yes, its what the for-profit companies like turbotax use as well. While its "modernized" in comparison to older systems it was originally created in 2004 (and you can tell because it has XML galore).

Re: Direct File won't happen in 2026, IRS tells states

#176

Post by mixmastamyk »

simoncion wrote: post #88
mixmastamyk wrote: post #59

Earlier quoted context omitted.

It started requiring phone numbers and things and I stopped using it in favor of my own spreadsheet.

> It started requiring phone numbers and things... a) You're already trusting them with every piece of information in your tax return. It'd cost like five cents to use that information to discover your phone number... if they're malicious, you're already fucked. b) When? At the end of the process where you're doing stuff like attesting that you're not lied on your tax return? I don't remember them demanding a phone n…

No, I didn’t enter PII into it, just let it do math, downloaded, and printed. Wrote contact info by hand.

(The efiling never worked for me, always complained about something esoteric.)

They’re just values as far as it’s concerned. And it is dumped every October. But phone # validation up front is too much, an overstep.

Like I said, I just used it for the calc ability so a spreadsheet works as well. Bit of work the first year, then tweak.

Re: Direct File won't happen in 2026, IRS tells states

#177

Post by dpark »

Amezarak wrote: post #130
com2kid wrote: post #113

Earlier quoted context omitted.

I am surprised no one has started a go fund me to make a fund just to bribe politicians to fix tax filing. It would be cost effective VS paying for tax prep!

The average HNer, who is fairly literate and well-informed about tax-prep, tends to misunderstand the situation. Using tax preparation software is the cheap (or free!) alternative to what millions of Americans are doing. It was a change for the better for people who didn't do their own taxes. A regular person's taxes can always be done electronically for free, or if they really want, for $20-$100 through tax prep sof…

> The average HNer, who is fairly literate and well-informed about tax-prep, tends to misunderstand the situation.

The fact that TurboTax is cheaper than a local CPA does not change the fact that Intuit actively lobbies to prevent free tax filing.

In a sane world the IRS should send a letter to every tax-paying household in February that says “we owe you X”, “you owe us X”, or “your taxes are complex, please work with a tax specialist”. Also in a sane world this would be free and the government would be incentivized to simplify the tax code so that as many people as possible were in one of the first buckets. In our world the government is aggressively lobbied for complex tax codes and prevention of free tax filing.

> A regular person's taxes can always be done electronically for free, or if they really want, for $20-$100 through tax prep software.

Define “regular”. Per TurboTax, only 37% of people qualify for free filing.

I have never tried to go through the TurboTax free file route but based on my experience with the paid service, I imagine they aggressively upsell free filers with the exact same scare tactics you associate with CPAs.

Re: Direct File won't happen in 2026, IRS tells states

#178

Post by thayne »

sublinear wrote: post #133
thayne wrote: post #74

Earlier quoted context omitted.

Yes. I've used Free filllable forms several times. For basic tax situations, and even mildly complex ones, the problem isn't so much that it is hard as that it is very tedious. It involves reading a lot of instructions, with many references to other documents and other sections. It involves copying a lot of numbers from one place to another, and doing basic math on them to get a new one. It could be improved a lot ju…

> It could be improved a lot just by automatically calculating more fields, and adding more of the "worksheets" that are in the instructions into the forms so it can calculate those for you. It already does this. The form validation checks that you have filled in the required fields and on most forms about half of the field values are not user-editable and instead auto-calculated from the other half. It also looks fo…

> It already does this

For some things. But there are also several fields that could be calculated, but aren't.

> It's assumed that you have read the instructions and done the worksheets elsewhere

Yes, but it would be helpful if it had something to do the worksheets as part of the site instead of you having to do the worksheet elsewhere.

Re: Direct File won't happen in 2026, IRS tells states

#180

Post by simoncion »

mixmastamyk wrote: post #176
simoncion wrote: post #88

Earlier quoted context omitted.

> It started requiring phone numbers and things... a) You're already trusting them with every piece of information in your tax return. It'd cost like five cents to use that information to discover your phone number... if they're malicious, you're already fucked. b) When? At the end of the process where you're doing stuff like attesting that you're not lied on your tax return? I don't remember them demanding a phone n…

No, I didn’t enter PII into it, just let it do math, downloaded, and printed. Wrote contact info by hand. (The efiling never worked for me, always complained about something esoteric.) They’re just values as far as it’s concerned. And it is dumped every October. But phone # validation up front is too much, an overstep. Like I said, I just used it for the calc ability so a spreadsheet works as well. Bit of work the fi…

Weird. The electronic filing has worked flawless for me every year for the past like four or five years. Was the "esoteric" complaint delivered as an email after you'd submitted your paperwork? If so, then in my experience, that's because you've fucked up the data you input into the form and the IRS's backend has a funny-but-useful way of spelling that.

> But phone # validation up front is too much, an overstep.

They definitely didn't do this to me any of the years I've used them to file taxes. When did you file yours? Did you file them long after the 2024 taxes were due?

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